If you have any doubt about the validity of revenue based financing or just don't pay attention to global market news then this information should cure some of those doubts. While $9.4 million isn't a large credit line for existing larger funders, they already obtained a $100million dollar round which as a startup is a good amount. French startup Karmen is just the lastest international company to enter the RBF market. There are countless and I've noted many of them on our site. This latest round of financing for a RBF company signals a strong belief in the product worldwide.
Article:
French startup Karmen has secured a small funding round so that it can improve its instant financing products. The company offers short-term loans to small companies facing a working capital crunch.
It’s a €9 million equity-and-debt round ($9.4 million at today’s exchange rates) with Seventure Partners buying a stake in the small startup. Financière Arbevel and Bpifrance are complementing the round with some debt.
The startup isn’t the only company operating in this space that could be described as instant financing for SMEs. French competitors include Silvr, Defacto, Unlimitd, and Hero.
Revenue-based financing has become a hot vertical because banks and traditional financial institutions struggle to address SMEs at scale. It’s a highly fragmented market with small margins. That’s why tech startups are trying to fill that financing gap with a data-driven approach.
Today’s news comes just a few months after Karmen secured a €100 million debt vehicle that serves as the basis for the company’s short-term loans. Six months later, it seems like quite a few companies are now relying on Karmen to fix their cashflow issues.
According to the company, around 600 companies have used it to buy inventory, pay suppliers, finance paid acquisition campaigns, and more. Loans range from €20,000 to €3 million, from two months to 24 months.
On average, the typical Karmen client borrows €200,000 with a six-month term. But there’s a wide diversity of financing options. The smallest customers generate only €300,000 in annual turnover (those are most likely one-person businesses), while Karmen’s largest customer generates €160 million in revenue per year.
