Defacto secures €15m to become Europe’s largest API-first B2B lending platform

By Leandra Monteiro

Defacto raised €15 million in a Series A round led by new investor Northzone includes Defacto’s seed backers Headline and Global Founders Capital, and angel tickets from Thibaud Elzière, Rodolphe Ardant (founder and CEO of Spendesk), Didier Valet (former deputy CEO at Societe Generale), and Victoria van lennep (founder of Lendable).

Defacto provides loans and credit to SMEs via its embedded finance platform. Its API-based product enables third parties such as marketplaces, ecommerce platforms and others to embed its products directly in their own products, integrating in a seamless way.

“Cash flow and access to liquidity are once again reasons for concern due to inflation, repayment of state covid loan and rising interest rates. Traditional banking caters less to SMEs and processes are too slow. An EY study estimates that in France alone, over 40.000 businesses will fail. It was 28.000 in 2021,” added Co-founder, Morgan O’hana. “We are building a product for builders, not bankers. Access to capital should be fair and instant. Banks rely on data that is at least 18 months old and then take 4 months or longer to process loan applications. We move in real-time.”

Since its launch in France, Defacto built partnerships with over 15 leading B2B marketplaces, FinTech companies, and e-commerce businesses. It distributed over €30m in short-term loans to SMEs through partners such as freelancing platform Malt or fintechs such as Agicap or Pennylane.

Frederic Tan, Product Director at Malt said, “We decided to work with Defacto for its flexibility, the quality of its API, and the integration experience. They have been a great ally in our challenge to offer an even more delightful and seamless payment experience for our clients and freelancers. The team is always available and responsive: a pleasure to work with!”

“Businesses are interacting more and more with digital platforms. Those interactions generate a large amount of data in real-time, which Defacto is leveraging to redefine how underwriting should be done. Banking institutions will never have the right information systems to process this flow of alternative data, to reach real-time and tailored lending offers” shared Defacto’s co-founder and CTO, Marc-Henri Gires.

With a new €400 million lending capacity Defacto is now rolling out its solution to Germany, the Netherlands, Belgium and Spain.