Penta, the German digital-only bank account for startups and SMEs, raises €2.2M seed

Penta, the German ‘challenger’ bank that offers a digital bank account targeting SMEs, has raised €2.2 million in funding. The seed round is led by Inception Venture Capital, a new London-based VC firm with a heavy fintech focus, and will be used for further hiring, product development and to fuel growth.

Running on top of Banking-as-a-Platform solarisBank (rather than holding a banking license of its own), Penta is designed to meet the banking needs of small to medium-sized businesses, including startups. It launched publicly in Beta to businesses in Germany in December, although there was initially a wait list, which I’m told is being lifted today.

At the time of launch, co-founder and CEO Lav Odorovic argued that SMEs and startups are currently underserved by incumbent banks, which sees account opening being cumbersome and much more difficult than it should be, whilst SMEs are charged exorbitant fees for making payments or international money exchange.

Penta has set out to address this and other unmet SME needs, such as tracking employee spending and automating accounting and invoicing. “We ultimately concluded that business owners want a fully digital bank that’s easy to use and that has the apps and products they need to help them scale quicker, save more time and money,” Odorovic said.

The reference to “apps” is where the upstart’s marketplace banking comes into play (a strategy being pursued in one form or another by a plethora of fintech startups, including the U.K.’s Starling, Curve, and Monzo, and Germany’s own N26). This will see Penta integrate the best third-party fintechs and other service providers to meet the needs of SMEs, instead of simply developing and up-selling its own products.

Part of the seed round will be used to launch the Penta marketplace of third party products. These will include automated accounting, low-cost FX, and multiple MasterCards with limits and permissions that can be given out to an SME’s various employees.

“We want to help businesses get off the ground as quickly as possible without them having to worry about annoying banking bureaucracy or paying pesky fees. That’s why Penta is free to open and free to use,” says Odorovic in a statement. “We’re giving businesses 10 free transactions per month. Every transaction after the 10th is €0.10 cents. Your Penta account will also come with our beautiful [bright green] MasterCard for online and offline payments”.