Defacto Raises Additional €10m in Series A Funding Extension

French fintech firm Defacto has secured an extra €10m in an extension of its Series A funding round. The recent funding round is an addition to a €167m securitisation that took place four months prior.

About Defacto

Established in 2021, the instant embedded lending platform offers short-term loans to small and medium-sized businesses. Over the past two years, Defacto has allocated more than €250m in small business financing, boasting an average quote to capital time of less than 27 seconds. Recently, the Paris-based startup has set its sights on personalized lending, providing proactive advice to small businesses on when to acquire debt.

Defacto’s co-founder and CEO Jordane Giuly shared that the primary reason for establishing Defacto was the lack of access to working capital, which is the leading cause of small business bankruptcy in Europe. The company was built specifically for SMBs with speed and flexibility as its core principles.

The Funding Round and Future Plans

The recent funding round saw the entry of new investor Citi Ventures, along with the continued support from existing investors Northzone, Headline, and Global Founders Capital. The fresh funds will be used to enhance Defacto’s capabilities, particularly in improving its customer journey.

In terms of expansion, Defacto aims to extend its presence in Europe, specifically targeting Germany, with ambitions to become a European leader in B2B lending by 2025.

The Role of AI in Defacto’s Success

The firm, which operates as an API-first product, attributes its success to the significant investment in AI modelling. Defacto uses a varied data set that incorporates public, financial, historical, and peripheral data to fuel its underwriting system. This approach allows for swift and efficient lending decisions.

In addition to integrating with more than 30 accounting, banking, fintech, and treasury tools, Defacto provides a comprehensive source of financial trends and risks. This approach enables the firm to offer SMBs tailored financial solutions.