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The beginning of French Carmen has received a small amount of money to improve its instant product. The company provides short-term loans to small businesses that are experiencing financial difficulties.
It’s a €9 million loan ($9.4 million at today’s prices) where Seventure Partners is buying a stake in the startup. Financière Arbevel and Bpifrance are completing the round and other loans.
Startup is not the only company operating in the area that can be described as helping SMEs immediately. French competitors include Silver, De facto, Unlimited and A hero.
The reason why capital investment has been so low is because banks and financial institutions are struggling to deal with SMEs on a large scale. It is a highly fragmented market with small margins. That’s why tech startups are trying to fill the funding gap with a data-driven approach.
Today’s news comes just a few months after Karmen heard protected a €100 million credit vehicle that serves as the company’s short-term debt base. Six months later, it seems like several companies are now relying on Karmen to fix their problems.
Nearly 600 companies have used Karmen to purchase products, pay vendors, fundraise and more. Loans range from €20,000 to €3 million, from two months to 24 months.
On average, Karmen’s average customer borrows €200,000 for six months. But as you can see, there are different ways to earn money. Likewise, small clients generate only €300,000 in annual turnover (those are one-person businesses), while Karmen’s largest client generates €160 million per year.
Most importantly, Karmen has attracted some loyal customers, as 80% of the original customers contact Karmen several times a year to open a new loan. Clients include Maison Kitsuné, Balibaris, Les Raffineurs and Almé.
Although many companies contact Karmen directly, the startup has a hybrid distribution system. They partner with other fintech companies to be able to offer Karmen money to their customers. Other ERPs, e-commerce marketplaces and business banks like Qonto have already integrated with Karmen.
This funding method represents 40% of Karmen’s current customer base. But the company says it hopes to raise that metric to 75% of new customers by the end of 2025.
Although most companies repay their debts without any problems, companies sometimes struggle to pay back what they owe.
“This is part of our job as a lender. But we reduce these risks through our data-driven approach, which allows us to have better visibility into the finances and operations of our clients,” said Karmen founder and CEO Gabriel Thierry.
“Furthermore, we are investing heavily in our risk analysis tool (due to AI) to strengthen this process,” he added. Hence, today’s financial cycle.
Karmen currently uses over 60 financing options to fill loan applications in near real-time. Its integrated systems can also be used to make smart decisions – bank accounts, accounting software, ERPs and invoicing tools contain information important to a company’s success.
