Hero, a fintech startup based in Paris, has recently secured €11.3 million ($12.2 million) in funding from Valar Ventures. The company aims to revolutionize banking for small businesses by providing a comprehensive range of financial services, including managing money, accepting payments, and offering credit lines.
In France, it is relatively easy to register a company and open a bank account. However, traditional banks offer more than just basic banking services. Small business owners often have to navigate multiple fintech products and seek short-term loans from revenue-based companies or traditional banks to finance their operations.
Hero aims to simplify this process by aggregating various tech and financial services into a single product. Customers can use the platform to send, receive, and hold money across multiple accounts and IBANs. Hero also offers payment cards, providing a seamless solution for businesses.
Unlike many fintech startups that rely on banking-as-a-service partners, Hero has developed its own core banking system. This gives them more control over their infrastructure and allows them to tailor their services to the unique needs of their customers.
One key advantage of using Hero is its competitive transaction fees, starting at 0.4% + €0.15 per transaction. This makes it an attractive option for retailers looking for a payment solution, especially when compared to other providers like Stripe.
The main revenue stream for Hero comes from its credit offering. Businesses can submit supplier invoices to Hero, who will pay them immediately. The businesses then have up to 90 days to repay the bill, helping them manage cash flow effectively. Similarly, businesses can also submit their own invoices and receive the money in advance, eliminating the uncertainty of when clients will pay. However, customers will need to pay interests on these credit products.
Hero has developed its own risk scoring engine to assess clients using both public and private data. This allows them to make informed decisions about providing financing to their customers. The startup has also partnered with a financial institution to create a debt fund, although further details about this partnership have not been disclosed.
Hero’s founder and CEO, Roland Jais-Nielsen, understands the challenges of cash flow issues from his previous experience as the founder of Merci Handy, a brand of hand sanitizers and cosmetics. His firsthand knowledge of the struggles faced by small businesses has influenced Hero’s approach to providing financial solutions.
While building everything in-house gives Hero more control and potentially sets them apart from other financial companies, it also presents challenges. The company is currently awaiting regulatory approval from the ACPR for its payment services, highlighting the importance of compliance and meeting regulatory requirements.
With this recent funding round, Hero is well-positioned to continue developing its innovative banking product for small businesses. Its focus on simplifying financial services and providing tailored solutions could give them a competitive edge in the market. As they await regulatory approval, it will be interesting to see how Hero’s all-in-one approach resonates with small business owners and if it can truly replace traditional banks for these customers.
