MUFG triples investment in credit line fintech Fundbox
Fundbox, an Israel and US-based fintech offering credit lines to small businesses, has landed a fresh equity investment from the corporate venture capital arm of Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group.
MUFG Innovation Partners has tripled its investment in Fundbox’s Series C round, bringing the total equity funding raised by the fintech in this round to nearly $200 million.
The start-up, founded in 2013 with headquarters in San Francisco and Tel Aviv, has raised more than $400 million to date from investors including Vinod Khosla‘s venture capital firm Khosla Ventures, Allianz, and Bezos Expeditions (the venture capital vehicle of Amazon CEO Jeff Bezos).
Fundbox helps both sellers and buyers. It offers money advances to small businesses waiting on outstanding payments, meaning sellers get paid quicker, and buyers have more time to make their payment.
Late payments are a big issue for small businesses across the globe. A report by MarketFinance last year found that US companies take an average 51 extra days to settle their invoices with UK small and medium-sized enterprises (SMEs), and German firms take an extra 32 days to pay their British counterparts. The average wait time for an unpaid invoice in the UK grew to 23 days in 2019.
Fundbox’s offering, designed to tackle late payments, is underpinned by machine learning which analyses transactional data to calculate the best terms and plans.
“We are pleased with how Fundbox’s advanced data science and technology capabilities have contributed to its superior portfolio performance, especially during COVID-19,” MUFG Innovation Partners’ managing director and chief investment officer, Akihiko Okamoto, said in a statement.
“Even in the face of these extraordinary economic conditions, the strength of the business has been impressive.”
Fundbox says that “despite a modest increase in losses” early on in the pandemic, the fintech’s key portfolio health indicators are “now back at, or better than, pre-crisis levels”.
The company’s loans are relatively short in terms of duration, affording it some capital flexibility. Founder and CEO Eyal Shinar tells Pymnts that Fundbox has “very minimal to non-existent exposure to restaurants, coffee shops, hair salons”.
In a statement, Shinar added that the fintech’s ability to “respond very quickly” during the crisis has come down to its investments in real-time data access, machine learning, and automated credit management.
“The funding and support from sophisticated strategic investors like MUFG will enable us to continue investing in our technology platform and customer experience,” Shinar adds.
In January, Fundbox hired its first chief financial officer (CFO) Marten Abrahamsen in the run up to what has been speculated as the company’s initial public offering (IPO). The firm is yet to file the regulatory paperwork to launch its IPO.