In France, it has been calculated that 25% of corporate bankruptcies are due to short-term financing issues. And in the United States, half of SMEs admit that this is an ongoing obstacle to their smooth running. More often than not, the drying up of cash flow is the result of unpaid invoices. Only one-third of suppliers are thought to be paid on time for their products or services, and this persistent delay has led to a cumulative debt nationally of some 4 billion euros.
Traditionally, a business would have had to go to a bank in order to access the financing necessary to plug the gaps caused by late payment. However, there are a number of constraints associated with their brand of invoice financing, including obligations based on the duration or volume of invoices, personal guarantees, recourse on the loan, hefty paperwork, and substantial fees. Finexkap is the first French company to purchase receivables like a bank, but it does so exclusively online and without any of the additional burdens of its 14 competitors.
Cédric Teissier and Arthur de Catheu are the brains behind Finexkap, which they founded in 2012. Initially, the pair found it difficult to raise funds for their project from within France and instead went to the UK and the US, where the FinTech markets are more developed, in search of investment. By the end of 2014, they had raised $22.5 million. Of this, $7.5 million constituted a Series A equity round, used for growing the platform’s data and product operations, marketing, and personnel, and $15 million was set aside for funding their first months of activity.
Finexkap’s algorithm, which is capable of rapidly assessing an SME’s eligibility for financing, was 14 months in the making, drawing on three million invoices totaling 17 billion euros. Businesses can submit their invoices online 24/7 in under five minutes, and receive a response on their dossier within 48 hours and financing within 72 hours. In essence, Finexkap acts as a conduit between cash-rich investors and cash-poor SMEs, all-the-while bypassing banks with whom people are less and less inclined to do business.
Since operations went live in 2015, Finexkap’s success has been explosive. Not only was it the fastest growing startup in France (by a margin of 1500%) it also outdid the winners from Spain, the UK, the Netherlands, and Sweden in the Tech5 competitions run by The Next Web. It finished in sixth position behind five new companies from Germany, the overall champion being Lesara, an online lifestyle and fashion store, which had an annual revenue growth of 7950%. The French company also won Alternative Finance Platform of the Year (EU) 2015 at the AltFi Awards, a prestigious industry event, in recognition of the more than 12 million euros worth of invoices it had financed in only six months.
Finexkap is actually Teissier and de Cartheu’s second venture. Their first company, Palico, is the leading global marketplace dedicated to private equity, boasting 15,000 users in 70 countries. What distinguishes their newest startup from others in more glamorous sectors like social media is that Finexkap provides a genuine societal function, enabling small businesses to thrive when otherwise they would have faced tough financial choices or certain failure.