Cash flow issues plague small and medium enterprises on a regular basis. But, if that was an already inconvenient situation, the Covid-19 pandemic has aggravated it to the breaking point for far too many people. MarketFinance, a UK firm that has established a loans platform to help small businesses stay afloat during these tough times, has announced a large financial infusion of £280 million ($383 million) as it prepares for a new wave of lending requests.
In an interview, CEO and founder Anil Stocker said, “It’s a terrific time to lend, at the start of the economic cycle.”
The money is largely in the form of debt, which MarketFinance will use to loan out to its clients as an approved partner of the UK government’s Recovery Loan Scheme; the remaining £10 million ($14 million) is in the form of equity, which MarketInvoice will use to improve its platform.
The financing will be provided by Italian bank Intesa Sanpaolo S.p.A. and an undisclosed “global investment firm,” while the equity will be led by Black River Ventures (which has previously supported Marqeta, Upgrade, Coursera, and Digital Ocean), with participation from existing backer Barclays Bank PLC. Barclays is a strategic investor in the following companies: The bank’s online SMB loan offering is powered by MarketFinance. Northzone is one of the startup’s other investors.
We hear that the company is valued at less than $500 million, but more than $250 million, despite the fact that it is not publicly providing any figures. market finance has been profitable since 2018, according to Stocker, which is why it hasn’t given up much equity in this round of fundraising.
He explained, “We’re establishing a sustainable firm, and the equity we raised was to access better debt at better costs.” “It can assist in the posting of additional equity on the balance sheet.” The funds will be put “into our reserves” and used for new product development, marketing, and continuing to expand the company’s API connectivity, he said. That second step is significant because it taps into the current trend of “embedded finance” operations, in which third parties offer loans to customers on their own platforms — with the loan product powered by MarketFinance, similar to what Barclays offers now.
The number of businesses that could benefit from this is potentially as large as the internet itself. Embedded finance’s promise is that any internet company that already does business with SMEs may potentially provide those SMEs loans to… do more business together. MarketFinance was founded as MarketInvoice several years ago, with the core business strategy of offering short-term loans to small businesses based on the value of their outstanding invoices – a technique known as invoice finance.