Finom Secures €92.7 Million in Growth Funding to Accelerate Expansion

Amsterdam-based digital bank Finom has made headlines by raising €92.7 million, approximately $105 million, from General Catalyst’s Customer Value Fund. This significant capital investment comes at an opportune time when the demand for financial services tailored to small- and medium-sized businesses is on the rise. The funding will be exclusively allocated to growth initiatives, paving the way for the company’s ambitious expansion across Europe.

A Unique Funding Approach

In an exclusive statement to TechCrunch, Kos Stiskin, Finom’s chairman and co-founder, emphasized that this investment strategy diverges from traditional funding rounds General Catalyst will not acquire any equity in the company. Instead, Stiskin highlighted that the funds are directed solely towards attracting new clients, showcasing confidence in Finom’s existing positive cash flow from core operations.

“Our core operations are generating positive cash flow, and all new investments and funding go directly toward attracting new clients,” Stiskin stated. This approach may create a pathway for rapid growth without diluting ownership at this crucial juncture.

Expanding Beyond Digital Banking

While Finom primarily focuses on digital banking, the company has been proactive in diversifying its service offerings. Earlier this year, it launched an “autonomous AI accounting agent” aimed at helping entrepreneurs and freelancers streamline their financial management. Furthermore, in March, Finom entered the direct lending market, incorporating an AI-powered scoring engine to enhance its services.

By year-end, the company plans to broaden its credit offerings, currently available in the Netherlands, across other European countries. This strategic move will not only serve existing customers but also attract new ones in different markets.

Strong Clientele and Revenue Model

Finom has successfully garnered over 100,000 business clients across Germany, France, Spain, the Netherlands, and Italy, demonstrating positive unit economics in each territory. Finom’s revenue model is primarily subscription-based, supplemented by transaction fees for select services. The recent expansion into lending has introduced a new revenue stream through interest on credit lines, further illustrating the company’s adaptive strategy to market needs.

Performance Insights

Though Stiskin refrained from disclosing specific revenue figures, he noted that Finom doubled its annual recurring revenue in 2024 and achieved EBITDAM profitability. This financial health places the company in a favorable position for future growth as it continues to innovate and expand its offerings.

Competing in a Growing Market

In assessing competition, Stiskin identified Qonto, a Paris-based challenger bank, as Finom’s closest rival. Qonto raised a hefty €486 million (~$552 million) in a Series D funding round in January 2022. However, Stiskin argues that Finom’s stronger localization strategy and comprehensive product suite give it an edge in attracting clients and establishing a foothold in new markets.

Workforce Growth and Leadership Changes

Finom has also been scaling its workforce, boasting 505 employees a 31.5% increase from the previous year. In a bid to enhance its financial acumen, the company appointed Alessandro Camilotti, former head of finance and analytics EU at Klarna, as its CFO last September.

Overall, since its inception in 2020, Finom has secured nearly €190 million (approximately $214 million) in total funding. Notably, in February 2024, it raised €50 million in a Series B equity round co-led by General Catalyst and Northzone.

Market Position and Valuation

Although the startup has yet to disclose its current valuation, it was reported by PitchBook to be valued at $150.7 million post-money in November 2021 after a €30 million seed funding round from VCs Target Global, Tal Ventures, and General Catalyst. This growing portfolio of funding rounds reflects strong investor confidence in Finom’s potential to capture a significant share of the financial services market for small and medium-sized businesses.

Notable Perspectives from Investors

Zeynep Yavuz, a partner at General Catalyst, praised Finom for its effective execution in a market that remains significantly underpenetrated. “We see Finom’s proprietary anti-money laundering and know-your-customer engine as a standout advantage — not just for compliance, but for customer experience,” Yavuz added, underscoring the startup’s efforts to ensure regulatory compliance while enhancing user experience.

Conclusion

As Finom charts its course for growth with ambitious plans supported by substantial funding, the focus remains squarely on creating value for its customers and capturing market opportunities. With a solid infrastructure and innovative service offerings, Finom is well-positioned to expand its influence in the European financial landscape.

For more about Finom’s expansion plans and insights on digital banking trends, check out our articles on the future of fintech and AI in banking. Stay tuned to witness how this digital bank continues to evolve in a competitive financial sector.