SMB Fintech Finom Raises €115M Amid European Competition

The fastest-growing firms in Europe still have options, even though funding may be limited for some.

Finom, an Amsterdam-based challenger bank that has been in business for five years and focuses on small and medium-sized enterprises throughout Europe, is the most recent beneficiary of that investor’s wish. TechCrunch exclusively revealed that the startup, which says it doubled its sales in 2024, recently closed a €115 million Series C financing round, or about $133 million. This is just a few weeks after General Catalyst, its partner since 2021, gave it $105 million in growth investment.

The core of Finom’s business strategy is to offer European SMBs a financial platform that integrates banking, invoicing, and an expanding array of features, such as accounting powered by artificial intelligence. CEO Andrey Petrov (far left in the photo) stated, “Theoretically, entrepreneurs don’t need to have an accountant at all.”

This vision is reflected in the startup’s aggressive growth goals. Finom’s ambition of one million business clients by the end of 2026 is motivating and not fixed, according to Petrov, but its new funding makes it a little more reachable.

Finom’s Series C also reflects this conviction that it may service a reasonable portion of the 26 million SMBs in Europe. AVP (formerly known to be AXA Venture Partners) led the round, and Headline (formerly e.ventures), a new investor, participated through Headline Growth. Cogito Capital, General Catalyst, and Northzone, who were already investors, also participated in the round.

The business may find it simpler to attract customers from legacy banks—its current strategy—than from rival fintechs, even with this momentum.

Finom has far less external money than Monzo, N26, Revolut, or Wise, all of which raised more than $1 billion, even after its Series C raised a total of about $346 million. Although the comparison isn’t perfect, its fundraising to date is more in line with the roughly $700 million raised by French unicorn Qonto, Finom’s closest rival.

The non-traditional element of Finom’s funding arrangement is what makes it so intriguing. In contrast to other venture capital firms, General Catalyst did not acquire any shares in Finom during its unconventional round; the money from its Customer Value Fund (CVF) can only be utilized for expansion, which is how it intends to recoup its investment.

According to chairman and co-founder Kos Stiskin (shown on the far right), this unconventional investment round, when paired with the Series B, would have been sufficient for the Dutch company to achieve profitability. However, Finom also hoped to obtain a “good and nice” new valuation and raise equity by the end of the year. Closing two agreements so close to one another was something it didn’t expect.

Stiskin told TechCrunch, “One was much faster than expected, and one took longer than expected.” “It is twice the (also undisclosed) valuation associated with its 2024 $54 million Series B,” he said, declining to reveal the current valuation.

Finom might have benefited from the timing. Aside from its 125,000 users, the company doesn’t disclose its unit economics, so the fact that General Catalyst looked behind the hood probably increased interest and accelerated the funding process. Investors may have hurried to write checks as a result of that vote of confidence and their immediate interest in getting their money back.

Beyond the signaling implications, Finom’s Series C backers, including General Catalyst, may find it advantageous to have the Customer Value Fund fund its marketing initiatives without sacrificing equity.

But the Series C will also finance riskier initiatives than marketing-based consumer acquisition.

One of its applications, according to Petrov, may be opportunistic, strategic purchases that would enable it to increase its clientele or range of products. Given that Finom has only bought one business to date, Kapaga, a British cross-border payment provider, in 2022 when Finom was thinking about entering the U.K., that signifies a change in approach.

Since then, Finom has moved its attention to some of the biggest markets in Europe because it believes there is more possibility there than in the United Kingdom. According to the organization, incumbent banks are not providing adequate service to small businesses in these markets, and there are fewer challenger banks vying for SMBs.

In the majority of its primary markets—the Netherlands, France, Italy, and Spain—it only has an electronic money institution (EMI) license, like many neobanks. In Germany, on the other hand, it has partnered with Solaris, which has a full banking license.

Notwithstanding these license restrictions, it managed to onboard lending in the Netherlands, which it views as a test market for its credit product, which Petrov believes is essential for business clients and any fintech. 

Finom’s efforts to broaden its product line both vertically, “starting from a banking account and ending in paying taxes, reports, and everything,” and horizontally, with deposits and loans, are also consistent with this lending drive. The use of AI extends beyond the realm of products.

AI is also being used internally by the organization. With 500 employees, it anticipates hiring a few people with computer and business backgrounds, but not many to expand its operations. Petrov stated, “We’re adding some people, but first and foremost we’re adding new kinds of AI agents to work with internally.” Therefore, we are employing fewer people than we require, and the results of leveraging AI and AI agents to automate some of [our] daily chores are encouraging.

The leadership structure of Finom has changed as well. Over the years, Finom’s four co-founders’ responsibilities have changed, with Petrov currently serving as the company’s sole CEO. Previously, Petrov shared this position with Yakov Novikov, who is now an advisor with Oleg Laguta.

Previously, the three of them founded Modulbank, a digital bank in Russia. This time, however, Finom focuses on Europe and its entrepreneurs, who are “the backbone of the European Union economy,” as Stiskin puts it.