Berlin-headquartered fintech startup Finmid, specializing in embedded fintech solutions geared towards marketplaces seeking to offer customized payment and financing solutions, has successfully secured €23 million ($24.7 million) in a Series A funding round. This capital injection aims to bolster product development and facilitate expansion into new markets. Following this investment, Finmid is now valued at €100 million ($107 million) post-money.
Marketplaces, which typically act as intermediaries connecting retailers or third-party providers with consumers, present prime targets for embedded finance companies. This is primarily due to the substantial transaction volume they handle, making it advantageous to integrate additional financial functionalities to enhance their profit margins.
Airwallex, Rapyd, Kriya, and other players are actively tapping into this opportunity. However, Finmid believes it can capture a larger market share, particularly in its home region. Across Europe, small and medium-sized enterprises (SMEs) traditionally rely on banks for financing. Nonetheless, the advent of fintech has broadened access to diverse financing sources for SMEs, with an increasing number opting for alternative avenues.
Finmid advocates for SMEs to access capital through business partners rather than traditional banks or neobanks, a sentiment echoed by its co-founder, Max Schertel. Schertel emphasizes the convenience of accessing financing within the existing business ecosystem. Additionally, marketplaces stand to benefit from offering such services internally, leveraging their vast customer base and data insights to personalize financing offers.
For instance, food delivery platform Wolt utilizes Finmid’s technology to extend cash advances to select restaurant partners directly through its app. Leveraging transaction data, Wolt can tailor pre-approved financing offers to eligible partners, enhancing both customer experience and revenue streams.
Finmid collaborates with various financing partners to provide working capital, with both the platform and Finmid earning a percentage of each transaction. This symbiotic relationship enables platforms like Wolt to streamline operations for their partners while generating additional revenue effortlessly.
Although initially challenging to pitch to venture capitalists due to the inherent reliance on partner integration, Finmid has garnered consistent support from investors, raising a total of €35 million in equity funding. Notably, the startup’s early backers have remained steadfast, contributing to its growth trajectory.
Looking ahead, Finmid plans to allocate the new funding towards talent acquisition, prioritizing individuals with extensive experience in finance-related domains. Expansion into new markets, starting with Italy, is also on the agenda, leveraging existing infrastructure without establishing physical offices in target countries.
