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Fundbox, a startup aimed at streamlining the cash flow between businesses, has raised $17.5 million in Series A funding round led by Khosla Ventures and is sporting some impressive names in the field of finance, including former Citigroup CEO Vikram Pandit. Fundbox acts as a middleman between companies, decreasing the time it takes for invoices to be cleared by fronting the money owed. The company has been operating in a stealth mode while signing up thousands of businesses for its service and already handling tens of thousands of invoices per day, Fundbox claimed.
The company acts as a microlender for small businesses that cannot afford to wait for money from clients that can often take up to 90 days to arrive. Fundbox identified this as an underserved space, in that banks tend to be reluctant to lend to small businesses, particularly in small amounts. "We've identified an unprecedented opportunity to bring data-driven innovation to a critically underserved and broken market, focused initially on allowing small businesses to immediately clear outstanding invoices and improve cash flow by accelerating payments," Fundbox founder and CEO Eyal Shinar said in a press release. Behind the scenes at Fundbox is a complex system that calculates the likelihood of a business defaulting on a payment, combining behavioral analysis, finance theory and a wealth of data.
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This allows the startup to calculate the necessary fees on its short-term loans. Business owners can directly connect accounting software to Fundbox to request microloans and track payments. Once a loan is given for the invoice, the business can pay it back in installments or all at once without a penalty. The system also takes into account the frequency with which a business uses Fundbox and the reliability of its payments. "Every small business wishes for convenient access to capital at a fair price, but for most, that is just wishful thinking," David Weiden, partner at Khosla Ventures, said in the press release. "Fundbox leverages newly available cloud services and deep data science to deliver financial services that simply were not possible before, and that's the kind of innovation that can really build a great company." Fundbox says that the business-to-business invoice area is worth $74 trillion, a much bigger market than the $3 trillion business-to-consumer one that includes competitors like Visa, Paypal and Square.
Read more: http://mashable.com/2014/04/10/fundbox-streamine-b2b-invoice-market/ Fundbox Looks to Streamline the $74 Trillion B2B Invoice Market To read more on this topic click here
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