German fintech Banxware raises €4M to scale its embedded financial service platform

Berlin-based fintech startup Banxware has raised €4M in its Seed round of funding led by venture capital firms Force over Mass and VR Ventures. This is the first external capital the fintech has raised.

Other investors in this round

Additionally, several fintech pioneers from the payments and SME lending space have also joined the initiative. These include HTGF – a public-private venture capital investment firm based in Bonn, JanKaniess and Carl Frederic Zitscher, the founders of Payone, Alex Urdea, Principalat Upper90, a New York City-based debt and equity fund, as well as PaulaBlazquez Solano, Principal at Innocells, the venture arm of Banco Sabadell in Spain.

Use of the funds

The company will use the capital to develop and grow its embedded white label financial services offering and its team, as well as expand sales to digital platforms across Europe.

Banxware will soon offer card-based products and other financial services, complementing its existing lending solution to business customers of platforms.

Services provided 

The company was founded in September 2020 by Miriam Wohlfarth, Jens Röhrborn, Fabian Heiß, and Nicolas Kipp. Banxware is a software provider for Embedded Financial Services that enables digital platforms such as marketplaces, payments providers, and other aggregators to offer white label financial products, especially loans to merchants.

According to the company, the future of banking is embedded: Embedded Financial Services bridges the gap between traditional banks and modern tech-driven platforms. Banxware’s technology enables any company to offer loans and other banking services to SME customers. 

Thus, Banxware creates the link between banks, digital platforms, and merchants and enables all parties to benefit from open banking:

• For banks, the company provides access to a new target audience as well as an accelerated, digitalised risk assessment to digitise their loan origination.
• For platforms, it helps in upselling their current offering to merchants with financial products to strengthen both customer retention and their own competitive position in the market without disruption of their platform UX.
• Merchants can benefit from the fully-digital credit approval process that allows them to get access to financing within 15 minutes, claims the company. 

By offering such services, the company expects a rise in demand for embedded financial services from platforms of all sizes and industries as well as big tech incumbents that want to become the centre of their customers’ business.

Differentiating factor 

With respect to other financial solutions in the market, Banxware differentiates itself by its fully digital, embedded approach. 

In December 2020, Banxware launched its first embedded product, a white label SME lending solution that is fully integrated into the platform and allows to offer cash-advance loans based on future revenues to their merchants. 

The credit decision happens in real-time and pay-out happens immediately. For this product, Banxware secured a first €100M loan facility from Vereinigte Volksbank Raiffeisenbank eG.

Miriam Wohlfarth, founder of Banxware says, “While traditional bank loans take up to three months and even the most innovative product-based finance up to five days, we were able to drastically reduce this time thanks to newest technologies and artificial intelligence. With us, platforms can offer loans, and within 15 minutes, the customer has the money in the bank. This is a new record time which does not exist in the market so far.”