French start-up. Carmen It has secured a small round of funding to enable it to ramp up its instant financial products. The company provides short-term loans to small companies facing a working capital crisis.
With Seventure Partners buying a stake in the small startup, that's a €9 million plus debt round ($9.4 million at today's exchange rate). Financière Arbevel and Bpifrance are financing the round with some debt.
Startups aren't the only companies operating in what can be described as instant financing for SMEs. French competitors included. Silver, De facto, Limited versus Hero.
The reason the revenue-based financing vertical is heating up is because banks and traditional financial institutions are struggling to deal with SMEs at scale. It is a highly fragmented market with small margins. So tech startups are trying to fill that financial gap in a data-driven way.
Today's news comes a few months after Karmen. safe A €100 million debt vehicle that serves as the basis for the company's short-term loan. Six months later, few companies seem to be relying on Karmen to solve their cash flow problems.
About 600 companies use Karmen to buy products; to pay suppliers; Karmen was used to run paid campaigns and more. Loans range from €20,000 to €3 million; From 2 months to 24 months.
On average, A typical Karmen client borrows €200,000 with a six-month term. But as you can see, A wide range of financing options are available. Similarly, The smallest clients generate only €300,000 in revenue per year (they are most likely sole proprietorships);
More importantly, Karmen has attracted some loyal customers, as 80% of the startup's clients contact Karmen several times a year to open a new line of credit. Clients include Maison Kitsuné; Balibaris, Includes Les Raffineurs and Almé.
Although most companies contact Karmen directly, The startup has a hybrid distribution strategy. It also partners with other fintech companies to offer Karmen financial products to their own customers. Some ERPs; E-commerce marketplaces and commercial banks like Qonto have already integrated with Karmen.
This embedded financial strategy now represents 40% of Karmen's clients. But the company said it expects to raise 75% of new customers by the end of 2025.
Most companies repay their loans without any problems, but companies can sometimes struggle to repay their debts.
“This is part of the job of lending money. But we limit these risks through our data-driven approach, which allows us to see the financial and operational performance of our clients in great detail,” said Gabriel Thierry, Karmen co-founder and CEO.
“Furthermore, we are investing heavily in our risk assessment technology tool (thanks to AI) to strengthen this approach,” he added. That's why I'm raising funds today.
Karmen uses approximately 60 different financial metrics to score loan applications in near real time. Its embedded strategy can also be leveraged to make smarter decisions — bank accounts, accounting software; ERPs and billing tools store valuable data on a company's overall performance.
