Hero, a new Paris-based fintech startup, announces a €11.3 million all-equity funding round led by Valar Ventures ($12.2 million at today’s exchange rate). For the past two years, the company has been quietly building an ambitious small business banking product that can essentially replace everything you’d expect from a traditional bank, from managing money to accepting payments and getting a line of credit.
When you start a company in France, it is very easy to register it and get a bank account with your company name. At the same time, a bank is much more than an IBAN and a debit card.
Running a company often means that you also have to accept payments in one way or another. And if things are going well — especially if you’re selling goods — you may need to finance your next inventory purchase and pay your suppliers upfront.
The result is that small business owners often have to deal with a myriad of fintech products. They also need to find a revenue-based company willing to provide short-term loans to small companies — in France, there are Silvr, Defacto, Carmen, Unlimitedetc. Alternatively, they can negotiate with a traditional bank to get a loan.
Hero wants to bundle these technology and financial services into a single product. Customers can use the product to send, receive and hold money with multiple accounts and IBANs. The startup also offers payment cards.
The company has created its own core banking system. While many fintech startups work with swan for financial infrastructure, Hero does not rely on a banking partner as a service.
Retailers can choose Hero as their payment solution using an API, a plugin for an e-commerce platform or payment links. On this front, the startup is relatively attractive compared to Stripe as transaction fees start at 0.4% + €0.15 per transaction.
Hero mainly plans to make money with its offering. You can submit a vendor invoice to Hero for immediate payment. You then have up to 90 days to pay the bill.
Likewise, you can submit your own invoices that you’ve already sent to your customers and get paid upfront. You don’t have to worry if your client is going to pay you next week or next month. In both cases, Hero customers will have to pay interest on these credit products.
Hero founder and CEO Roland Jais-Nielsen already knows why cash flow issues can really hurt a business, having previously founded Merci Handy, a fancy hand sanitizer and cosmetics brand.
The startup has developed its own risk scoring engine to evaluate a customer using both public and private data. Hero is deciding whether it wants to provide funding to its customers, but the startup has set up a debt fund with a financial partner — unfortunately it’s not sharing more on that front.
Hero previously raised a €7 million funding round in 2022. SquareOne, an investor in that initial funding round, is also participating in today’s new funding round.
It will be interesting to see if Hero’s focus on building everything in-house will provide an advantage compared to other finance companies. It also creates some challenges. For example, the company is still awaiting regulatory approval from the ACPR for its payment services.
