Recap Expands Financial Offerings in Partnership with HSBC

Berlin-based fintech firm Recap is expanding its product portfolio for the first time since its inception in 2021. Despite increasing problems in the credit startup environment, Recap has managed to establish itself in the market and now aims to attract new customers from different sectors.

The Changing Financial Landscape

In the current financial climate marked by persistent inflation, high interest rates and weak economic prospects, securing risk capital for startups often comes at a high cost. As a result, alternative financing forms, like those provided by Recap, have gained relevance. The company offers revenue-based financing to software providers, allowing them to repay their loans based on their revenue, without needing to give up any company shares.

Co-founder Paul Becker notes that despite high interest rates posing issues for financing startups, Recap has seen a rise in demand and has not observed any increase in default rates. In the past year, the fintech firm has more than quadrupled its financing volume, having granted a mid double-digit million amount to several hundred software companies.

More Than Just Short-Term Financing

Recap plans to leverage its experience in funding young companies to position itself as a long-term financial partner. Becker stated that the company no longer wishes to be just a stop-gap for short-term financing. To this end, Recap has extended its product portfolio for the first time since its launch.

Conversations with clients have indicated that flexible financing options, which can adapt to a startup’s growth trajectory, are in high demand. This means that a client may need less money if profitability is achieved earlier than planned, and more money if an opportunity for a strategic acquisition arises. Recap aims to fill this gap with its new financial product, which allows companies to freely decide on the use of their credit line, as well as individually adjust the repayment period and term.

Partnership with HSBC

Recap has teamed up with British banking giant, HSBC, which is providing the fintech firm with capital that it then passes on to the companies. This partnership comes after the dissolution of the Silicon Valley Bank, which had previously provided this service.

A Software-Supported Financial Analysis

Recap will conduct a software-supported financial analysis on potential clients to determine an individual risk profile based on data such as revenue, profitability, and competition. This allows the fintech firm to minimize its default risks while enabling companies to better estimate their actual financial needs.

Becker expects high demand for the company’s new offering. He predicts that Recap will be able to triple its financing volume in the coming year. The company’s new product is attractive not only to software providers but also to service providers such as agencies or consultancies, where alternative forms of financing are still underused. Recap plans to offer its financial tool to other companies in the long run.