Meet Topi, a Berlin-based startup that raised a $ 4.5 million pre-seed funding round co-led by Index companies and Creandum. The company is working on a fast and capital efficient payment solution for businesses.
On the B2C front, consumer payments have evolved at a rapid pace in recent years. When it comes time to pay, customers expect to be able to choose between several payment methods, all of which offer different advantages and disadvantages.
Usually, you can pay with your debit or credit card, which might allow you to take advantage of some sort of insurance and earn points or cash back. You can also choose to pay with a digital wallet, like PayPal. Sometimes you can choose to spread a big purchase over several months with Klarna, Affirm, Afterpay, etc.
And yet, B2B transactions haven’t changed so much. Companies are often faced with a simple dilemma: whether to pay directly or spend time negotiating a financing offer. A supplier may offer certain financing options directly. Sometimes companies ask their bank directly. Either way, it is a long, bureaucratic and manual process.
Topi wants to achieve the ideal Venn diagram of B2B payments – a payment solution that requires no paperwork, but a payment method with a few funding offers. Topi believes it can offer financing options of up to five years with instant approval.
“We build all of this ourselves. We are building the first product right now and it will hit the market within the next year, ”co-founder Estelle Merle told me.
This payment solution would be especially useful for expensive purchases – a new machine, a large event, or an upgrade for the restaurant kitchen. Topi plans to integrate its payment solution directly into the payment flow of popular B2B merchants.
Many merchants already offer financing options, but they usually just link to a help page with information on how to go further. “We are digitizing this manual process and bringing it right to the point of sale,” said Merle.
This is not just a technical challenge, because financing SMEs involves certain financial risks. The company wants to be able to make smart decisions without asking for too much information. A customer should be able to know if they are eligible for financing options in just a few minutes.
“We have an in-house risk management team,” co-founder Charlotte Pallua told me. “What we don’t want is asking SMEs to download financial statements from three years ago. Everything must be digital.
She then gave me some advice on data sources. For example, Topi might get sales data from a payment processor or e-commerce performance from a Shopify account. With the deployment of open banking across Europe, you can also imagine entering your business bank account login information to allow Topi to retrieve transactions from the past few months.
Besides Index Ventures and Creandum, several business angels have invested in the startup, such as HelloFresh founder Dominik Richter, N26 founder Max Tayenthal, Adyen founding member Thijn Lamers and WeFox founder Fabian Wesemann.
Topi’s two co-founders, Charlotte Pallua and Estelle Merle, met during their MBA at Harvard. Pallua worked for Apple on financing programs while Merle previously worked for Goldman Sachs and Via Transportation. Topi’s CTO, Ernesto Jiménez, worked for GoCardless and led a large team of engineers there.
When you look further, Topi’s vision goes beyond simplifying payments. If the startup manages to become an important brick in B2B transactions, companies that use Topi could end up spending a lot of time on the Topi portal. They could see upcoming payments and manage prepayments.
But Topi’s portal could also become a SaaS product on its own. For example, customers can choose Topi’s insurance products directly. Once you have mastered the customer relationship, there are many possibilities to grow horizontally. And Topi is well aware of this opportunity.