French Startup Karmen Revolutionizes Instant Financing with Recent Funding Round
In the bustling world of finance, French startup Karmen is making waves with its innovative approach to short-term loans. Recently, Karmen secured a €9 million round, a mix of equity and debt, aimed at enhancing its instant financing products tailored for small companies grappling with cash flow issues. Notably, Seventure Partners has acquired a stake in this promising startup, while Financière Arbevel and Bpifrance have supplemented the round with debt contributions.
This move places Karmen among a competitive landscape alongside other French startups like Silvr, Defacto, Unlimitd, and Hero. The burgeoning field of revenue-based financing has captured attention due to traditional banks’ challenges in servicing small and medium enterprises (SMEs) efficiently. With narrow margins and a fragmented market, tech startups like Karmen are stepping in with data-driven solutions to bridge this financing gap.
A Data-Driven Solution for SMEs
Just a few months ago, Karmen secured a €100 million debt vehicle foundational to its short-term loan offerings. Fast forward six months, and approximately 600 companies have turned to Karmen for assistance with cash flow management. These businesses utilize Karmen’s loans for various purposes: buying inventory, paying suppliers, and financing paid acquisition campaigns.
“The typical Karmen client borrows around €200,000 over a six-month term,” the company notes, highlighting the diversity in their clientele’s needs.
Karmen Financial Report
- Loan amounts vary from €20,000 to €3 million.
- Loan terms range from 2 to 24 months.
- Clients boast annual turnovers from €300,000 to €160 million.
Building Loyalty and Expanding Reach
Karmen has garnered a loyal customer base, with 80% of its clients returning multiple times annually to access new debt lines. Esteemed brands such as Maison Kitsuné, Balibaris, Les Raffineurs, and Almé are among its clientele. While many companies seek Karmen directly, the startup employs a hybrid distribution strategy by partnering with fintech companies that offer Karmen’s financing products to their clients.
This embedded financing approach currently accounts for 40% of Karmen’s clientele. The goal is ambitious yet attainable: increase this figure to 75% by the end of 2025. Integration partners include ERPs, e-commerce marketplaces, and business banks like Qonto.
Mitigating Risks with Advanced Technology
Karmen acknowledges that some companies might struggle with repayment. However, the startup employs a robust data-driven strategy to mitigate these risks effectively. “We limit these risks through our data-driven approach,” states Gabriel Thierry, Karmen’s co-founder and CEO. This method allows them to maintain granular visibility into clients’ financial health.
“Investing heavily in our AI-powered risk assessment tools ensures our approach remains strong,” Thierry added.
Gabriel Thierry
Currently utilizing around 60 financial metrics for real-time loan application scoring, Karmen asserts that its embedded strategy can further enhance decision-making processes by leveraging data from bank accounts, accounting software, ERPs, and invoicing tools.
