Defacto raises $183m debt financing from Citi and Viola Credit

By Gloria Methri

French SME lender Defacto has closed a securitization fund with Citi and Viola Credit for up to €167 million ($183m). Citi will be the senior lender of the fund while Viola Credit will continue to support Defacto as a mezzanine lender of the fund. This new facility allows Defacto to continue its exponential growth with a yearly funding capacity of up to 1 billion euros.

Founded in mid-2021 by Jordane Giuly, Morgan O’hana, and Marc Henri Gires, Defacto provides seamless, flexible, and instant financing to small and medium enterprises (SMEs) in Europe.

Defacto provides its loans to SMEs via an embedded approach. Its API-first product enables third parties such as B2B marketplaces, FinTechs, and other digital platforms to embed financing solutions directly in their own products. As a result, SMEs can benefit from a seamless and instant lending experience, while platforms increase their differentiation and customer satisfaction.

Over the last 18 months, Defacto has integrated several partners such as Malt, Qonto, or Pennylane, and has answered the financing needs of 7,000 European businesses from 5 different countries for 200 million euros.

For partners with constrained tech resources, Defacto launched in May 2023 a low-tech version of its product, Liquid, to enable the easiest and fastest integration of Defacto. The securitization fund of up to €167 million will have an initial size of €67 million, with increases subject to the lender’s consent.

Jordane Giuly, cofounder and CEO of Defacto said, “We are delighted to secure this facility with Citi, one of the largest banks in the world, and having Viola Credit renewing its trust in Defacto’s team, strategy and product. In the current macro environment, this is an important milestone for enabling our growth with both existing and new partners and answering the financing needs of thousands of SMEs.”

Ruthi Furman, General Partner and Founder at Viola Credit said, “Defacto has proven to have a sustainable business model in the B2B lending space. The company, which was created in mid-2021, has rapidly grown while keeping its costs under control thanks to a strong focus on process and operational automatisation and on data. As Viola Credit, we are delighted to participate in this new facility, allowing them to decrease their overall cost of funding.”