OatFi, a company that provides working capital infrastructure for B2B payments platforms, today announced an $8 million Seed round.
“Difficult payments terms compress operating cashflow, which makes it difficult to finance growth & keep up with general operating expenses. With B2B payments coming online quickly, we have the unique opportunity to help platforms help solve this problem at the source for SMBs.”
The round was led by QED Investors with participation from existing investors Portage Ventures, Picus Capital and Cambrian Ventures, and the addition of new investors Fin VC, Dash Fund and Lorimer Ventures. Ziv Paz, Cofounder of Melio, also participated in the round. This brings the total funding to $11.25 million, following a $3.25 million pre-seed round co-led by Portage Ventures and Picus Capital earlier this year.
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Additionally, OatFi has raised a $50 million credit facility from Architect Capital.
OatFi provides the end-to-end infrastructure for B2B payment platforms to launch embedded working capital tools such as buy now pay later (BNPL) or various receivables financing products. These products optimize SMBs’ cashflows by maximizing days payable outstanding – the amount of time it takes to pay its bills – while shortening days sales outstanding – the time it takes to collect money owed.
Almost two-thirds of all businesses in the U.S. still pay by cash or check, including 80 percent of the 32 million SMBs in the country. That accounts for $10 trillion of transaction volume each year.
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Through OatFi, platforms can configure their own UX that seamlessly embeds within their existing platform by essentially building their own ‘BNPL’ or receivables financing solution, without launching a credit business.
“Most existing B2B solutions have copy-pasted the BNPL playbook for consumers, but the problems for businesses are much different”, said OatFi CEO Mike Barbosa. “An SMB’s working capital issue could exist on both sides of their cashflow conversion cycle, depending on their relationship with suppliers and customers.
“As platforms bring B2B payments online, we want to solve the problem at the source. Via our flexible infrastructure, B2B payment platforms can embed the desired user experience within their existing product. While a simple widget can work on a consumer checkout page, the product flow for B2B payments is often unique. OatFi provides an API-first infrastructure that empowers our partners to launch their own tools, while we handle the stuff.”
OatFi integrates with bill pay and invoicing, payments infrastructure and spend management platforms to enable the launch of cashflow tools. By extending due dates on payments owed, or transforming outstanding receivables into immediate cash, OatFi offers a win-win solution for both SMBs with cashflow problems and the B2B payment platforms that want to better serve their users.
Platforms that employ OatFi’s product get to ‘build their own’ BNPL or receivables financing tool via OatFi’s API-first approach. Via the launch of these embedded tools with OatFi, platforms are also able to increase LTVs without owning any of the credit risk.
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OatFi was started by second-time founders Mike Barbosa and John Jordan. Merging backgrounds in finance, entrepreneurship, and tech, Mike spent five years with Morgan Stanley and Bloomberg before co-founding a climate-tech startup, while John spent four years as a software engineer at Disney+ before starting a software development agency specializing in web3 app development.
“SMBs are currently facing major macro difficulties with rising inflation and contracting economic conditions, but cashflow issues have always been a problem,” said Barbosa. “Difficult payments terms compress operating cashflow, which makes it difficult to finance growth & keep up with general operating expenses. With B2B payments coming online quickly, we have the unique opportunity to help platforms help solve this problem at the source for SMBs.”
Added QED Investors Partner Laura Bock: “While net terms and invoice factoring have existed for a long time, rarely do both solve the cashflow needs of suppliers and their customers. With B2B payments coming online, OatFi is able to unlock the critical data that its bill pay and invoicing partners finally have in digital form to offer automated, instantaneous working capital to businesses on both sides of every B2B transaction. We’ve enjoyed working with Mike and John and seeing their incredible progress over the past year and QED is thrilled to lead OatFi’s Series Seed round.”
“A new category of business-to-business BNPL is emerging, and OatFi is poised to disrupt it. BNPL is very different from business-to-consumer BNPL, and it sits at the intersection of several fintech trends—BNPL, SMB digitization, fintech SaaS, B2B payments, and embedded finance, among others,” said Rex Salisbury, Founding Partner at Cambrian, who also invested in OatFi’s pre-seed. “I’m delighted to support OatFi as they expand to more businesses across the country through their next stage of growth.”
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