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Romanian fintech Instant Factoring grabs €6.3M to extend microfinancing for small companies

Cristian Ionescu, CEO and Co-founder of Instant Factoring, press release
Image credit: Cristian Ionescu, CEO and Co-founder of Instant Factoring, press release
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Back in November 2021, after three years of growth in the Romanian market, fintech Instant Factoring was expanding to Serbia, in the context of growing tendency towards the late payment of bills in the market. Today, Instant Factoring announced raising a new round of €6.3 million, part of which will be used to fuel development in the Romanian and Serbian markets.

The other part of the funds will be used to accelerate digital financing processes through technology and software development, create new financial products, and expand operational capabilities, CEO Cristian Ionescu announced. 

With the new money, the total available capital reaches €12 million in equity and debt. The current round consists of 45% – capital investment and loans from existing shareholders, and 55% – loan from US financial creditors. 

A solution that brings SMEs more financial freedom and speed

Cash flows are an important factor in the effective running of a business. Yet liquidity can be an issue for companies at the beginning of their journeys. In Southeast Europe, financing options for SMEs by traditional institutions such as banks are limited. 

This makes factoring, whereby an intermediary agent provides cash or financing by purchasing company’s accounts receivables, an attractive option to improve short-term cash needs.

In the Serbian market, for instance, factoring is not new. Yet, banks, the main providers of this service, have not extended it to small companies. Banks usually want to see a history and solid customer base. It creates the “chicken or egg” dilemma for small businesses – does the capital or portfolio come first?

Built by entrepreneurs for entrepreneurs, Instant Factoring helps small businesses and micro-enterprises turn invoices in capital in a few simple steps. Usually, distributors receive their money within 30 to 90 days after the order has been placed, depending on the agreement. With factoring, once they make an account on a digital platform, users can upload their invoices in a minute, and get access to funds within 24 hours after sending the invoice. The only condition is that the invoices are not yet due.

Read more:  In other news: A weekly tour through the SEE startup ecosystem, May 2-6

Business owners get more than one advantage. They can streamline cash flows by collecting invoices from customers early on. In turn, this opens new opportunities for reinvestment into product optimization and improvement. With Instant Factoring, there is no restriction to how the money can be used. Moreover, by transferring the responsibility for collecting payments to a third party, companies can focus on strengthening other aspects of the relationship with their customers, as well as on their own business.

The strength of the platform lies in the internal rating system, which uses AI to help make quick financing decisions. When they launched in 2018, Instant Factoring was awarded as the best digital fintech platform at the Central European Startup Awards, part of Global Startup Awards.

“In 2021, Instant Factoring Romania has financed local micro and small companies with 30 million, and registered 100% growth. More than 1400 companies became new active users of the invoice financing platform in Romania,” Cristian Ionescu, CEO and Co-founder, told The Recursive.

Elsewhere in Serbia, the company aims to reach a financing volume of 500,000 by the end of 2022.

+++ In other news from Southeast Europe, Bulgarian payment and expense management startup Payhawk raised a $112M Series B round last month. Find out more.+++

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Antoanela is an Innovation Reporter at The Recursive with a knack for sustainability and environment protection. She is on a mission to communicate and celebrate innovative ideas and solutions that improve our ability to thrive together on this planet.
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