ImpactAlpha, April 10 – Cashflow management is a critical challenge for small businesses worldwide. Fintech startup Weel provides cashflow loans to Brazil’s small businesses to help them weather variability between incoming and outgoing payments.
The Brazil- and Israel-based company has raised $30 million from U.S. investment firm Franklin Templeton. Franklin Templeton invested as a means to increasing its portfolio in Brazil.
Weel launched in 2015 to help Brazil’s small businesses secure low-cost loans to help them with the day to day management of their companies. The type of lending it offers is called invoice factoring. Through Weel’s online platform, business owners input anticipated incoming payments to the business over a three-month period. Weel relies on large datasets that it acquires from other financial services firms to analyze potential borrowers’ data and develop a credit-risk profile. For those it approves, it provides short-term loans to small businesses against their incoming payments.
Weel claims it can disburse funds within 15 minutes of approval and at a lower interest rate than most other financial services firms. It also claims it has a 0% default rate in a country known for its high credit delinquency rates, at least among individual borrowers.
Franklin Templeton’s investment will help Weel expand its products and services for Brazil’s small businesses. Weel also plans to expand to Chile and Mexico this year.
The funding round follows Weel’s $6 million raise from monashees, Mindset Ventures, and Banco Votorantim in January, and an $8.5 million raise in 2017. Other fintech startups, like South Africa’s Payabill and the U.K.’s Fluidly, are using data science and alternative credit metrics to help small businesses manage cashflow issues.