Irish SMB Fintech Swooping into U.S. with New Funding

An Irish small business-focused fintech called Swoop has raised a $6.6 million Series A round designed to help the company expand into the U.S. market.

Swoop is not a small business lender. The company is a platform where small businesses can comparison shop for financial products. Swoop is free for SMBs to use. It makes its money on commissions from banks and other financial institutions listed on its platform.

Swoop already has an office in Canada, which it will use as a springboard into the U.S. The company is also present in Australia in addition to the UK and Ireland.

Co-founders Andrea Reynolds (CEO) and Ciaran Burke (COO) launched Swoop in 2017. To date, more than 75,000 companies have used the platform. One interesting feature is that Swoop helps SMBs find sources of financing beyond loans, including equity, grants, and tax credits.

Also notable is that the company is adding staff, bucking the current layoff trend in fintech. The company says it will have 80 staff by the end of the summer, up from 60 today.

“Access to finance is the number one issue facing SMEs, but they have traditionally been an underserved customer segment,” Swoop CEO Reynolds said. “Finance is data-driven and borderless. With the influx of new lenders into the market, Swoop is able to connect SMEs with the funding they need wherever they are in the world. To date, we’ve helped our customers secure £500m [about $607 million] to grow their businesses.”

So why do investors like Swoop’s model?

“Andrea and the team at Swoop have executed strongly on their potential since we first invested in the company in 2018. We are excited to see them take their vision to new markets,” said Rajeev Saxena, CEO of Velocity, one of the firm’s existing investors also participating in the A round.

Other investors include Arab Bank Ventures, IAG, and WeHo Ventures.

The Right Category?

Of course, VC wallets are snapping shut in the current environment. And in particular for fintech companies. However, given the long runway for most deals, Swoop’s funding probably has been in the bag for a while.

There is a debate raging over which categories within fintech will curry the most favor with investors in this tight environment.

Broadly speaking, consumer fintech is out. Meanwhile, VCs are calling embedded finance startups back. Unfortunately, many investors are lumping small businesses in with consumers. So there may be some tough times ahead for SMB-focused startups. Especially for any that are running low on cash. Swoop’s successful A round notwithstanding.

Consider this from a recent article in the tech publication Protocol examining the rising popularity of embedded finance.

For investors now, the most exciting fintechs are ones with low overhead, a clearly defined strategy of marketing to businesses and a promise of infrastructure that will accelerate the transition to a fully digital financial ecosystem.

PitchBook recently warned of a bifurcation of the market in fintech: Those serving consumers and small businesses, the firm’s analysts wrote, will be negatively impacted while enterprise and infrastructure companies will remain at strength.‘”

Embedded finance is any solution that adds financial services into a non-financial consumer experience. For example, you know when a retailer offers you insurance or different payment options at the point of sale? Those are examples of embedded finance. Stripe and Plaid are among the global leaders in embedded finance.

Swoop doesn’t fall into the embedded finance category. But it does seem to be addressing a real SMB pain point. And its model at least seems to be fairly efficient. And, of course, its projected 450% revenue growth rate this year can’t have hurt.

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