Cardiff fintech Sonovate exceeds £2B funding milestone as contract working soars post pandemic

The Covid pandemic has led to a global shift in preference by businesses and individuals alike towards more flexible, contract-based working. Led by its philosophy of smarter pay for the new working world, Cardiff-based Sonovate that provides embedded finance to businesses engaging freelance workers, has surpassed £2 billion in total funding during September 2021.

Half of this total funding (£1 billion) was provided by the disruptor to businesses in the last two years (October 2019 to September 2021). This latest milestone has been achieved four times faster than the time taken to fund the first billion pounds.

Alongside reaching this latest milestone, the fintech lender, which has been tipped to become first fintech ‘unicorn’ in Wales, also achieved its most successful month yet in September, achieving £67 million in funding, a full £10million ahead of its previous best month.

Over 500 new clients in 2020

Over 30,000 freelancers, contractors and gig workers in more than 40 countries have now received payments from over 3,000 businesses funded by Sonovate. The average duration of new contract placements submitted for its funding increased by almost 50% in the first six months of 2021, further indicating the fast-growing and global shift in preference by businesses and individuals alike towards more flexible, contract-based working.

The fintech disruptor, which began funding businesses to pay their temporary workers in 2013, is one of the fastest growing business finance lenders in the UK, providing embedded finance services to recruitment businesses, consultancies and labour marketplaces of all sizes. Since the start of 2020, the lender has onboarded more than 500 new clients, including a record number of enterprise businesses. In the same period, it onboarded a record number of small and medium sized businesses outside of the recruitment sector, while continuing to broaden its reach in the recruitment space – its primary vertical.

Solve cash flow and working capital issues

Richard Prime, co-founder and co-CEO at Sonovate, said: “Since the start of 2021, we’ve closed a new deal with a business customer almost every single working day – helping hundreds more companies across Europe, Asia and the US to pay their people on time, every time. During the pandemic, our team worked tirelessly to remove barriers to growth and solve cash flow and working capital issues for thousands of businesses. During the pandemic we were able to double our funding volume and onboard hundreds more new clients making this past September a record month for the business for funding performance.”

Entrenched at the intersection of business finance, technology and the future of work, the startup anticipated two transformational and permanent trends emerging in the global business community and has been well positioned to benefit from both.

Adoption of embedded finance

Tipped to generate global annual revenues of $230 billion by 2025, the process of enabling organisations to create and manage their own unique financial services through integration with financial service providers’ APIs is a rapidly expanding industry. ‘Lending as a Service’, the frictionless provision of on-demand funding to companies is, in particular, gathering pace as a result of tighter lending controls imposed by traditional lenders during the Covid pandemic.

Rise of freelance or contract working

The Covid pandemic has accelerated trends that have already been in play for several years: the transition to more flexible, contract working arrangements, and the rise of the global contingent workforce. Businesses of all shapes and sizes are considering how to culturally, operationally and – crucially – financially accommodate a greater proportion of contract and freelance workers in their future workforce.

Prime added: “Being completely focused on providing the best possible tech-driven funding to our customers at their point of need, we’re accelerating our market share of the emerging Lending as a Service space and cementing ourselves as an established, proven and fast-adopted challenger to banks and other traditional lenders.”

Greater demand for tech-driven finance

Sonovate predicts even greater demand for its tech-driven finance in the next year as the international business community gets back on its feet after the pandemic, continues to invest in its financial technology services and adapts to a more prevalent flexible working environment. The startup expects to hit £3 billion of total funding within ten months by summer 2022 driven by this shift in worker habits and product improvements.

Roll out of cloud-native SaaS platform

It will launch a new platform later this month, strengthening its lending as a service and embedded finance offering for businesses of all sizes. This cloud-native SaaS platform will provide instant funding decisions and credit limits, variable advance and facility management, and automated reporting.