The e-commerce market is on its way to $transition5.5 trillion in revenue this year, which tells not only how many consumers are shopping online these days, but also how many businesses are now selling to them. Today a startup called Juni announces $206 million in funding — $100 million in Series B and another $106 million in debt — to create an e-commerce focused neobank designed specifically to serve this growing group of retailers with tools to help them run their business.
Mubadala Capital led a $100 million investment round with previous sponsors. ECT Ventures, Felix Capital, Cherry Ventures and partners DST Global is also involved. Meanwhile, the $106 million in debt financing that Juni will use to fuel its lending products comes from TriplePoint Capital.
Founded in 2020 and launched in 2021, Juni closed its Series A only last October (gathered $21.5 million in July and another $52 million in October), but the growth rate is very high – “several hundred percent”, CEO Sameer El Sabini said in an interview. (The actual number of customers is not given.) The company does not disclose its valuation, but sources close to the company tell me that it is now around $800 million.
Most incumbent banks, and now a significant number of neo-banks, are targeting SMEs as customers, but the gap in the market that Juni has identified and filled is that the e-commerce needs of SMEs and those who doing business on the Internet in general are unique among them: they have potentially huge amounts of money in and out of their accounts, and this money does not necessarily come in a constant stream. Most likely, they do business in different regions and with different suppliers. They use a number of other digital tools both to sell and to launch and expand their operations.
El Sabini, who co-founded the company with CTO Anders Orcedal and Jonathan Sanders (who no longer with the company but remains a “silent partner”, as El Sabini said), all had a track record of working in the digital business, where they saw not only for themselves but also for their clients the opportunity to build a bank that would take all this into account (so for say) and created a financial management service to match this dynamic.
Thus, core banking, Juni credit cards and advance/refund services (where debt financing will be used), accounting and analytics are optimized for the type of incoming and outgoing revenue that e-commerce companies have. The platform includes around 2,400 integrations with tools (and the data those tools generate) that companies can potentially use for their accounting, their digital advertising, their website payments, and more.
And while it sounds like a very big product with lots of tentacles, Juni has actually narrowed down its scope over the past year. The company initially catered to both e-commerce retailers and digital marketing merchants, as the latter group also share many of the same dynamics, spending money across multiple jurisdictions and using different marketing and advertising technologies. Now he has moved his target customer and the tools he creates to the e-commerce vertical and the marketing they do in particular. “ATWe are focused on e-commerce companies,” said El-Sabini. “However, marketing is an important function in all e-commerce companies.”
The company was launched during the pandemic, which was sort of a windfall: suddenly there were a lot more consumers buying a lot more online, and e-commerce companies were struggling to both reach and sell to that audience without going broke, so having A banking partner who could help with this was part of the reason for Juni’s strong growth.
Interestingly, and as you might expect, this need does not disappear as the pandemic subsides. Growth in this sector is definitely slowing down at the moment (falling at least four percent globally and will continue to do so over the next few years, says electronic marketer), and so e-commerce companies have to deal with it too.
“Cost is generally under pressure and we can offer credit based on a deep understanding of our clients’ forecasts so that they understand cash flow,” and cash flow is key to these clients, he continued. “Something we also see is fear in the markets. So if you can have a long-term partner who can help you and understand your position, that is obviously very important. We want long-term relationships with our clients.”
Abu Dhabi-based investment firm Mubadala, the parent company of Mubadala Capital, is a prolific fintech investor (it has backed Brex, SpotOn, GoCardless and more), and Fatu Bintou Sagnang, a partner who led the investment, said she and the firm evaluated a number of other players in the banking industry, with a focus on SMEs, before investing in Juni.
“It all started with looking at SMEs and fintech opportunities, and we were looking for companies that matched that thesis,” she said. “We like companies that use technology wisely to reduce costs.” She said they spent over nine months getting to know young Juni and loved his focus on e-commerce. “We really see many parallels with Brex in the US. We have some experience with sectors and our thesis is that the next iteration in fintech challenging incumbents will be more verticalization.”
Credit: techcrunch.com /