Tech

Defacto provides short-term loans to SMEs. It just raised $10 million with this 20-slide pitch deck.

ByAmygdalin Lover November 17, 2023November 17, 2023

French fintech Defacto has raised a $10 million Series A extension.
The Paris-based business, founded in 2021, has brought in cash from Citi Ventures.
The company provides short-term loans to small and medium sized businesses.

Defacto, a French fintech startup, has received a $10 million Series A extension from Citi Ventures.

The Paris-based company, which was founded in 2021, makes short-term loans to small and medium-sized businesses. Companies can use Defacto’s API to connect to third-party marketplaces and e-commerce platforms, where they can borrow money to cover working capital.

Because of the costs associated with sourcing and underwriting smaller companies in the low-margin world of lending, legacy financial institutions frequently underserve SMEs. Defacto, on the other hand, hopes to lower the cost and administration for smaller businesses through integrations with companies such as fellow fintechs Pennylane and Qonto.

“The macroeconomic shift with interest rate rises means banks are moving away from riskier assets like SMEs,” Morgan O’Hana, cofounder of Defacto, explained to Insider.

“By using new digital distribution channels, better credit scoring, and cloud tools alongside Open Banking, we are able to conduct KYC and underwrite businesses at an overall lower cost.”

Defacto has extended its Series A round until 2022 in a “opportunistic” move as it strives for profitability, according to O’Hana. Citi Ventures provided the startup with an additional $10 million in funding earlier this year, in addition to a $183 million debt facility.

Northzone led the previous Series A round, with additional funding from previous backers Headline and Global Founders Capital.

The new funds will be used to expand Defacto’s platform as it moves toward more personalized debt financing for small businesses. Similarly, Defacto, which has retained a small team of 20 employees, plans to make a few key hires in the coming months.