SMB-centric FINOM will close 115 million euros when European fintech gets hot

Although they may be short on funding, they still choose the fastest growing startup in Europe.

The latest beneficiaries of the investor’s appetite are Are you okayA five-year-old Amsterdam-based Challenger Bank aimed at small and medium-sized businesses across Europe. The company, which claims to double its revenue in 2024, has just shut down its 115 million euro Series C equity round (approximately $133 million), and TechCrunch has learned exclusively. This will come a few weeks after landing $105 million growth capital From the catalyst of the general, the supporter Since 2021.

FINOM’s business model focuses on providing European SMBs with a financial platform that combines banks, invoices and growing capabilities, including AI-enabled accounting. “In theory, entrepreneurs don’t need to have an accountant at all,” said CEO Andrey Petrov (on the far left of the photo).

The startup’s ambitious growth goals reflect this vision. Petrov’s goal of attracting 1 million business customers by the end of 2026 is motivation, and its new funding will make its targets slightly achievable.

This belief that FINOM could serve a significant share of Europe’s 26 million SMB is also reflected in Series C. AVP (Previously Axa Venture Partners), participation from new investors Heading (formerly E.ventures) through the growth of headlines. Existing Investors Capitalgeneral catalysts, and North Zone I also participated in the round.

Despite this momentum, startups may find it easier to acquire clients from legacy banks (current plans) than other fintechs.

Even after Series C made its total funding of around $346 million, FINOM has far less external capital than Monzo, N26, Revolut, or Wise, all raised over $1 billion. The funds so far rival the roughly $700 million raised by Finom’s closest peers. French Unicorn Qonto – The comparison is not perfect though.

What makes Finom’s funding structure particularly interesting is its non-traditional elements. Unlike typical VCs, the general catalyst did not gain fairness in FINOM in its non-traditional rounds. Capital from the Customer Value Fund (CVF) can only be used for growth. This is a plan to get the money back.

According to Chairman and Co-Founder Kos Stiskin (on the far right in the photo), combined with Series B, this non-traditional fundraising round would have been enough for the Dutch company to achieve profitability. However, Finom hoped to increase fairness by the end of the year and get a “good” new review in the process. What I didn’t expect was to bring both deals closer together.

“It took longer than expected and much faster than expected,” Stiskin told TechCrunch. He refused to disclose the updated rating, saying it was twice the (private) rating related to it. 2024 $54 million Series b.

The timing may have worked courtesy of FINOM. The company does not publish the economics of the units, except for a user base of 125,000, so the fact that a common catalyst has looked under the hood could possibly help boost profits and speed up the funds. That trust vote, and its direct interest in recovering the money, could have been a signal that prompted investors to write a check.

Beyond the effects of the signal, ensuring that FINOM’s marketing efforts are funded without giving up fairness to the customer value fund, may seem like a fair deal for Series C backers, including General Catalyst itself.

However, Series C funds riskier efforts through marketing than customer acquisition.

According to Petrov, one of its uses could be strategic and opportunistic acquisitions that allow them to expand either their customer base or their product portfolio. This represents a change in strategy when Finom purchased only one company so far and bought it in 2022. whereUK cross-border payment services when FINOM was considering expanding to the UK

Since then, FINOM has shifted its focus to some of Europe’s largest markets. Looking at larger opportunities than the UK, these markets believe that there are few challenger banks competing for SMBs, and that traditional banks are not serving small and medium-sized businesses.

But like many neobanks, it operates only under electronic money agency (EMI) licenses in most major markets (Netherlands, France, Italy, Spain) (not Germany, but it is not a partner. Solaristhere is a full bank license).

Despite these license restrictions, it was possible Add loans in the Netherlandswhich considers it a test site for its credit offerings. Petrov is considered a must for any fintech or business customer.

The lending initiative is in line with Finom’s efforts to expand its product line both on deposits and loans, and vertically “start with a bank account and end with paying taxes, reports and more.” AI is also involved, not just the product side.

The company also uses AI internally. With a team of 500 people, we expect to have business-related and technology-related recruitment, although not too many to expand our business. “We’re adding some people, but most of the time we’re adding a new type of AI agent to work inside,” Petrov said. “So we’re hiring more than we need to. We see the appropriate output in terms of using AI and AI agents to automate some of (our) routine tasks.”

Finom’s leadership structure has also evolved. The split in duties between the four co-founders of Finom has experienced several changes over the years, and Petrov is now the sole CEO. He once shared with Yakov Novikov, an advisor alongside Oleg Laguta.

The three of them previously created a module bank for the Russian digital bank. But this time, Finom’s focus is on Europe and its entrepreneurs, in Stiskin’s words, “the backbone of the European Union economy.”