Citi and Viola Credit back Defacto’s SME lending with €167m

Citi and Viola Credit back Defacto's SME lending with €167m

French FinTech firm, Defacto, a leading provider of loans to small and medium-sized enterprises (SMEs) via an API, has recently closed a significant securitisation fund.

The fund, which reaches up to €167m, was facilitated by banking giant Citi and venture capital firm Viola Credit. Citi is set to take on the role of senior lender for the fund, while Viola Credit has demonstrated their continued faith in Defacto, by offering sustained support as a mezzanine lender.

Founded in mid-2021 by Jordane Giuly, Morgan O’hana, and Marc Henri Gires, Defacto serves as an accessible financing solution for SMEs across Europe. The firm utilises an innovative, API-first product that permits third-party entities such as B2B marketplaces, other FinTechs, and digital platforms to seamlessly integrate Defacto’s financing solution directly into their own offerings. Consequently, SMEs can benefit from a smooth, immediate lending experience, and platforms can enhance their differentiation and customer satisfaction.

The new funding will be utilised to continue Defacto’s exponential growth, providing the company with a yearly funding capacity of up to €1bn. The firm has made considerable strides since its inception, integrating with partners such as Malt, Qonto, and Pennylane, and fulfilling the financing needs of 7,000 European businesses across five different countries, amounting to €200m.

Additional noteworthy developments include the launch of a low-tech version of its product, Liquid, in May 2023. This initiative was designed to facilitate easy and quick integration of Defacto’s services for partners with constrained tech resources.

Defacto CEO Jordane Giuly said, “We are delighted to secure this facility with Citi, one of the largest banks in the world, and having Viola Credit renewing its trust in Defacto’s team, strategy and product. In the current macro environment, this is an important milestone for enabling our growth with both existing and new partners and answering the financing needs of thousands of SME.”

Expressing her excitement about the partnership, Viola Credit General Partner and Founder, Ruthi Furman stated, “Defacto has proven to have a sustainable business model in the B2B lending space. The company, which was created mid 2021, has rapidly grown, while keeping its costs under control thanks to a strong focus on process and operational automatisation and on data. As Viola Credit, we are delighted to participate in this new facility, allowing them to decrease their overall cost of funding.”

The securitisation fund will initially be sized at €67m, with potential increases being subject to lender’s consent.

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