BlueVine raises $102.5M more for banking services that target small businesses

When it comes to fintech plays, small and medium businesses are not often the target audience: they’re too small and fragmented compared to big-spending corporates; and they’re too demanding compared to mass-market consumer users. But as a sector, they account for over 99% of all businesses in developed countries like the UK and USA, and that means they cannot be ignored. Today, BlueVine, one of the financial services startups that has built a business specifically catering to SMBs is announcing a big round of funding, underscoring the quiet opportunity and demand that is out there.

“We see a massive gap in the market, with most SMBs still using consumer plus accounts,” said Eyal Lifshitz, Bluevine’s CEO and co-founder. “That is the mission we are on.”

The startup, which offers financing and other banking services to SMBs, today is announcing that it has raised $102.5 million, a Series F round of equity funding that is coming from a mix of financial and notable strategic investors.

Led by ION Crossover Partners, the round also includes existing investors Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide (a major financial services player in the UK), Citi Ventures, Microsoft’s venture fund M12, and private investors; as well as new investors MUFG Innovation Partners Co., Ltd, O.G. Tech (the VC connected to Israeli billionaire and property magnate Eyal Ofer), Vintage Investment Partners, ION Group, Maor Investments and additional private investors.

With this latest round, Silicon Valley-based BlueVine has raised between $240 million and $250 million in equity, with another half a billion dollars in debt financing to fuel its loans platform, Lifshitz said in an interview. The company has never disclosed valuation, and it’s not doing so today, but he added that BlueVine is “doing quite well”, with the valuation “up” compared to its Series E.

“We are not profitable yet, but we’ve grown 100% since last year and will do triple digit revenue this year,” Lifshitz said, noting that the company has now originated some $2.5 billions in loans to date to 20,000 small businesses.

While SMBs are not often the first target for fintech startups, that does not mean they are completely ignored. Others that have built big businesses around these users include Kabbage — the SoftBank-backed startup out of Atlanta that also started out with loans before diversifying also into a wider range of banking services. (Kabbage is currently valued at over $1 billion, as a point of comparison.) Another newer player in the space of SMB-focused banking is Mercury, which also recently raised money; its primary target is a narrower subset of the SMB world, startups.

BlueVine’s service is mainly based around its financing products, where it provides both lines of credit and term loans (both up to $250,000) and “factoring,” where customers can arrange for BlueVine to pay up front for invoices that they select to be paid, a service that translates into credit lines of up to $5 million and means that users don’t need to wait for money to come in before paying for bills.

As with Kabbage, BlueVine’s move into a wider array of banking services — sold as BlueVine Business Banking, which includes checking accounts and other services alongside financing — is a newer, still-growing and expanding business. The checking account, for example, only was announced in October this year.

For business customers, the idea is to give them a one-stop shop for all of their financial services, while for BlueVine, the idea is to create a more complete set of offerings to keep users on its platform and to make better margins on them across more services. Interestingly, this sets BlueVine up to compete not as much with startups — the majority of which still offer single-point services or a small collection of them, but with banks that still provide full suites of services, even if they are often more pricey and less efficient than startups.

My real competitors are the 4,600 banks in the US,” Lifshitz said. “It’s a very long tail in the US. But if you dive into that further, historically SMBs haven’t been serviced well by them.”

The fact that the company is attracting a range of financial services investors inevitably raises the question of how BlueVine might partner with them down the line or even become an acquisition target, but one thing that Lifshitz said that it will not be doing is white-label services (something that Kabbage has explored): “We don’t want to give our tech away,” he said. “We are focused on leveraging our tech to be the best in class.”

“BlueVine has demonstrated a track record of success with their multiple financing products and set themselves apart with their vision of a complete platform of innovative banking products for small businesses,” said Jonathan Kolodny, Partner at ION Crossover Partners, in a statement. “We’ve been following the company closely since its early days, and have witnessed the demand, and frankly the economic need, for BlueVine’s banking services. We believe the company is exceptionally well-positioned, thanks to its world-class management team, to change the way small businesses manage their financial needs today and in the future.”