FinTech targets SMEs that need cash advances

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A trio of former Robinhood employees have launched a new FinTech aimed at smaller businesses, the Wall Street Journal reported on Wednesday (Sept. 29).

The new San Francisco-based company, Parafin, will offer online cash advances that can be repaid as a percentage of a company’s daily revenue, the report said.

Sahill Poddar, Parafin’s chief executive, was once the head of machine learning at Robinhood. He worked with Ralph Furman, president of the startup, who was a data scientist on the brokerage app, and Vineet Goel, chief product officer, formerly head of risk and fraud engineering at Robinhood.

The three of them said they saw an opportunity to build on Robinhood’s experience in FinTech infrastructure. They wanted to apply this to small businesses that were experiencing strife and anger from the pandemic when capital fell.

Parafin reached out to early Robinhood backers for venture capital, with WSJ reporting that the startup raised a Series A for $ 30 million earlier this month. Last year they had a $ 4 million seed round.

Part of Parafin’s plan also includes the ability to offer small businesses other financial products such as bank accounts and insurance.

Businesses have been trying to add financial services recently to generate new revenue streams, and companies like Shopify and others have come up with tools to help.

And cash loans have a high approval rating – but online loans have historically been known to be risky.

Poddar said Parafin is not like other online lenders.

“We are categorically different from online lenders,” he said. “We will only be repaid when the [small business] makes sales. “

He added that Parafin offers low, transparent fees. And he said the company has been able to keep its fees down because it offers funding through its partners and doesn’t have to spend as much on direct marketing to small businesses.

Also read: Pakistan’s QisstPay is quoting $ 15 million for the expansion of the BNPL platform

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NEW PYMNTS DATA: TODAY’S SELF-SERVICE TRIP – SEPTEMBER 2021

Above: Eighty percent of consumers are interested in non-traditional checkout options like self-service, but only 35 percent have been able to use them for their recent purchases. Today’s Self-Service Shopping Journey, a collaboration between PYMNTS and Toshiba, analyzed over 2,500 responses to learn how merchants can address availability and perception issues to meet demand for self-service kiosks.

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