Less than six months after announcing a $40 million Series B investment, alternative lending startup Fundbox has closed on another $50 million in funding to provide small businesses with the immediate cash they need to stay afloat.
Spark Capital Growth led the round, which brings Fundbox’s venture funding total to $108 million in just under a year and a half. Bezos Expeditions, Sound Ventures (the fund recently launched by Ashton Kutcher and Guy Oseary), and Entrée Capital participated, joined by existing investors Khosla Ventures, General Catalyst, Blumberg Capital and Shlomo Kramer.
For small businesses that run on invoices, Fundbox issues loans in the exact amount of each invoice so that business owners don’t have to wait the 30, 60 or 90 days it typically takes to get paid.
Rather than relying on credit scores and FICO scores like traditional lenders, Fundbox plugs into a company’s existing accounting software and assesses each invoice individually. In real time, the Fundbox algorithm is able to build a risk profile of the specific transaction, the business in question and the market it’s operating in.
If accepted, Fundbox underwrites the invoice in 50 seconds and deposits its value in a company’s bank account the next business day.
Businesses have 12 weeks to pay back the loan, ideally after they’ve received the invoice payment they were waiting for, along with a flat monthly transaction fee. Founder and CEO Eyal Shinar reports that Fundbox is seeing a very low, single-digits default rate — a number far below the market standard.
Since we last heard from Fundbox in March of this year, the company has doubled its average invoice size from around $5,000 to more than $10,000.
“The more revenue you’re generating as a small businesses, the more out-of-pocket expenses you have,” Shinar says. “So if you don’t get paid on time, and you’re not generating the cash until two or three months down the road, you need to bridge that gap.”
Fundbox is currently serving more than 20,000 small businesses and has processed 15 million invoices to date, Shinar says, which have a cumulative value of more than $30 billion. Considering that there are 34 billion invoices issued each year in the U.S. alone — with 90 percent of these issued by B2B companies — it’s clear the company has a long way to go.
“If we’re going to be as successful as Visa in the B2B space, that would be a several-trillion-dollar company,” Shinar says. “Let’s start with having every invoice being cleared by Fundbox, that 34 billion per year… that would be a good place to be.”