Parafin Raises $100 Million to Grow Embedded Finance Infrastructure for Platforms
Parafin has raised $100 million in a Series C funding round to grow its embedded finance infrastructure that powers financial services for marketplaces, vertical software-as-a-service (SaaS) providers and payment platforms.
The company will use the new capital to scale its existing products, ship new ones and expand into new geographies, Parafin said in a Tuesday (Dec. 17) press release.
Parafin helps platforms extend financial services to small businesses that are underserved by bank and incumbent methods, according to the release.
“At Parafin, we’ve worked tirelessly to construct our entire company — from our products and teams to our processes — to solve this problem,” Parafin CEO and Co-Founder Sahill Poddar said in the release. “For example, our machine learning-based risk models train on millions of small business performance data to determine eligibility, offers and pricing as opposed to relying on credit scores or requiring personal guarantees.”
Parafin’s infrastructure provides a single integration that allows platforms to offer their small business sellers capital, spend management and savings tools, according to the release.
These services offer customized financial solutions to businesses based on real-time performance data, the release said.
Hans Tung, managing partner at Notable Capital, which led the funding round, said in the release that Parafin has a “differentiated approach to solving small business financing at scale through strategic partnerships with the world’s largest platforms.”
“The team has executed flawlessly in building enterprise-grade infrastructure for marketplaces like DoorDash, Walmart and Amazon, as well as their small and medium business merchants,” Tung said.
Parafin said in September that it began offering finance to Walmart Marketplace sellers through the Walmart Marketplace Capital program.
Parafin said at the time that the Capital by Parafin program offers funding with one fixed capital fee, no interest or late fees, payments based on a percentage of the seller’s sales, and repayment periods of up to nine months.
The company was founded in 2020 and raised $60 million in an August 2022 funding round, saying it wanted to help platforms offer small businesses the financial services they need.
Parafin said in its Tuesday press release that it has grown volumes fourfold since its Series B round, expects to reach profitability within six months, and now funds nearly $1 billion annually for tens of thousands of businesses in the U.S. and Canada.
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