Banxware – reputation of the team caught the eye, but great potential of the product won the heart (and investment!)

In December I visited my favourite coffee shop around the time government had again announced work from home in London. Her sales had halved already by the next day. I made a comment that I will miss her coffee, so she sold me a bag of coffee beans that she thought I would like. And I thought – Voila! This is how a truly embedded product must feel – when and where you need it, without you looking or asking for it, and offered by someone who knows your tastes and preferences.

In the era of open banking and digital transactions, a merchants’ business performance and cashflow data sits within the platform ecosystem like online marketplaces, payment providers, and other aggregators, but to get financing a merchant still needs to go to traditional lenders like banks or agencies and prove all the above and more. Same as me going to grocery store to buy coffee beans when my favourite (she sometimes adds a cinnamon twist to my coffee!) barista knows my preferences and could recommend something better, faster and without having to go anywhere.

A seemless link between banks, marketplaces and merchants

Berlin-based Banxware enables digital platforms like marketplaces, payment providers, POS providers and other aggregators who know their merchants well, to provide cash advances and revenue-based loans right within their platform, without the merchants having to go to a bank or an agency. It creates a seamless link between banks (who loan the money), marketplaces (who have access to the information on merchants) and merchants (who need the money).

At Element Ventures, we’ve always liked businesses addressing the SME funding market in Europe as accessing banks and traditional lenders is often difficult and tedious for SMEs. It’s a €80bn market in Europe with €10bn in Germany alone. Complexity for digital SMEs is that they are often young, do not have historical data going back three years and are perhaps not yet profitable. They need funding that’s quick, convenient, and flexible to their business specific needs.

A fantastic team

But our thesis isn’t complete without talking about the exceptional team, and rightly the “team”. Founders Miriam and Jens, have the vision, energy, and deep knowledge within the sector. Miriam Wohlfarth is very well-known in the German fintech space (even our German lawyers told us so!) as an entrepreneur, speaker, and a mentor. She founded Ratepay in 2009, which is now a part of the Nexi network. Jens Roehrborn, the CEO, is a qualified lawyer with over 20 years of experience in the payments and banking industry including board memberships at PPRO, Deutsche Handelsbank, Railsbank. They are joined by Fabian Heiß, former Head of Business Unit at Finleap, Nicolas Kipp, Ratepay’s Ex-Chief Risk Officer and Diogo Simoes, former Head of Engineering at Klarna. They have the right mix of market, product, innovation and technological expertise, and truly, a lot of it!

Banxware has secured a EUR100 million loan facility from Volksbank Raiffeisenbank to deploy using its underlying technology and risk assessment critera. It went live in 2021 with two products on six differerent platforms. The team has signed some great customers for 2022 (4 out of 5 largest German PSPs, eg. Payone, JV of Worldline group) that will give Banxware access to 400,000 merchants in Germany alone.

If you’re a platform, you must give your merchants this truly embedded experience. And if you’re a merchant in Germany, lookout for that “Powered by Banxware” button to appear on your merchant portal soon!