Sep
09
2021
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Nuula raises $120M to build out a financial services ‘super app’ aimed at SMBs

A Canadian startup called Nuula that is aiming to build a super app to provide a range of financial services to small and medium businesses has closed $120 million of funding, money that it will use to fuel the launch of its app and first product, a line of credit for its users.

The money is coming in the form of $20 million in equity from Edison Partners, and a $100 million credit facility from funds managed by the Credit Group of Ares Management Corporation.

The Nuula app has been in a limited beta since June of this year. The plan is to open it up to general availability soon, while also gradually bringing in more services, some built directly by Nuula itself but many others following an embedded finance strategy: business banking, for example, will be a service provided by a third party and integrated closely into the Nuula app to be launched early in 2022. Alongside that, the startup will also be making liberal use of APIs to bring in other white-label services, such as B2B and customer-focused payment services, starting first in the U.S. and then expanding to Canada and the U.K. before expanding further into countries across Europe.

Current products include cash flow forecasting, personal and business credit score monitoring, and customer sentiment tracking; and monitoring of other critical metrics including financial, payments and e-commerce data are all on the roadmap.

“We’re building tools to work in a complementary fashion in the app,” CEO Mark Ruddock said in an interview. “Today, businesses can project if they are likely to run out of money, and monitor their credit scores. We keep an eye on customers and what they are saying in real time. We think it’s necessary to surface for SMBs the metrics that they might have needed to get from multiple apps, all in one place.”

Nuula was originally a side-project at BFS, a company that focused on small business lending, where the company started to look at the idea of how to better leverage data to build out a wider set of services addressing the same segment of the market. BFS grew to be a substantial business in its own right (and it had raised its own money to that end, to the tune of $184 million from Edison and Honeywell). Over time, it became apparent to management that the data aspect, and this concept of a super app, would be key to how to grow the business, and so it pivoted and rebranded earlier this year, launching the beta of the app after that.

Nuula’s ambitions fall within a bigger trend in the market. Small and medium enterprises have shaped up to be a huge business opportunity in the world of fintech in the last several years. Long ignored in favor of building solutions either for the giant consumer market, or the lucrative large enterprise sector, SMBs have proven that they want and are willing to invest in better and newer technology to run their businesses, and that’s leading to a rush of startups and bigger tech companies bringing services to the market to cater to that.

Super apps are also a big area of interest in the world of fintech, although up to now a lot of what we’ve heard about in that area has been aimed at consumers — just the kind of innovation rut that Nuula is trying to get moving.

“Despite the growth in services addressing the SMB sector, overall it still lacks innovation compared to consumer or enterprise services,” Ruddock said. “We thought there was some opportunity to bring new thinking to the space. We see this as the app that SMBs will want to use everyday, because we’ll provide useful tools, insights and capital to power their businesses.”

Nuula’s priority to build the data services that connect all of this together is very much in keeping with how a lot of neobanks are also developing services and investing in what they see as their unique selling point. The theory goes like this: banking services are, at the end of the day, the same everywhere you go, and therefore commoditized, and so the more unique value-added for companies will come from innovating with more interesting algorithms and other data-based insights and analytics to give more power to their users to make the best use of what they have at their disposal.

It will not be alone in addressing that market. Others building fintech for SMBs include Selina, ANNA, Amex’s Kabbage (an early mover in using big data to help loan money to SMBs and build other financial services for them), Novo, Atom Bank, Xepelin and Liberis, biggies like Stripe, Square and PayPal, and many others.

The credit product that Nuula has built so far is a taster of how it hopes to be a useful tool for SMBs, not just another place to get money or manage it. It’s not a direct loaning service, but rather something that is closely linked to monitoring a customers’ incomings and outgoings and only prompts a credit line (which directly links into the users’ account, wherever it is) when it appears that it might be needed.

“Innovations in financial technology have largely democratized who can become the next big player in small business finance,” added Gary Golding, General Partner, Edison Partners. “By combining critical financial performance tools and insights into a single interface, Nuula represents a new class of financial services technology for small business, and we are excited by the potential of the firm.”

“We are excited to be working with Nuula as they build a unique financial services resource for small businesses and entrepreneurs,” said Jeffrey Kramer, Partner and Head of ABS in the Alternative Credit strategy of the Ares Credit Group, in a statement. “The evolution of financial technology continues to open opportunities for innovation and the emergence of new industry participants. We look forward to seeing Nuula’s experienced team of technologists, data scientists and financial service veterans bring a new generation of small business financial services solutions to market.”

May
13
2020
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UK’s ANNA raises $21M for its SMB-focused business account and tax app

Small and medium businesses and sole-traders account for the vast majority of businesses globally, 99.9% of all enterprises in the UK alone. And while the existence millions of separate companies, with their individual demands, speaks of a fragmented market, together they still represent a lot of opportunity. Today, a UK fintech startup looking to capitalise on that is announcing a round of growth funding to enter Europe after onboarding 20,000 customers in its home country.

ANNA, a mobile-first banking, tax accounting and financial service assistant aimed at small and medium businesses and freelancers, has closed a $21 million round of investment from a single investor, the ABHH Group, the sometimes controversial owner of Alfa Bank in Russia, the Amsterdam Trade Bank in the Netherlands, and other businesses.

The investment is a strategic one: ANNA will be using the funding to expand for the first time outside of the UK into Europe, and CEO Edouard Panteleev said that effort will be built on Amsterdam Trade Bank’s rails. He confirmed that the investment values ANNA at $110 million, and the founders keep control of 40% of the company in the deal.

The fundraising started before COVID-19 really picked up speed, but its chilling effect on the economy has also had a direct impact on the very businesses that ANNA targets as customers: some have seen drastic reductions in commercial activity, and some have shuttered their businesses altogether.

Despite this, the situation hasn’t changed measurably for ANNA, Panteleev said.

“Covid-19 hasn’t impacted us so far. We are designed as a digital business, and so working from home was a completely normal shift for us to make,” he said, but added that when it comes to the customers, “Yes, we have seen that our customers’ incoming payments are quite affected, with 15-30% decrease in the volume of customer payments.” The firm belief that ANNA and investors have, however, is that business will bounce back, and ANNA wants to make sure it’s in a strong position when it does.

ANNA is an acronym for “Absolutely No Nonsense Admin” and that explains the gist of what it aims to do: it provides an all-in-one service for smaller enterprises that lets them run a business account to make and receive payments, along with software for invoicing, accounting and managing taxes that is run through a chat interface to assist you and automate some of the functions (like invoice tracking). ANNA also offers additional services, such as connecting you to a live accountant during tax season.

ANNA is part of a wave of fintech startups that have cropped up in the last several years specifically targeting SMEs .

It used to be the case that SMEs and freelancers were drastically underserved in the world of financial services: their business, even collectively, is not as lucrative as accounts from larger enterprises, and therefore there was little innovation or attention paid to how to improve their experience or offerings, and so whatever traditional banks had to offer was what they got.

All that changed with the rise of “fintech” as a salient category: ever-smarter smartphones and app usage are now ubiquitous, broadband is inexpensive and also widespread, cloud and other technology has turbo charged what people can do on their devices, and people are just more digitally savvy. A wave of startups have taken advantage of all that to develop fintech services catering to SMEs, which also has meant competition from the likes of Monzo, Revolut, Tide, and  now even offerings from high street banks like NatWest.

Panteleev believes ANNA’s product stands separate from these. “We offer more of a financial assistant to users, rather than just moving their money, and it’s also a different business case, because we look at what a user needs more holistically,” he said. Pricing is also a little different: businesses with monthly income of less than $500 can use ANNA for free. It then goes up on a sliding scale to a maximum of £19.90 per month, for those with monthly income between £20,000 and £500,000.

Panteleev — who co-founded the company with Andrey Pachay, Boris Dyakonov, Daljit Singh, Nikita Filippov, and Slava Akulov — is a repeat entrepreneur, having founded two other banking startups in Russia with Dyakonov that are still going, Knopka (Russian for button), and Totchka (Russian for dot). These are older and more established: Totchka for example has some 500,000 users, but Panteleev has said that there are no plans to try to bring ANNA into the Russian market, nor take these other companies international.

For ABHH, the attraction of investing in this particular startup was probably two-fold. The businesses have Russian DNA in common, making for potentially a better cultural fit, but also it is yet another example of a legacy, large bank tapping into a smaller and more fleet-of-foot startup to address a market sector that the bigger company might be more challenged to do alone.

“I’m looking forward to embarking on this exciting journey together,” said Alan Vaksman, member of the supervisory board at Amsterdam Trade Bank and future chairman of ANNA, in a statement. “At this moment most SMEs find themselves in a challenging situation, however, once the pandemic comes to an end, there will be a very clear realisation that neither corporates nor family businesses can afford to run most operational processes manually. Tech services and platforms, like ANNA, are in for some dynamic times ahead.”

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