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French startup Carmen has secured a small round of funding so that it can improve its instant financing products. The company offers short-term loans to small companies facing a shortage of working capital.
It’s a €9 million equity and debt round ($9.4 million at today’s rate), with Seventure Partners taking a stake in the small startup. Financière Arbevel and Bpifrance complete the round with some debt.
Startup is not the only company operating in this field, which can be described as instant financing for SMEs. French rivals included Silver, De facto, Unlimited and Hero.
The reason why income-based financing has become a hot vertical is because banks and traditional financial institutions are struggling to appeal to SMEs at scale. It’s a very fragmented market with small margins. That’s why tech startups are trying to fill this funding gap with a data-driven approach.
Today’s news comes just a few months after Carmen provided 100 million euro debt facility that serves as the basis for the company’s short-term loans. Six months later, it seems that several companies are now relying on Carmen to solve their cash flow problems.
About 600 companies use Carmen to purchase inventory, pay suppliers, fund paid shopping campaigns, and more. used for Loans range from 2 to 24 months from 20,000 euros to 3 million euros.
On average, a typical Carmen customer borrows €200,000 for a six-month period. But as you can see, there is a wide variety of financing options. Similarly, the smallest clients have an annual turnover of only €300,000 (which are likely to be sole proprietorships), while Carmen’s largest client has an annual turnover of €160 million.
More importantly, Carmen has attracted some loyal customers, as 80% of the startup’s customers contact Carmen several times a year to open a new line of credit. Clients include Maison Kitsuné, Balibaris, Les Raffineurs and Almé.
While most companies contact Carmen directly, the startup has a hybrid distribution strategy. Partners with other fintech companies so they can offer Carmen financial products to their customers. Some ERPs, e-commerce marketplaces and business banks like Gonto already integrate with Carmen.
This embedded funding strategy currently represents 40% of Carmen’s clients. But the company says it hopes to reach 75% of new customers by the end of 2025.
Although most companies repay their loans without any problems, companies sometimes have difficulty paying their debts.
“It’s part of our job as a lender. But we limit these risks through our data-driven approach, which gives us complete visibility into our clients’ financial and operational performance,” said Gabriel Thierry, Carmen co-founder and CEO.
“Furthermore, we are investing heavily in our risk assessment technology tool (powered by AI) to strengthen this approach,” he said. So today’s round of funding.
Carmen currently uses approximately 60 different financial indicators to evaluate loan applications in real time. Its internal strategy can also be used to make smarter decisions – bank accounts, accounting software, ERPs and invoicing tools store valuable information about the company’s overall performance.
