Finiata, the finance platform targeting SMEs, freelancers, and the self-employed that was founded by Sebastian Diemer, who previously co-founded credit scoring and loans company Kreditech, appears to be on somewhat of a roll. The company, formerly known as Bezahlt, has picked up €18 million of financing of its own, and already claims 5,000 customers.
The new round is part equity and part debt: €10 million has been invested as a Series A by VC firms DN Capital, Point Nine, Fly Ventures, Redalpine, ENERN, and Kulczyk Investments, while an additional €8 million has been raised in the form of debt financing. Finiata is in the business of providing credit to its own customers, after all.
Taking aim at the German ‘factoring’ market, but with a specific focus on smaller companies, including one-person operators, Finiata provides invoice factoring (or invoice financing) whereby companies secure credit by selling outstanding invoices to a third party at a discount. The idea is that they can free up working capital in the business to reinvest or simply in order to get paid more quickly.
“The problem we are trying to solve is to provide freelancers, small companies and startups with fast, easy and cheap [factoring]. This customer group is ignored by banks and other financial institutions that offer factoring services that have largely been directed almost exclusively at large corporates and companies with minimum sales of 100,000 Euros,” Diemer told me last year
To help it lend money to what Diemer claims is an underserved segment of the business financing market, Finiata has developed a credit scoring system that “mixes manual processes, traditional scoring algorithms and alternative data sources”. The latter, in theory, lets it provide financing to businesses that traditional refactoring providers typically don’t. It also has parallels with Kreditech, Diemer’s previous company.
“Finiata is basically the Kreditech playbook for a much larger market segment with less regulations and a higher customer benefit,” explains Diemer. “Besides the opportunity of servicing a previously uncovered customer segment, our automation further has the benefit that we can provide a financing framework for all customers. This framework tells them exactly how many invoices they can get pre-financed through us”.
To that end, Kenan Deniz, Finiata’s CTO, says the startup’s headcount now sits at 50 people, with more than 50 percent of the team consisting of programmers, data scientists and experts that work on its scoring algorithm.
Meanwhile, with today’s new and existing backers, European expansion is planned next. Diemer name-checks Kulczyk Investments and ENERN in particular as partners that give Finiata access to a network of banks, distribution and regulation in its target markets.