Austin-based Lendflow announced late last week that it raised $10.8 million to help SaaS companies add or embed financial products into their software.
The Series A funding round brings Lendflow’s overall funding total to more than $13 million.
Lendflow’s clients are vertical SaaS companies that work with small and medium-sized businesses. Its platform allows these SaaS companies to easily build, enhance or embed financial products within their ecosystem using their own branding.
“We want to make it really simple for them...very plug-and-play, so they can focus on the product that fits their customer experience,” Lendflow CEO and founder Jon Fry told Built In.
The products that financial institutions offer are often “cookie-cutter,” Fry said, and not tailored to specific industry needs. By adding and embedding financial products, vertically integrated SaaS companies are able to offer financial products that make sense for each industry.
Historically, it has taken an inordinate amount of time and effort for a product or service provider to become a lender, Fry said. Lendflow works with vertical SaaS companies in construction, transportation, e-commerce and home services industries to help them launch lending services quickly and effectively.
“When you have products that are built for specific use cases and specific needs, rather than a one size fits all, you’re letting the software companies dictate and innovate, which is the next wave of financial innovation that needs to happen,” Fry said.
Andrew Dunn, vice president of financial products at Levelset, said in a statement that Lendflow helped expand the reach of its software, which helps construction contractors get paid, even when there are cash flow gaps.
“Lendflow has helped us expand our reach into new markets by enabling us to quickly launch a robust capital program,” Dunn said. “Their full-service capabilities allow us to meet our customers’ needs for fast, transparent access to capital in an efficient, scalable way.”
Some small- and medium-sized businesses might not qualify for loans at traditional banks because the lenders have limited amounts of data on the company.
Lidia Shong, Lendflow’s vice president of marketing, said small and medium-sized businesses are more likely to get access to capital by using an industry-specific software that has access to more company data.
“By adding these additional data points, we’re able to open up the availability of credit to small- and medium-sized businesses that didn’t have that clean, pristine profile that banks are looking for,” Shong said.
Small and medium-sized businesses also appreciate the convenience of obtaining a loan through a software platform they are familiar with. It also increases the business’ engagement with the software, which she said makes the software “stickier.”
“They’re increasing engagement, they’re increasing retention and also [net promoter score],” she said.
Lendflow currently has 45 employees, and the company expects to add another 25 employees over the next three months in positions like engineering, product development and customer success.
