Founded in June 2021 by Jordane Giuly, the former co-founder of Spendesk (the spend management platform recently valued at over €1.5B), Morgan O’hana, and Marc-Henri Gires, Defacto provides seamless and instant financing to small and medium enterprises (SMEs).

The Series A round of €15M, led by new investor Northzone (backer of FinTech Klarna,) includes Defacto’s seed backers Headline and Global Founders Capital, and angel tickets from Thibaud Elzière (founder of eFounders), Rodolphe Ardant (founder and CEO of Spendesk), Didier Valet (former deputy CEO at Societe Generale), and Victoria van lennep (founder of Lendable).

Built with a “Capital by API, not paperwork” mindset

Defacto provides loans and credit to SMEs via its embedded finance platform. Its API-based product enables third parties such as marketplaces, e-commerce platforms and others to embed its products directly in their own products, integrating in a seamless way.

 Its technology-first approach focuses on providing access to working capital to SMEs,  a segment underserved by traditional actors, especially in today’s adverse macro-economic environment.

“Cash flow and access to liquidity are once again reasons for concern due to inflation, repayment of state covid loan and rising interest rates. Traditional banking caters less to SMEs and processes are too slow. An EY study estimates that in France alone, over 40.000 businesses will fail. It was 28.000 in 2021” adds co-founder Morgan O’hana. “We are building a product for builders, not bankers. Access to capital should be fair and instant. Banks rely on data that is at least 18 months old and then take 4 months or longer to process loan applications. We move in real-time.”

Since its launch in France, Defacto built partnerships with over 15 leading B2B marketplaces, FinTech companies, and e-commerce businesses. It distributed over €30m in short-term loans to SMEs through partners such as freelancing platform Malt or fintech such as Agicap or Pennylane. 

Frederic Tan, Product Director at Malt: "We decided to work with Defacto for its flexibility, the quality of its API, and the integration experience. They have been a great ally in our challenge to offer an even more delightful and seamless payment experience for our clients and freelancers. The team is always available and responsive: a pleasure to work with!"

Instant access for SMEs, instead of a wait of 4+ months. 

The digitalization of the SME market is accelerating, with B2B transactions moving online through marketplaces and with increasing penetration of fintech services for SMEs. This trend confirms the embedded lending opportunity, which Defacto is serving with its API-first approach through multiple use cases:

• Fintechs offering invoice financing to their customer base
• B2B marketplaces finance sellers' invoices and offer BNPL to their buyers;
• B2C e-commerce funding their inventories

“Businesses are interacting more and more with digital platforms. Those interactions generate a large amount of data in real-time, which Defacto is leveraging to redefine how underwriting should be done. Banking institutions will never have the right information systems to process this flow of alternative data, to reach real-time and tailored lending offers” says Defacto’s co-founder and CTO Marc-Henri Gires.

"Jordane, Morgan, and Marco are building an incredibly exciting proposition within the B2B space, a category where they are poised to become a leader. B2B commerce is significantly larger than B2C commerce and most of the solutions for buyers and sellers around checkout financing have been lacking technology-led thinking. The explosion of SME platforms will create significant opportunity over the coming years and Defacto we believe has the potential to be at the forefront of these market developments." adds Kilian Pender, a Partner at Northzone joining Defacto's board.

Thanks to a new €400M lending capacity Defacto is now rolling out its solution to Germany, the Netherlands, Belgium and Spain.

Defacto has focused on sustainable growth and carefully built a lean team of 13 of senior and product-focused team members which are soon to include Charlotte Gounot, a veteran of Agence France Trésor (The French Treasury) who formerly ran the front office and market operations at French Debt Management Office.

“Finance needs to shift towards real-time data and processes. Small and medium businesses make for 99% of all European businesses. Yet traditional banking is increasingly shy in supporting them. Defacto’s Capital by API provides entrepreneurs with forms of credit that not only scale with their needs but are also more fair and transparent. It’s an engine for growth. I have rarely met a team so customer-focused and achieving so much in one short year” comments Jonathan Userovici, a Partner at Headline and Defacto’s Seed round lead.