Greek wallet Viva raises $ 80 million for its neobank targeting small businesses – TechCrunch
Challenger banks continue to make big waves in the financial world, with small businesses driving customers away from incumbents by giving them an easier way not only to engage with basic banking services, but also to tap into in a wave of technology that brings more customization and often deals better with the equation. In the latest development, Viva wallet, a Greek start-up offering banking services to small and medium-sized traders, has secured funding of $ 80 million, money it will use to expand its footprint and the services it offers to users, in particular by expanding its Merchant Advance lending activity.
The company is present in 23 European markets and plans to expand soon into Croatia, Hungary and Sweden.
Funding is remarkable in part because of who is investing. Tencent – the Chinese tech giant behind WeChat which is also making major breakthroughs in financial services – is in the round, alongside the European Bank for Reconstruction and Development (EBRD) and Breyer Capital. Hedosophia, the somewhat secretive fund that has also been active in PSPCs in the United States, is also a funder, we have confirmed.
Viva Wallet is not disclosing its valuation at the moment, but Yannis Larios, vice president of strategy and business development of the company, has confirmed to us that he is in the process of closing a large series D which would value it at 1, 5 billion euros ($ 1.8 billion). This is a big step forward: he also noted that when Viva Wallet closed its Series C in the second half of 2019, it was valued at 305 million euros.
It is not clear if the D series is the same as a 500 million euros ($ 603 million) Reuters reported in August 2020 that Viva Wallet is raising (we asked) to help it build a new type of loan portfolio around its merchant advances and other loans it provides to clients.
Essentially, if approved by regulators, investors would take stakes in a new legal entity, a special purpose vehicle, which would hold the loans. This is not usually how loan debt is handled by neobanks, but it seems the logic is that it could give startups more agility to scale faster by removing some of the risk from their balance sheets. (The downside: potentially less liability around these loans?)
The cycle is notable for coming at a time when Europe is slowly, hoping to stick its head out under the weight of the COVID-19 pandemic, which has rocked and toppled many already faltering economies even before the public health crisis. Focused primarily on merchants, Viva Wallet is a prime example of the type of tech company that could help some of these critical businesses turn around.
“We are delighted to integrate Tencent, EBRD and Breyer Capital into Viva Wallet,” said Haris Karonis, founder and CEO of Viva Wallet, in a statement. “We are convinced that the extensive know-how and network of partnerships of our investors will accelerate Viva Wallet’s plan to unify the fragmented European payments market. The technological innovations we are bringing to European merchants will help them deliver a localized, frictionless payment experience to all of their customers, and free them from the hassle of maintaining legacy card terminals.
If you think the neobank world is very crowded – and neobanks specifically geared towards the SME opportunity are getting crowded as well (some of the other contenders include Finom, Wise outside the US, Monzo, Penta, Starling and ANNA, among others.) – one of the reasons Viva Wallet is gaining attention is its traction and track record so far.
Larios says the startup has been profitable as early as the first quarter of this year, thanks to a business that grew more than 40% last year, with 60,000 currently active merchants on its books. It is on track, he said, for that number to reach 100,000 by the end of this year.
One of the reasons for its success, he said, is that it has taken a very localized approach to growth, setting up operations with physical branches in each of the countries where it operates – a kind retro idea in today’s market where banks are closing regularly. their physical locations and become virtual. “Viva Wallet proves the resilience of its business model,” he said.
The funding will be used in part to expand its lending program, but also to expand areas where Viva Wallet is already strong. One of them is its Tap-On-Phone point-of-sale solution, which turns any Android device (smartphone, tablet or business device) into a card terminal, to accept both contactless and by PIN code without requiring separate hardware. (Most point-of-sale systems use small, separate terminals that connect to a tablet or phone.)
He also said there will be mergers and acquisitions in the future to expand to more markets more quickly.
One area in which the business will not grow is that of the consumer. Other neobanks like Revolut and Atom have taken advantage of their pull with young consumers to provide services to the businesses they have found, but Larios says this is not a strategy that Viva Wallet will adopt the other way around, especially because the consumer market has done it. far turned out to be a difficult margin game (or even bad margin).
“Viva Wallet is focused only on businesses and will continue to do so!” he said (his exclamation!). “The consumer segment offers no space for profitability and we find that all competing consumer-driven neo-banking business models primarily burn money.”
“We are focusing on SMEs in Europe, providing a pan-European payment solution which is however very localized to meet the real local needs of merchants in terms of accepting local payments, local IBAN accounts, business debit cards Local BINs, etc. ” But while Viva Wallet may have a lot of SME clients – and the EBRD’s investment is certainly made to approve it – it points out that it also includes mid-sized businesses and some businesses – large merchants like supermarket chains. , for example – and that will be an area in which it will continue to develop.
This gives Viva Wallet enough specialization and differentiation, as well as its profitability in targeting these areas so far, to attract large investors keen to take advantage of the economic recovery, both to help this and to ride the wave. wave of this because it pays dividends.
“We are very happy to help Viva Wallet unify the fragmented European payments ecosystem in 23 countries. Viva Wallet is at the forefront of a paradigm shift for fintech and together we plan to transform the payments industry in Europe, ”Breyer Capital’s Jim Breyer said in a statement.
“Tencent shares Viva Wallet’s aspirations to create value for users and partners through innovation. We look forward to supporting Viva Wallet in its expansion across Europe, ”added Danying Ma, Managing Director of Tencent Investment.