August 9, 2015
Let’s Talk Payments had the opportunity to interview CEO and Founder of Fundbox, Eyal Shinar. Fundbox is a cash flow optimization tool that leverages Big Data analytics, engineering and predictive modeling that is transforming the biggest pain point for small businesses. Fundbox gives small business owners credit-on-demand and aims to address a more narrow and immediate need and that is, paying business owners for the work they’ve already done.
LTP: The payment space is really hot with many solutions coming up in the B2C segment? Why did Fundbox choose the B2B segment instead?
Fundbox has identified an unprecedented opportunity to bring data-driven innovation to a critically underserved and broken market, focused initially on allowing small businesses to immediately clear outstanding invoices and improve cash flow by accelerating payments. The #1 pain point for these small business owners is cash flow as they often have to wait months for their clients to pay an invoice after it is issued.
Furthermore, Fundbox is solving a critical problem uniquely in a massive market. The B2B invoice space is worth $74 trillion, a much bigger market than the $3 trillion B2C market.
LTP: What is the vision of Fundbox and how did the idea of Fundbox come to your mind?
Just like many other small business owners, my mother struggled with late payments with the business she owned. We started Fundbox to create a new type of solution for small businesses; one that offers them a way to streamline their cash flow without burdening their business with bloated loans that are irrelevant to their actual financial needs. The vision behind Fundbox is to provide small businesses credit-on-demand so they will never have to wait to get paid for services or products they have already provided.
LTP: What are the key challenges faced by the industry when it comes to invoicing and payments and how does your solution help to solve the problem?
Historically, small businesses have struggled to maintain a positive cash flow. In fact, 64% of small businesses have invoices that had gone unpaid for at least 60 days. Seasonality of business, long payment terms, and unexpected expenditures have left many businesses often strapped to ensure basic operational costs are met in a timely basis. We’ve created a cash flow optimization tool that leverages Big Data analytics, engineering and predictive modeling that is transforming this massive pain point for small businesses. Fundbox gives small business owners credit-on-demand, embedded directly into their accounting software. This allows them to instantly clear outstanding invoices and render cash flow gaps obsolete without disrupting workflow.
Traditional sources of business capital do not specifically focus on cash flow management. Fundbox is eliminating this problem head-on, easing everyday business operations which in turn promotes business growth. With Fundbox, in approximately 24 hours, a small business owner can have working capital, from outstanding invoices, available to use to reinvest in their business.
LTP: Who are your major customer segments? Do you provide solution only to small and medium businesses or do you also go after large multinationals?
We serve the small to medium business sector. Tens of thousands of business owners rely on Fundbox every day to improve their cash flow. Fundbox appeals to a variety of small businesses such as:
LTP: Can you brief us about your product? Specs/features
Fundbox is a cash flow optimization tool that leverages Big Data analytics, engineering and predictive modeling that is fundamentally transforming the massive pain point of cash flow management that small businesses face.
Fundbox empowers small business owners with credit-on-demand, embedded directly into their accounting software. This allows small businesses to instantly clear outstanding invoices and render cash flow gaps obsolete without disrupting workflow.
Fundbox’s proprietary technology platform uses a data-driven small business risk engine, which analyzes a large amount of data points that includes: financial health, customer demographics and the nature of the business to build a profile of the company’s overall health.
We provide our customers with a Fundbox dashboard that provides them details of each of their unpaid invoices, including fees and repayment terms. A small business owner is empowered to manage their cash flow and can quickly make an informed decision regarding which invoices to clear and get paid.
Fundbox recently launched a new mobile optimized dashboard so that small businesses can have the ability to manage cash flow on demand on-the-go. The new mobile-ready dashboard will help small business owners more effectively manage cash flow and finances in the palm of their hands.
LTP: Do you also plan to have more products such as expense management, petty cash management for your customers integrated on to your current platform?
Our growth has surged over the past 18 months, surpassing 300% in quarter over quarter growth. This success illustrates how important it is to provide small businesses with credit-on-demand. The market's response to the service underscores how big a problem cash flow management is for small businesses and how broken the traditional payments system is for this particular sector of the market. Today Fundbox has a wealth of opportunities to further the goal of helping small businesses optimize cash flow. As our company grows and evolves, we’ll look for additional opportunities to further this mission. For now, we’re laser focused on our current offering.
LTP: What is your company’s revenue model and how many customers do you have currently and from which industry segments?
The Fundbox revenue model is based on variable fee pricing. There are no setup or subscription fees. The fees are determined by the financial health of the business, varying with risk. For example, the fee for clearing a $1,000 invoice ranges from $52 to $72 over the repayment period of up to 12 weeks. Pricing is also based on a user’s Fundbox history, so the longer a small business owner uses Fundbox and the more invoices he or she has cleared, the lower the clearing fee becomes.
We focus on healthy growing businesses and take a business friendly approach by offering features like no prepayment penalty and our variable pricing. Tens of thousands of businesses have connected to the Fundbox platform to eliminate cash flow gaps by instantly clearing invoices. Fundbox is advancing thousands of invoices weekly, offering small business owners the ability to optimize their cash flow by advancing payments for unpaid invoices.
Any business that invoices their customers is able to use Fundbox.
LTP: Fundbox raised $40 mn in March ’15. How do you plan to use it?
The financing has enabled us to further accelerate our rapid expansion, innovation and product development, as well as increase our marketing efforts to reach and educate small businesses.
LTP: Are you also looking at entering new markets such as India where banks are not so keen on servicing the needs of SMB businesses due to lack of documentation?
We have no immediate plans, but we believe Fundbox and other alternative financing companies will definitely play a role in serving SMBs in markets with less mature business infrastructure. Our ability to use various data sources, both structured and unstructured, in our underwriting process fits well in these evolving ecosystems. We see a lot of opportunity to bring our product to small business owners across the globe.