Hero Raises €11.3 Million to Tackle Working Capital Crunch

Hero, a Paris-based fintech startup, has successfully raised €11.3 million in an all-equity funding round, led by Valar Ventures. This significant investment aims to support Hero's mission to help companies facing a working capital crunch.

The Foundation of Hero

Founded with the vision to streamline financial services for small and medium-sized businesses, Hero aggregates essential financial tools into one comprehensive product. From money management to obtaining a credit line, Hero offers a range of services that can replace traditional banking options.

Starting a business in France has become relatively straightforward, but managing finances remains complex. Companies often need to accept payments, finance inventory purchases, and pay suppliers upfront. Traditionally, business owners need multiple fintech solutions or to negotiate with banks for loans. Hero addresses these complexities by offering an all-in-one solution.

Innovative Financial Solutions

Hero offers multiple accounts and IBANs for managing money, along with payment cards for operational expenses. The startup has developed its core banking system independently, avoiding reliance on third-party banking-as-a-service providers. This independence ensures greater control and customization of services.

Retailers can adopt Hero's payment solutions via an API, e-commerce plugins, or payment links. The competitive transaction fee, starting at 0.4% + €0.15 per transaction, makes Hero an attractive alternative to solutions like Stripe.

Credit Offerings

Hero's primary revenue stream comes from its credit offerings. Business customers can submit supplier invoices to Hero for immediate payment, with a repayment term of up to 90 days. Similarly, companies can get advance payments on their invoices sent to clients, mitigating the cash flow issues of delayed payments. In both scenarios, customers incur interest charges, which form the core of Hero's profit model.

Risk Management

Hero's founder and CEO, Roland Jais-Nielsen, has firsthand experience with cash flow problems from his previous startup, Merci Handy, a successful sanitary products brand. To mitigate risks, Hero has developed a unique risk scoring engine that leverages both public and private data to assess potential clients. Financing decisions are meticulously evaluated, although specifics about the debt fund created with a financial partner remain undisclosed.

Regulatory and Future Plans

Hero's commitment to building everything in-house offers an edge, albeit with challenges. The startup is awaiting regulatory approval from the ACPR to expand its payment services. This next step will be pivotal in determining Hero's growth and scalability.

Previously, Hero secured €7 million in 2022 from initial funding participants, including SquareOne, who have reinvested in the recent funding round. This continuous financial support underscores investor confidence in Hero's business model and growth potential.

Market Position and Growth

Hero's focus on integrating diverse financial services into a single platform distinguishes it from other fintech startups. By eliminating the need for multiple fintech solutions and traditional bank negotiations, Hero simplifies financing for small and medium-sized businesses. This holistic approach promises substantial market disruption and growth opportunities.

The startup's independent core banking system and competitive pricing for payment services challenge existing market players. As Hero awaits regulatory approval, its in-house built services are poised to meet market demands efficiently.

Conclusion

With €11.3 million in new funding from Valar Ventures and continual investor support, Hero is set to redefine financial services for small businesses. By resolving working capital challenges through integrated financial solutions, Hero paves the way for more streamlined business operations and sustainable growth.