Finmid Secures $24.7M to Drive Embedded Fintech Solutions for SMBs and Marketplaces

Berlin-based fintech startup Finmid has raised €23 million ($24.7 million) in a Series A funding round to fuel its mission of empowering small and medium-sized businesses (SMBs) to access loans through platforms like Wolt.

The investment, which values the company at €100 million ($107 million) post-money, marks a significant milestone in Finmid's journey to expand its product offerings and enter new markets.

Embedded finance solutions, particularly those targeting marketplaces seeking to enhance their payment and financing capabilities, have gained traction in recent years. Finmid distinguishes itself by focusing on marketplaces eager to provide their own financing options, leveraging transactional data to offer personalized financing offers and drive additional revenue streams.

Marketplaces, as intermediaries between retailers or service providers and customers, are natural candidates for embedded finance solutions due to their existing transactional activity. By integrating Finmid's technology, marketplaces can streamline financing processes and improve margins while enhancing the overall customer experience.

The rise of fintech has transformed the landscape for SMB financing, offering alternative sources of capital beyond traditional banks. Finmid advocates for a paradigm shift wherein SMBs access capital through their business partners rather than relying solely on banks or neobanks. This approach, according to Finmid's co-founder Max Schertel, aligns with the evolving needs of SMBs and the changing dynamics of the financial services industry.

A key aspect of Finmid's value proposition lies in its ability to leverage data insights to facilitate lending decisions. By analyzing transactional data and other relevant information, Finmid helps platforms like Wolt offer targeted financing solutions to their partners, such as cash advances for restaurant partners based on sales history.

Crucially, the capital for these financing offers is sourced from Finmid's network of financing partners, while both Finmid and the platform earn a percentage of each transaction. This revenue-sharing model incentivizes collaboration and aligns the interests of all stakeholders involved.

Despite the potential benefits, the adoption of embedded finance solutions requires patience and persistence, as securing partnerships is essential for success. However, Finmid's strategic approach and focus on reliability have resonated with investors, enabling the company to raise €35 million in equity funding to date.

The company's founders, Schertel and Alexander Talkanitsa, draw on their experience at challenger bank N26, recognizing the importance of robust financial infrastructure and reliability in the fintech space. This emphasis on reliability is reflected in Finmid's API, which integrates multiple data points to streamline lending processes and enhance user experience.

Looking ahead, Finmid plans to use the new funding to expand its team and deepen its expertise in key areas, particularly finance. Additionally, the company aims to enter new markets, with Italy being the first target for expansion. While maintaining offices in Berlin and Vienna, Finmid remains committed to its mission of democratizing access to financing for SMBs and empowering marketplaces to unlock new growth opportunities through embedded fintech solutions.