OatFi comes out of hiding to improve working capital for SMEs with $8 million in funding

By Edlyn Cardoza

October 13, 2022

  • APIs
  • B2B payment platforms
  • BNPL

OatFi, a company that provides working capital infrastructure for B2B payment platforms, announced an $8 million funding round. OatFi also raised a $50 million credit facility from Architect Capital.

QED Investors led the round with participation from existing investors Portage Ventures, Picus Capital and Cambrian Ventures, and the addition of new investors Fin VC, Dash Fund and Lorimer Ventures. Ziv Paz, co-founder of Melio, also participated in the round. This brings total funding to $11.25 million, following a $3.25 million pre-seed round co-led by Portage Ventures and Picus Capital earlier this year.

QED Investor Partner Laura Bock said: “Although net terms and invoice factoring have been around for a long time, they rarely both solve the cash flow needs of suppliers and their customers. With B2B payments moving online, OatFi is able to unlock the critical data its payment and billing partners finally have in digital form to deliver automated, instant working capital to businesses on both sides of every B2B transaction. We’ve enjoyed working with Mike and John and seeing their incredible progress over the past year and QED is thrilled to lead OatFi’s Seed Series.

OatFi provides the end-to-end infrastructure for B2B payment platforms to launch integrated working capital tools such as buy-it-now, pay-later (BNPL) or various receivables financing products. These products optimize cash flow for SMEs by maximizing days outstanding payable – the time it takes to pay invoices – while reducing days outstanding on sales – the time it takes to collect money owed.

Nearly two-thirds of all businesses in the United States still pay by cash or check, including 80% of the country’s 32 million SMBs. That’s $10 trillion in trading volume every year. Using OatFi, platforms can set up their own UX that integrates seamlessly into their existing platform by essentially creating their own “BPL” or receivables finance solution without initiating a credit business.

“Most existing B2B solutions have cut and pasted the BNPL playbook for consumers, but the issues for businesses are very different. An SME’s working capital problem can exist on both sides of its cash flow conversion cycle, depending on its relationship with suppliers and customers. As platforms bring B2B payments online, we want to address the problem at the source,” said Mike Barbosa, CEO of OatFi. “Thanks to our flexible infrastructure, B2B payment platforms can integrate the desired user experience into their existing product. While a simple widget might work on a consumer payment page, the product feed for B2B payments is often unique. OatFi provides an API-first infrastructure that allows our partners to launch their own tools, while we manage the [complex] Things.”

OatFi integrates with bill payment and billing, payment infrastructure, and expense management platforms to enable the launch of treasury tools. By extending the due dates of payments or by transforming outstanding payments into immediate cash, OatFi offers a solution to SMEs with cash flow difficulties and to B2B payment platforms that wish to better serve their users.

Platforms that use OatFi’s product can “build their own” BNPL or receivables finance tool through OatFi’s API approach. Thanks to the launch of these embedded tools with OatFi, platforms can also increase LTVs without possessing credit risks.

“SMEs are currently facing major macroeconomic challenges with rising inflation and shrinking economic conditions, but cash flow issues have always been a problem,” Barbosa said. “Tough payment terms compress operating cash flow, making it difficult to fund growth and keep track of general operating expenses. With the rapid arrival of online B2B payments, we have the opportunity unique to help platforms solve this problem at the source for SMEs.

“A new category of business-to-business BNPL is emerging, and OatFi is poised to disrupt it. BNPL is very different from business-to-consumer BNPL, and it sits at the intersection of several fintech trends – BNPL, digitization of SMEs, fintech SaaS, B2B payments and integrated finance, among others,” said Rex Salisbury, founding partner at Cambrian, which also invested in OatFi pre-seed. “I’m excited to support OatFi as they expand to more businesses across the country in their next stage of growth.”

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