Flowpay Secures Over €2 Million for SME Finance Tech Expansion

The Czech fintech startup Flowpay has leveraged predictive AI models, automation, and Embedded Finance to enhance access to operational funding for small and medium-sized enterprises (SMEs).

It successfully secured €2.1 million in its seed funding round, receiving support from Techstars, along with emerging Czech venture capital firms such as Soulmates Ventures and DEPO Ventures. Notable angel investors including Mark Ransford, Martin Herrmann, Kartik Varma, and Allard Luchsinger also contributed to the funding. This recent financial injection is set to enable Flowpay to expand its operations beyond the Czech Republic, improve its technological infrastructure, and extend its services to a broader spectrum of SMEs.

“SMEs are the backbone of our economy. To be successful, they need financing to fund their growth. Most banks are not well set up to support them effectively, as processing relatively small loans is costly, and assessing risk based on outdated data poses a significant challenge for them. Because of these dynamics, many traditional lenders choose to focus on higher-value loans for larger companies, leaving the SME segment poorly served and economies performing sub-optimally. Flowpay is a prime example of a new generation of tech-driven companies that enable fast and cost-effective funding of smaller loans for the SME segment,” says Allard Luchsinger, Managing Director of Techstars.

Since its establishment, Flowpay has marked notable achievements, notably its participation in the prestigious Techstars accelerator in Amsterdam. This participation underscored its emergence as a significant entity in the operational finance sector, attributed to its pioneering platform and AI application. This technology facilitates companies in securing financing swiftly and efficiently through the analysis of real operational data. Furthermore, Flowpay, alongside six other European startups, was selected for the IBM fintechx programme, aimed at expediting the integration of generative AI within financial services. Additionally, the startup was honoured with the Technological Startup of the Year award in the Vodafone Idea of the Year competition, further cementing its status in the industry.

“Flowpay utilises the power of AI to assess risk and efficiently process loans, embedding their tools in the platforms that SMEs already use for their daily operations. We have been impressed by the quality of its leadership, the robustness of its credit models, and their speed of execution. Techstars believes Flowpay has shown it has the potential to become a leader in the transformation of the SME lending landscape,” adds Allard Luchsinger.

“Even if you have a profitable and fast-growing business, banks might still not give you a loan when you need it for something like stocking up your warehouse or investing in advertising. Banks cannot assess risk precisely and usually just look at tax returns, which are outdated and most often do not reflect reality. At Flowpay, we work with client data taken directly from their point-of-sales systems, e-commerce platforms like Shoptet, and use AI to rate their potential to obtain financing. We want to help SMEs grow with our Risk as a Service (RaaS) solution and license it to financial institutions around the world,” explains William Jalloul, founder and CEO of Flowpay.

Strong support from Czech VCs

“Borrowing money and going into debt can be unsustainable. To address this challenge, Flowpay has introduced a key innovation for SMEs, which make up an undeniably crucial segment of the economy. We consider our investment to back the development of a revolutionary and accurate scoring and credit assessment tool to be a huge step in supporting sustainable business growth. Flowpay shortens the time needed to evaluate credit applications to mere minutes, increases the accuracy of risk assessment, and speeds up access to finances for SMEs. This approach represents a revolution in financing, supports dynamic growth, and contributes to the sustainable prosperity of our economy,” says Hynek Sochor, founder of the accelerator and fund Soulmates Ventures.

For businesses, the loan application process is often prolonged and uncertain, which is a result of the bank sector’s slow progress in digitalisation. “Flowpay solves this problem by digitising and automating processes using accurate data. This data is available to the business by connecting to the company's financial, accounting and business systems, forming a technology bridge between the business, the financier and possibly another party providing the data, such as a payment gateway or e-commerce platform. Flowpay is one of the pioneers of this embedded finance approach in the CEE region with a vision to become a global leader in providing financial solutions for sole traders and SMEs,” says Michal Ciffra, partner at DEPO Ventures.

Future plans

Flowpay's strategy encompasses both penetrating new markets and advancing its technological offerings to more closely align with client requirements. This financial backing will enable the company to enhance its provision of customised credit solutions, designed to meet the unique needs and capacities of each business. The Flowpay team, comprising around 15 specialists primarily in Data Science and IT, leverages their collective expertise to ensure seamless and effective company operations. Aiming to sustain growth and expedite its development, Flowpay intends to increase its workforce to 20 members shortly.