Finom Raises €115M in Funding Amidst Booming European Fintech Market for SMBs

Despite the hurdles some face in securing funding, emerging startups in Europe continue to garner interest from investors.

Finom, an Amsterdam-based challenger bank and a prominent player entering its fifth year, has recently captured this investment zeal. The firm is committed to aiding small and medium-sized enterprises (SMEs) throughout Europe. They project a revenue doubling in 2024 and have successfully concluded a €115 million Series C equity round (around $133 million), as reported exclusively by TechCrunch. This follows a prior growth investment of $105 million from General Catalyst, its financial ally since 2021.

Finom’s business model centers on providing a comprehensive financial platform for European SMEs, merging banking, invoicing, and features like AI-enhanced accounting. CEO Andrey Petrov remarked, “Theoretically, entrepreneurs don’t even need an accountant.”

The startup’s ambitious growth path underscores this vision. Petrov highlighted that Finom aims to onboard one million business clients by the end of 2026, a target that seems increasingly achievable with this new funding.

The Series C funding round, led by AVP (formerly AXA Venture Partners), indicates Finom’s potential to capture a significant share of Europe’s 26 million SMEs. New investor Headline (formerly e.ventures) participated via Headline Growth, along with existing backers like Cogito Capital, General Catalyst, and Northzone.

Despite this positive momentum, attracting clients from traditional banks, its current focus, may be easier than competing with established fintech rivals.

With the Series C raising its 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 closer to the roughly $700 million raised by its nearest rival, the French unicorn Qonto, although these figures aren’t entirely comparable.

What makes Finom’s funding strategy particularly compelling is its unique approach. General Catalyst chose not to acquire an equity stake in Finom through this deal; the capital from its Customer Value Fund (CVF) is designated solely for growth, with expectations of recovering the investment.

With the Series B included, Finom’s distinctive funding strategy could enable the company to achieve profitability, as noted by chairman and co-founder Kos Stiskin. However, Finom also plans to pursue equity financing by year-end, aiming for an appealing new valuation. It did not foresee completing both fundraising phases so quickly.

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

Timing might have been in Finom’s favor. The firm hasn’t disclosed its unit economics—beyond boasting a user base of 125,000—yet General Catalyst’s thorough due diligence may have heightened investor interest and accelerated fundraising efforts. This backing and the urgency to recover their investment may have prompted investors to expedite their participation.

In addition to signaling effects, the Customer Value Fund empowers Finom to pursue marketing efforts without diluting equity, which appears to benefit its Series C investors, including General Catalyst.

Nevertheless, the Series C will also finance riskier initiatives beyond customer acquisition through marketing.

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

Since then, Finom has prioritized several major European markets, viewing them as more promising than the U.K. It claims these markets have fewer challenger banks servicing SMEs and that traditional banks are not adequately meeting the needs of small businesses.

Like many neobanks, Finom primarily operates with 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 limitations, it has successfully launched lending in the Netherlands, using it as a testing ground for its credit offerings, which Petrov asserts are vital for both fintech and business clients.

This lending initiative aligns with Finom’s goal to diversify its product portfolio both horizontally—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 is also leveraging AI for its internal operations. With a team of 500, it plans to hire various business and tech-focused personnel but does not expect significant operational growth. “We’re bringing on some staff, but primarily we’re integrating new types of AI agents for internal functions,” Petrov noted. “Thus, we’re hiring less than expected, yet we’re seeing substantial output from the use of AI agents to automate routine tasks.”

Finom’s leadership structure has evolved over time. The roles among the four co-founders have changed, with Petrov serving as the sole CEO—a position he previously shared with Yakov Novikov, who is now 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, in Stiskin’s opinion, symbolize “the backbone of the European Union economy.”