SMEs are the backbone of our economy. To be successful, they need financing to fund their growth. Most banks are not well set up to support them effectively, as processing relatively small loans is costly, and assessing risk based on outdated data poses a significant challenge for them. This leaves the SME segment poorly served and economies performing sub-optimally.
Czech fintech Flowpay resolves this challenge. Using predictive AI models, the company enables SMEs to access better operational funding.
In a recent development, Flowpay has raised €2.1 million in a seed funding round. It was backed by Techstars the world’s most active pre-seed investor that backed Amply and Sprout.ai alongside rising Czech VCs Soulmates Ventures and DEPO Ventures. Also, angel investors such as Mark Ransford, Martin Herrmann, Kartik Varma, Allard Luchsinger, and others participated in the round.
The investment will allow Flowpay to scale beyond the Czech Republic, enhance its technological capabilities, and offer its services to a wider range of SMEs.
Expansion plans
Flowpay’s plans include expansion to new markets and further technological development to better suit the needs of its clients. This investment will also allow it to increase its capacity to provide personalised credit solutions tailored to the specific needs and capabilities of each business.
The Flowpay team currently consists of approximately 15 experts. With ambitions to continue growing and further accelerate development, the company plans to expand its ranks to a total of 20 team members shortly.
AI to assess risk and process loans
Flowpay was founded in 2021 by William Jalloul, a serial entrepreneur, investor, and finance expert. It has developed an innovative way to assess not only the risk but mostly the potential of SMEs on which basis it provides operational financing for their growth.
Using AI, it automates the entire process from funding applications to risk scoring and evaluation. By leveraging Embedded Finance, it further enables clients to use these services where they feel most comfortable, through platforms they use every day, easing the otherwise tedious process.
Unlike banks, it does not require clients to fill in unnecessary paperwork, instead connecting to point-of-sales systems, e-commerce platforms, and more. Based on this data, it evaluates the availability of financing and offers each client a customised loan to fit their needs.
Achievements of Flowpay
Alongside six other European startups, Flowpay was accepted to the IBM fintechx programme, which focuses on accelerating the adoption of generative AI in financial services. In addition, the company won Technological Startup of the Year in the Vodafone Idea of the Year competition.
“Flowpay utilises the power of AI to assess risk and efficiently process loans, embedding their tools in the platforms that SMEs already use for their daily operations. We have been impressed by the quality of its leadership, the robustness of its credit models, and their speed of execution. Techstars believes Flowpay has shown it has the potential to become a leader in the transformation of the SME lending landscape,” stated Allard Luchsinger, Managing Director Techstars.
“Even if you have a profitable and fast-growing business, banks might still not give you a loan when you need it for something like stocking up your warehouse or investing in advertising. Banks cannot assess risk precisely and usually just look at tax returns, which are outdated and most often do not reflect reality. At Flowpay, we work with client data taken directly from their point-of-sales systems, e-commerce platforms like Shoptet, and use AI to rate their potential to obtain financing. We want to help SMEs grow with our Risk as a Service (RaaS) solution and license it to financial institutions around the world,” explained William Jalloul, founder and CEO of Flowpay.
“We consider our investment to back the development of a revolutionary and accurate scoring and credit assessment tool to be a huge step in supporting sustainable business growth. Flowpay shortens the time needed to evaluate credit applications to mere minutes, increases the accuracy of risk assessment, and speeds up access to finances for SMEs. This approach represents a revolution in financing, supports dynamic growth, and contributes to the sustainable prosperity of our economy,” said Hynek Sochor, founder of the accelerator and fund Soulmates Ventures.
“Flowpay solves this problem by digitising and automating processes using accurate data. This data is available to the business by connecting to the company’s financial, accounting and business systems, forming a technology bridge between the business, the financier and possibly another party providing the data, such as a payment gateway or e-commerce platform. Flowpay is one of the pioneers of this embedded finance approach in the CEE region with a vision to become a global leader in providing financial solutions for sole traders and SMEs,” said Michal Ciffra, partner at DEPO Ventures.
