Although they may be short on funding, they still choose the fastest growing startup in Europe.
The latest beneficiary of the investor’s appetite is the five-year-old Amsterdam-based Challenger Bank, targeting small and medium-sized businesses across Europe. The company, which claims to double its revenue in 2024, has just shut down its 115 million euro Series C equity round (approximately $133 million), and TechCrunch has learned exclusively. This comes just weeks after landing $105 million in growth funds from General Catalyst, the first supporter since 2021.
FINOM’s business model focuses on providing European SMBs with a financial platform that combines banks, invoices and growing capabilities, including AI-enabled accounting. “In theory, entrepreneurs don’t need to have an accountant at all,” said CEO Andrew Petrov (on the far left of the photo).
The startup’s ambitious growth goals reflect this vision. Petrov’s goal of attracting 1 million business customers by the end of 2026 is motivation, and its new funding has made its target slightly achievable.
This belief that FINOM could serve a significant share of Europe’s 26 million SMB is also reflected in Series C. The round was led by AVP (formerly AXA venture partner) with participation from new investor headlines (formerly E.ventures) through headline growth. Existing investors Kogito Capital, General Catalyst, and Northzone also participated in the round.
Despite this momentum, startups may find it easier to acquire clients from legacy banks (current plans) than other fintechs.
Even after Series C made its total funding of around $346 million, FINOM has far less external capital than Monzo, N26, Revolut, or Wise, all raised over $1 billion. The funds so far rival the roughly $700 million raised by Finom’s closest peer, French unicorn Qonto, but the comparison is not perfect.
What makes Finom’s funding structure particularly interesting is its non-traditional elements. Unlike typical VCs, the general catalyst did not gain fairness in FINOM in its non-traditional rounds. Capital from the Customer Value Fund (CVF) can only be used for growth. This is a plan to get the money back.
According to Chairman and Co-Founder Kos Stiskin (on the far right in the photo), combined with Series B, this non-traditional fundraising round would have been enough for the Dutch company to achieve profitability. However, Finom hoped to increase fairness by the end of the year and get a “good” new review in the process. What I didn’t expect was to bring both deals closer together.
“It took longer than expected and much faster than expected,” Stiskin told TechCrunch. He refused to disclose the updated rating, saying it was twice the (private) rating associated with the 2024 $54 million Series B.
The timing may have worked courtesy of FINOM. The company does not publish the economics of the units, except for a user base of 125,000, so the fact that a common catalyst has looked under the hood could possibly help boost profits and speed up the funds. That trust vote, and its direct interest in recovering the money, could have been a signal that prompted investors to write a check.
Beyond the effects of the signal, ensuring that FINOM’s marketing efforts are funded without giving up fairness to the customer value fund, may seem like a fair deal for Series C backers, including General Catalyst itself.
However, Series C funds riskier efforts through marketing than customer acquisition.
According to Petrov, one of its uses could be strategic and opportunistic acquisitions that allow them to expand either their customer base or their product portfolio. This represents a change in strategy considering Finom has only acquired one company so far. When I bought Kapaga, a UK cross-border payment service that Finom is considering expanding to the UK in 2022,
Since then, FINOM has shifted its focus to some of Europe’s largest markets. Looking at larger opportunities than the UK, these markets believe that there are few challenger banks competing for SMBs, and that traditional banks are not serving small and medium-sized businesses.
However, like many neobanks, it operates only under electronic money agency (EMI) licenses in major markets in the Netherlands, France, Germany, Italy and Spain (partnership with Solaris, which has a full banking license in Germany).
Despite these licensing restrictions, we were able to add loans to the Netherlands. The Netherlands is considered a testing ground for credit offerings. Petrov is considered a must for fintech and business customers.
This lending initiative is in line with Finom’s efforts to expand its product line both on deposits and loans, and vertically “start with a bank account and end with paying taxes, reports and more.” AI is also involved, not just the product side.
The company also uses AI internally. With a team of 500 people, we expect to have business-related and technology-related recruitment, although not too many to expand our business. “We’re adding some people, but most of the time we’re adding a new type of AI agent to work inside,” Petrov said. “So we are hiring more than necessary and we see a good output in terms of using AI and AI agents to automate some of the things. [our] Daily tasks. ”
Finom’s leadership structure has also evolved. The split of obligations between the four co-founders of Finom went through several changes over the years, and Petrov is now the sole CEO. This is the role he once shared with adviser Yakov Novikov along with Oleg Laguta.
The three of them previously created a module bank for the Russian digital bank. But this time, Finom’s focus is on Europe and its entrepreneurs, in Stiskin’s words, “the backbone of the European Union economy.”
This story has been updated to clarify Finom’s current license.
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