Finom Raises €115M as European Fintech Landscape for SMBs Flourishes

Despite facing challenges in obtaining funding, emerging startups in Europe continue to garner interest from investors.

Finom, a challenger bank founded in Amsterdam and now in its fifth year, has recently embraced this investment trend. The company is dedicated to assisting small and medium-sized enterprises (SMEs) throughout Europe. They project a doubling in revenue for 2024 and have successfully raised €115 million (around $133 million) through a Series C equity round, as reported exclusively by TechCrunch. This marks a continuation after a previous growth investment of $105 million from General Catalyst, which has partnered with them since 2021.

Finom’s business model is centered around providing a comprehensive financial platform designed for European SMEs, incorporating banking, invoicing, and AI-enhanced accounting features. CEO Andrey Petrov noted, “Theoretically, entrepreneurs don’t even need an accountant.”

This ambitious growth strategy reflects Finom’s vision. Petrov highlighted that Finom aims to acquire one million business clients by the end of 2026, a goal that now seems more achievable with the latest funding.

The Series C funding round, led by AVP (formerly AXA Venture Partners), showcases Finom’s ability to capture a significant portion of Europe’s 26 million SMEs. New participant Headline (previously e.ventures) joined through Headline Growth, alongside existing investors like Cogito Capital, General Catalyst, and Northzone.

Even with this positive momentum, the challenge of drawing clients away from traditional banks remains, and competing against established fintech firms may prove more difficult.

With the Series C bringing the total funding to approximately $346 million, Finom still trails behind competitors such as Monzo, N26, Revolut, and Wise, each of which has raised over $1 billion. Its funding is also closer to the approximately $700 million secured by its nearest rival, the French unicorn Qonto, although these sums aren’t completely analogous.

What makes Finom’s funding strategy particularly noteworthy is its unique approach. General Catalyst chose not to take an equity position in Finom during this round; instead, the capital from its Customer Value Fund (CVF) is solely allocated for growth, with expectations of recouping the investment.

Including the Series B, Finom’s innovative funding strategy positions the company to potentially reach profitability, as remarked by chairman and co-founder Kos Stiskin. However, Finom also plans to pursue equity financing by year-end, aiming for an appealing new valuation. They did not foresee completing both funding phases in such quick succession.

“One took longer than expected, while the other was much quicker than anticipated,” Stiskin shared with TechCrunch. He refrained from revealing the updated valuation, only mentioning that it has doubled compared to the undisclosed figure tied to its $54 million Series B in 2024.

Timing may have been advantageous for Finom. The firm has not disclosed its unit economics—beyond stating a user base of 125,000—yet General Catalyst’s extensive due diligence may have heightened investor interest and accelerated fundraising efforts. This support, combined with the urgency to recover their investment, likely encouraged investors to act swiftly.

In addition to signaling benefits, the Customer Value Fund allows Finom to concentrate on marketing initiatives without diluting equity, which seems advantageous for its Series C investors, including General Catalyst.

Nevertheless, the Series C will also fund more ambitious projects beyond customer acquisition via marketing.

As Petrov mentioned, part of the funding might be directed toward strategic acquisitions to expand its customer base or improve product offerings. This marks a strategic shift, as Finom has made only one acquisition to date—the British cross-border payment service Kapaga in 2022—while planning to enter the U.K. market.

Since then, Finom has prioritized larger European markets, deeming them more promising than the U.K. They assert that these markets have fewer challenger banks catering to SMEs and that traditional banks are not adequately meeting the needs of small businesses.

Similar to many neobanks, Finom primarily operates under an electronic money institution (EMI) license in key markets including the Netherlands, France, Italy, and Spain (it collaborates with Solaris in Germany, which holds a full banking license).

Despite these licensing constraints, it has successfully launched lending in the Netherlands, using it as a test environment for credit offerings, which Petrov asserts are essential for both fintech and business clients.

This lending initiative aligns with Finom’s ambition to broaden its product portfolio both horizontally—by adding deposits and loans—and vertically, “ranging from banking accounts to tax payments, reports, and beyond.” AI plays a crucial role in this expansion, extending beyond product development.

The company also employs AI for its internal operations. With a workforce of 500, it plans to hire various business and tech personnel but does not expect significant operational growth. “We’re bringing on some staff, but mainly we’re integrating new types of AI agents for internal functions,” Petrov commented. “Therefore, we’re hiring less than anticipated, yet seeing considerable output from these AI agents in automating routine tasks.”

Finom’s leadership structure has evolved over time. The roles among the four co-founders have shifted, with Petrov now serving as the sole CEO—a role he once shared with Yakov Novikov, who now acts as an advisor alongside Oleg Laguta.

The trio previously founded the Russian digital bank Modulbank. However, Finom’s current focus is on Europe and its entrepreneurs, who, according to Stiskin, represent “the backbone of the European Union economy.”