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Funding fintech disruptors: UK VC Element Ventures invests £3.5M in Stockholm-based Billhop

Element Ventures
Image credits: Element Ventures

Billhop, a Stockholm-based payment institution that enables businesses and individuals to pay their invoices using their existing card, has secured €4 million (approx £3.5 million) in Series A investment round from financial technology VC Element Ventures. 

Based out of London, Element Ventures is a global venture capital fund investing in B2B financial technology companies. 

Sebastian Andreescu, CEO & co-founder of Billhop comments: “We are very pleased to have the backing of Element Ventures and look forward to working with Michael, whose experience and knowledge within the financial sector will be a valuable resource for Billhop. The new capital will enable our accelerated growth plan, which entails expanding the team, increasing our market footprint, and further developing and improving our solution for European businesses of all sizes. 

Why Elements invested in the Swedish startup?

The Swedish company was recently named among the fastest-growing companies in Sweden with a growth of 768% during the last three years and Sweden’s ‘most disruptive company’, by Deloitte.  

Commenting on the investment choice, Michael McFadgen, partner at Element Ventures, in an exclusive interview with UKTN says, “Even before the COVID-19 pandemic, we knew there was a significant funding gap for SMEs across Europe. They wanted to access working capital financing for growth, and that gap wasn’t being filled by traditional options like overdrafts, factoring, etc. This created a need for a simple, accessible product that is flexible for SMEs and corporates to use to manage working capital.”  

“Billhop is an elegant solution to this by partnering with card programmes to turn credit card lines into broadly usable working capital financing. The company had amazing data demonstrating the growth path they’d been on since 2019. They’ve tripled revenue, hit €270 million in payment volume, ]and now have 50,000 customers using the platform. We met the founders at this crucial inflexion moment, and we wanted to be a part of it,” adds McFadgen. 

No one offers like Billhop 

The majority of the suppliers do not accept card payments due to processing fees and administration involved, and not all SMEs, sole traders, and corporates have integrated assets required to settle their invoices. 

However, Billhop not only enables card payment, but also speeds up the process, reduces the need for late fees, makes businesses more efficient, and helps them to close liquidity gaps. 

Talking about the USP of Billhop, McFadgen, says, “Quite simply, there isn’t anyone else offering what Billhop is doing in Europe. There are a couple of offerings in the US and a few versions of what Billhop does integrate into B2B payment systems. But if you want to pay a bill using your credit card and the recipient doesn’t accept cards, then there is no platform offering a solution to this in Europe. It’s a unique tool, and that was one of the reasons to back the company.”  

Serious growth mode

The funding will be used for further product development and to strengthen Billhop’s sales, marketing, and customer support functions, to meet the growing demand for working capital financing solutions. 

“Billhop is in a serious growth mode. The funding will go towards growing SME acquisition, expanding the enterprise channel, and hiring senior commercial people to facilitate this,” says McFadgen.

The UK market and challenges

Talking about the UK market, McFadgen, says, “The UK is one of Billhop’s strategic markets and will be key going forward. They’re looking to continue to place a lot of focus on partnering with banks and other card-based lenders here as well as bringing on more SMEs. There are around 6 million SMEs in the UK alone; it’s a huge opportunity for a company like Billhop.”

“Billhop is solving a real need, thanks to its position at the intersection of payments and financing. In the payments market, there are simply too few options available. There’s a lot of payment tools out there such as Stripe and for online and digital businesses. However, there’s a dearth inaccessible products for more analogue SMEs — and businesses that don’t have a finance director or CFO. There’s still a lot of work to be done to provide simple and elegant tools to all SMEs,” adds McFadgen on challenges faced in the UK payment market. 

Backs companies building tomorrow’s financial technology

Element Venture’s mission is to back the bold companies building tomorrow’s financial technology. The VC invests in financial services and venture firms with outstanding founders with a deep understanding of the problem. 

“At Element, our main focus is on looking for early, high-quality evidence of repeatable product-market fit in a very activated market. This essentially means looking for a growing market, a company that is solving a pressing issue in this market, and evidence of how it is rising to the challenge,” says McFadgen.  

Also, he explains, “We are domain experts when it comes to B2B fintech, so we think about whether we are a good partner for the business and how having our expertise on board will accelerate the journey of a startup. We know the space through and through, and we like to use this knowledge to actively support our portfolio companies – by utilising our extensive network to provide advice, expertise and connections to help propel our portfolio forward, so this is a major factor when we look to invest.” 

2021 roadmap

Talking about the roadmap for this year McFadgen reveals, “We want to make a small number of high conviction investments into businesses that have hit that inflexion point, where we can be a valuable partner to the teams we invest in. We also want to continue evangelising that having a sector-focused investor with domain expertise can benefit founders and startups. If we can continue to do this in 2021, we’ll be really happy.”