Finverity raises $5 million in equity funding as revenue grows 15x

Finverity, the digital ecosystem for trade and supply chain finance, today announces that it has raised USD 5 million in a heavily oversubscribed equity funding round from new and existing investors. New investors include London-based fintech specialist Outward, Amsterdam-based Acrobator Ventures and US-based s16vc founder fund with follow-on investment from MENA-based B&Y Venture Partners as well as a number of UHNWIs. The funding round comes on the back of 15x revenue growth in 2022 in the Middle East and Africa and the recent expansion into Eastern Europe.

Founded in 2017 by Viacheslav Oganezov and Alex Fenechiu, Finverity was born out of a vision to make the global financial system work for everyone, one product at a time. Fast forward 5+ years and Finverity has built the world’s first truly digital trade and supply chain finance ecosystem in pursuit of its goal of bridging the $1.7 billion global trade finance gap by channeling capital where it’s needed most .

Finverity has a double offer:

• Funding platform – brings together companies seeking working capital and financiers who want to distribute capital to the quality funds on a single platform. The platform offers a full range of services and technology to enable trade and supply chain finance deals to be executed seamlessly and at scale;
• Software as a Service solution – provides an end-to-end technology system for banks and non-bank financial institutions (NBFIs) to completely revolutionize their trade finance and working capital operations, customer experience and risk capabilities.

The funds raised in this round will be used to immediately increase the number of employees from the current 40 to 60 employees, to meet rapidly increasing demand for Finverity’s solutions and to complete office openings in Dubai, Poland and Kenya. Furthermore, Finverity’s technology is being extended to cover almost the entire range of funded trade finance and working capital products.

What is Supply Chain Finance (SCF)?

The many terms used to describe SCF show how little standardization exists across the globe. Seemingly innovative terms like BNPL (Buy Now, Pay Later) are simply another way of naming SCF. In essence, SCF is the financing of a time delay between the moment goods/services are ordered/sent and the moment they are actually paid for. In a simple example, if a farmer sells avocados to a local supermarket, they will likely be paid 60 days after delivery to the supermarket and invoice issued. SCF allows the supermarket to offer the farmer an early payment option at a fraction of the cost the farmer would otherwise incur if he tried to finance that invoice himself, in a very simple way. It increases supply chain resilience, unlocks cash trapped in invoices and allows businesses to grow organically with predictable cash flows. There are also significantly more complex structures within SCF and across trade finance and working capital products.

Why are SCF and Finverity of interest to investors now?

First, from a macro point of view, the combination of rising interest rates, higher inflation and a subdued global macroeconomic outlook has made working capital a topic of C-suite discussions and is leading to strong demand for trade finance solutions. Banks and financial institutions (FIs) are trying to meet the huge demand from a wide range of businesses, as they are rarely equipped to do so quickly or efficiently, especially given the increasing complexity of changing supply chains and corporate business needs. This is where partnerships with fintechs that Finverity come in handy. The continued digital transformation in trade finance globally puts Finverity in a desirable sweet spot to meet the growing demand.

Second, Finverity has been built with zero code customization in mind, giving its offerings a serious competitive edge. Through its own financing platform, Finverity goes far beyond simply connecting companies and financiers. Managed by a specialist team, the platform provides deal origination (identifying businesses in need of funding), deal structuring, due diligence, matching businesses with financiers based on their risk appetite and end-to-end processing. The provision of all these integrated services enables financiers to focus on evaluating credit risk and significantly increases the scalability and speed of deal flow selection and processing. Zero-code customization offered by the platform enables Finverity to quickly structure and roll out products that meet business needs, while integrating them into the operational processes of both businesses and financiers. By 2022, Finverity generated over $500 million in demand from business customers for its financing solutions.

As for the SaaS solution, Finverity offers banks and NBFIs an end-to-end enterprise level system that can be deployed in under 21 days. This is in stark contrast to much longer distribution times in the industry, often over 12 months. Integrated zero-code customization gives banks and NBFIs immediate ability to rapidly roll out new trade finance and working capital products.

Third, the combination of favorable macro dynamics and cutting-edge offerings has driven Finverity’s growth and enabled a number of partnerships with banks and financial providers. In 2022, Finverity launched partnerships with a number of banks’ trade finance desks, including Investec, National Bank of Fujairah and FIMBank, with a focus on helping them scale asset deployment by funding Finverity-originated transactions and digitizing trade finance operations using Finverity’s technology. As a result, partner banks can shorten their credit approval times, reduce operating costs and fund much larger deal volumes without having to build out a large in-house team. This leads to better general customer offers and the opportunity to tap into completely new customer segments.

Fourth, strong demand for trade and supply chain finance in emerging markets has served Finverity’s focus on MENA and Africa, where the next 3 to 5 years point to a brighter macroeconomic outlook compared to the Western economies and where demand remains largely unmet. GDP growth for the countries of the Gulf Cooperation Council (GCC) is expected to more than double, reaching 6.5 percent in 2022, according to a recent IMF Policy Paper. This is due to rising commodity prices and the region’s political neutrality, which limited the negative effect from the war in Ukraine. Meanwhile, demand for SCF in Africa continues to rise. An October 2022 IFC market assessment shows that in Kenya alone, the current supply chain finance (SCF) market is worth approximately $24.8 billion. This represents a key opportunity for financial institutions to reach SMEs across a range of value chains. SMEs account for 42% of demand, while today’s SCF offer covers only 7-10% of total demand.

Alex Fenechiu, COO and co-founder of Finverity, commented: “The pace at which our industry is evolving is truly impressive. Five years ago, Supply Chain Finance (SCF) was hardly making the headlines. It wasn’t even a ‘real’ financial product in many countries. Today it is considered a key requirement to drive economic growth for years to come. This means we have entered the mass adoption phase of SCF. What is needed today is very different from what has been used for the past 20 years. We have created a wizard that allows financial institutions to launch new products in the working capital space in 4 weeks instead of 12 months.We have also helped banks and NBFIs increase utilization from existing customers and reduce losses due to fraud and defaults.Our time is now , and with our new partners I am confident that Finverity will be a leading driver of SCF and working capital innovation across emerging markets”.

Viacheslav (Slava) Oganezov, CEO and co-founder of Finverity, commented: “When we started this fundraising, the market was just starting to go through a rough patch, so there was a lot of talk about negative sentiment. What we found, however, is that there is a significant amount of venture capital out there. Funds have been raised and need to be deployed, investors are just more selective. Our industry is counter-cyclical and we designed our business to grow sustainably, with positive unit economics and a clear path to profitability in mind. The current macro trend has played to our strengths and allowed us to choose fantastic partners for the journey ahead! We are very grateful to all our new investors and are excited to build out the next phase of Finverity’s growth in partnership with them!”

Andi Kazeroonian, Chief Investment Officer of Outward VC, commented: “While technology has driven exponential growth of the multi-trillion dollar SCF and trade finance industry in developed economies over the past decade, some of the world’s most important emerging economies have been left behind. Prohibitively high set-up costs , immediate and complex integration requirements, and inadequate AML/KYC capabilities on existing platforms all contribute to manual and paper-based processes remaining the market norm.The Finverity team’s deep understanding of these acute pain points has enabled the creation of a truly fit-for-purpose solution.

Rapid deployment, easily configurable and customizable workflows, clean and intuitive user interface, and market-focused origination capabilities are already having a profound impact on their target markets, enabling the launch and growth of SCF for organizations where previously not possible. We are convinced that this dynamic, combined with the growth prospects and increasing digitization of emerging economies, point to a huge opportunity for Finverity to emerge as the global leader in this space. As such, we at Outward are proud to partner with Slava, Alex and the rest of the team to support this exciting next phase of growth and beyond.”

Joachim Lacquer, General Partner and co-founder of Acrobator Ventures, commented: “From the first conversation, it was clear that we were dealing with something special, both in terms of the scale of the problem Finverity is trying to solve and the characters of the founders, Slava and Alex. These founders possess a rare combination of grit, vision, humility and empowerment. The team members, advisors and investors who have joined them in their quest to level the playing field for emerging market SMEs are testament to that. It’s very rewarding to play a small part in this big story. »

Oleg Bibergan, managing partner, s16vc founders fund, commented: “Having first met Alex and Slava more than 3 years ago, it has been incredible to see how much progress the team has made towards fulfilling their vision of making trade finance globally fairer and more accessible. We are in the early days of SCF tech enablement, and it is exciting to think about the scope of challenges and opportunities in this area. As a founder fund, we love working with ambitious founders who want to solve huge challenges, and we’re excited to work with Finverity as they turn their vision into reality.”