FINOM, the fast-growing mobile-first financial management platform for SMEs and freelancers, has acquired Kapaga, a UK-based cross-border payment service facilitating international trade for SMEs. The transaction will solidify FINOM’s position as the leading financial services provider for SMEs, and bolster its expansion plans in the UK and across the continent. 

The B2B financial services for SMEs market in Europe is currently underserved. Just 3% of the 24 million European SMEs use digital platforms to manage their finances, emphasising the gap in the market. The majority of owner-managed businesses continue to use traditional banks, despite the growth of the fintech sector globally and the rise of platforms created for entrepreneurs by entrepreneurs that offer services tailored to a diverse customer base.  

FINOM has developed a mobile-first platform, blending a wide range of high-quality financial management products into a holistic back-office solution for entrepreneurs and freelancers. The suite of features available includes e-invoicing, transactions within the Single Euro Payments Area (SEPA), and digital wallets. Since launching in 2019, FINOM has seen impressive growth in France, Italy and Germany, where it is the most downloaded fintech app for SMEs. The company has the highest customer scores across IOS, Android and Trustpilot compared to others in this space, such as Qonto and Revolut. FINOM is live in 27 countries and has plans to expand into other key European markets.

Founded in 2020 by Bloomberg alumna, Katya Dorofejeva, Kapaga has seen revenue growth surpassing £10m a year, serving more than 200 UK SMEs and corporate entities in managing their finances and operating internationally across multiple currencies. Kapaga’s cloud architecture offers companies transparency and efficiency in streamlining cross-border payments, allowing them to send and bill money to 190+ countries in numerous currencies via a single and secure application process. The acquisition demonstrates FINOM and Kapaga’s shared mission to provide innovative, accessible and tailored services for European  SMEs and to set a new standard for the industry. The idea for a partnership first emerged during a founders’ ski trip hosted by existing investor Target Global, a pan-European venture capital firm with a track record of backing leading fintech start-ups, including Revolut, Kuda, and Fintecture.

Kos Stiskin, Co-Founder of FINOM, commented: “Entrepreneurs and freelancers are the backbone of the European economy, producing $8 trillion of value annually, but costly and time-intensive bureaucracy means they cannot run their business as efficiently as possible. At FINOM, we truly believe in the value of collaboration, and working with Katya and her highly experienced team will enable us to create a product for SMEs that meets all our customers’ banking needs.”

Katya Dorofejeva, Founder and CEO of Kapaga, commented: “Joining forces with FINOM enables us to explore a unique and growing product. Entrepreneurs and freelancers are facing a plethora of challenges in setting up tactile business accounts that serve their needs. There is currently no continental fintech player that equally serves the UK and Europe in specifically targeting SMEs - until now! This merger solidifies the two companies’ pursuits of providing tailored payment services for the entire continent. Kos and the team really understand the market and the specific needs of small and medium-sized businesses. I am sure that we will benefit from each other’s knowledge and expertise to serve this crucial segment and grow the fintech arena.”

Mike Lebanov, Partner at Target Global, commented: “It is fantastic to see two of our most promising portfolio companies team up to bring innovative finance solutions to such a huge yet underserved market. FINOM and Kapaga have both demonstrated strong growth over the past two years, and I am confident that through their shared vision and understanding of the market, they will create a powerful product that has the potential to disrupt the B2B banking services market.”