Small-business lender Fundbox just hired its first CFO. The former VC explains why the startup was overdue for a finance chief.
- Thinking about an IPO down the line, small business lender Fundbox just hired its first CFO, growth investor Marten Abrahamsen, to get the company ready.
- Fundbox lends to small businesses in the US, and also offers a product to streamline net terms agreements.
- An IPO won't happen in the next 12 or 18 months, Abrahamsen said, but getting the company ready for a listing is certainly part of the plan, he said.
- In the near-term, Abrahamsen will focus on evaluating where the company is spending on its growth, and making sure investments are going to the right parts of the business.
- Abrahamsen thinks Fundbox is well positioned to manage through a possible economic downturn, as there may be more demand for short-term credit.
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It's not easy to take a company public. And 2019 showed us just how unforgiving the public markets can be for startups.
Uber's stock is down about 17% since its May listing, and Lemonade delayed its 2019 IPO plans amidst WeWork's failed attempt at a debut.
But it's not all doom and gloom. Fintechs like Tradeweb and Bill.com are both trading above their 2019 IPO prices.
Thinking about an IPO down the line, small business lender Fundbox just hired its first CFO, Marten Abrahamsen, to get the company ready.
Fundbox said it's been searching for a CFO for nearly two years.
"The company is obviously growing and maturing. I think they were safely past their due date of when they should hire a CFO," Abrahamsen told Business Insider.
Like BlueVine and Kabbage, Fundbox lends to small businesses in the US.
Fundbox also offers a product to streamline net terms agreements, a common practice amongst small businesses whereby goods are exchanged, but vendors are paid later, with terms ranging from 15 to 90 days. The startup offers its customers a cash payout immediately, and then gets paid back separately by the buyer.
Fundbox raised $176 million in Series C equity funding while also securing a $150 million credit facility in September last year. While the company didn't disclose a valuation from the round, Fundbox CEO Eyal Shinar told Business Insider that it would be its last fundraising round.
Investors included General Catalyst (Lemonade, Monzo, Stripe), Spark Capital Growth (Affirm, Marqeta, Plaid), and Allianz X (Lemonade, N26, Quantemplate). Fundbox has raised $585 million to-date.
What's in store for Fundbox's first CFO
Fundbox has been operating without a CFO since it was founded in 2013. But Abrahamsen said he wasn't brought in to solve any glaring problems.
"I'm not stepping into something big and immediate that I need to address," said Abrahamsen. "It's more to partake in longer-term planning of where we're headed."
An IPO won't happen in the next 12 or 18 months, Abrahamsen said, but getting the company ready for a listing is certainly part of the plan, he said.
Instead, in the near term, Abrahamsen will focus on evaluating where the company is spending on its growth, and making sure investments are going to the right parts of the business.
"We're growing up as a business and we've certainly had budgets before, but I think this will be the first year that we will have a budget enforcement process," said Abrahamsen.
"Given the scale of our business, it's important to take a step back and truly assess the optimal way to spend our resources," said Abrahamsen.
In addition, Abrahamsen will focus on more predictable revenue results, where there aren't swings month-to-month in customer acquisition and loan origination numbers. Once a company goes public, it's required to disclose quarterly results, so sharp changes between quarters may not be received well in the markets.
"We have to make sure that it's a streamlined business, as opposed to a business that sprints then rests, even though they might both end up in the right place," Abrahamsen said.
Before joining Fundbox, Abrahamsen was a growth investor at TCG Capital, a growth equity firm founded by Peter Chernin, former president and COO of News Corp.
Abrahamsen has never been a CFO before, but has been a board member and participated in committees that hired CFOs for his portfolio companies.
"I feel like I've done it from every possible angle other than actually inside of a company," said Abrahamsen. "I'm very excited to get to do this full time."
A possible upside in an economic downturn
While no one has a crystal ball, experts and industry analysts have been predicting an inevitable recession to hit the US economy soon.
But Abrahamsen thinks Fundbox is well positioned to manage through a possible downturn.
"There's the macro question, one that we've spent a lot of time thinking about here, and I think there are some potential positive elements if we see a macroeconomic pullback," said Abrahamsen.
"There might be more of a need for credit, so I think we'll actually see that positively more so than anything else."
Abrahamsen stressed the importance of strong risk models and underwriting and highlighted that given the shorter term length of Fundbox's loans, which range from 12 to 24 weeks. Fellow small business lenders BlueVine and Kabbage offer term loans starting at 6 months.
"We have the opportunity to get paid back quickly and reassess models, and turnover of our capital is so fast," Abrahamsen said.
"I think that's another area where we're uniquely well positioned to both help our customers and add utilization in a scenario where macroeconomically, things aren't quite as good as they are today," he said.