Embedded finance is undoubtedly one of the hypes of the past year. In Germany, the fintech Banxware, founded in 2020, is one of the first to significantly shape and advance the topic in Germany. Now the company has raised €10 million in a seed expansion round led by Element Ventures. D4 Ventures, FinVC and Varengold Bank AG participate as co-investors.
Banxware’s existing investors Force over Mass, VR Ventures and HTGF have significantly increased their investments as part of this round. This also applies to the industry experts who have already invested, including Payone founders Jan Kaniess and Carl Frederic Zitscher. Alex Urdea of Upper90 and Paula Blazquez Solano of Banco Sabade’s venture arm, Credo Capital Partners, are going along for the ride.
Real-time financing options
The current funding round is the second that the fintech company has undertaken in 2021. In February of last year, the Berlin-based company already raised four million euros. British venture capitalist Force over Mass and VR Ventures led the round at the time.
At its core, embedded finance means that any company can offer financial services. Banxware’s business solution is also based on this principle and sees itself as a Lending-as-a-Service provider. The solution enables digital platforms as well as marketplaces and payment service providers or store system providers to offer embedded financing products in real time to their business customers. In the background, Vereinigte Volksbank Raiffeisenbank is the first banking partner to provide a total of 100 million euros in credit volume for SMEs for this purpose. Banxware was founded in 2020 by Miriam Wohlfarth and Jens Röhrborn.
Embedded finance as a major growth market
“The time is just right for embedded finance. We notice that demand has grown enormously,” says Banxware founder Wohlfarth. Embedded financial services already account for around $43 billion in revenue today. By 2025, this market could grow to $230 billion. The management consultant Simon Torrance even predicted a market value of seven trillion US dollars for the year 2030.
Large, international tech companies such as Paypal, Shopify and Square have long recognized the potential. Embedded finance has also arrived in Germany – and that’s a good thing, Wohlfahrt is sure. “Solutions are emerging in the UK, but the Brexit will make it harder from the UK to serve the European market.”
Further integrations in platforms planned
The company says it will now use the capital injection to further develop its offering. In addition, the team will be expanded and product development, sales and marketing will be extended to digital platforms throughout Europe.
So far, the solution has been integrated with Penta, Takeaway.com (Lieferando) and Prestashop, among others. In the first quarter of 2022, the goal is now to integrate the financing solution with additional payment service providers and platforms in Germany. On Monday of this week, the Berlin-based company already announced a strategic partnership with Payone. In the process, Payone, a joint venture between Worldline and the DSV Group’s Payment Competence Center, aims to enable express lending for merchant financing.
Prominent name takes over chairmanship of advisory board
In the course of the current financing round, the Berlin-based company has restructured its advisory board. With Christoph Bornschein, a prominent name was brought on board as its chairman. Bornschein is founder and managing director of the agency TLGG and thus an experienced rabbit in the business.