Invoice finance platform raises £2.7m, eyes UK expansion

By Ryan Weeks on Monday 7 November 2016

Alternative Lending

Finnish online invoice finance platform closes investment round, looks to launch in UK in early 2017.

AREX, an online invoice finance platform for SMEs, has clinched £2.7m in investment in a round led by Finland’s Lifeline Ventures. The fundraise also saw participation from LocalGlobe, which is based in London, and a number of angel investors.

Founded in 2014, AREX is an online invoice finance platform which allows small businesses to trade their unpaid receivables online as a means of plugging up cash-flow gaps. The platform allows business to factor invoices individually, charging a facilitation fee of 0.25 per cent of each financed invoice. By connecting small businesses to investors directly, AREX claims to reduce the total cost of transactions by 70 per cent.

The platform is already operational in Finland, and plans to use its latest injection of funding to branch out into the UK, where it already has an office. AREX also has an office in Barcelona. The £2.7m will also be used to further expand its products.

With less than 3 per cent of invoices worldwide sold via factoring companies at present, Lifeline Ventues founding partner Timo Ahopelto says that the total factoring market could be worth up to a whopping $70 trillion globally. “Kim and the team are building an entirely new asset class, that is both a new model for investors, enabling them to participate in SMB financing in a way that simply wasn’t possible before, and a critically important way for small and medium businesses – potentially across the world – to release their working capital,” he said.

In the UK, AREX will run into competition in the form of such marketplaces as MarketInvoice, Platform Black (which now operates under Sancus BMS colours) and Investly.

Further expanding on the market opportunity, Kim Forsman, CEO of the AREX platfor, said that the factoring industry – already a $2 trillion market globally – is one “which has remained largely manual and little-changed by technology, with SMBs obliged to sell their invoices via intermediaries at hugely disadvantageous terms”.

LocalGlobe’s Robin Klein said that AREX was “yet another example” of the “ambition and brilliance of execution” within the Nordic fintech sector at present. It’s certainly true that the Nordic fintech scene has been churning out some good stories of late, with the most recent example coming courtesy of equity crowdfunder Invesdor, which produced a rare exit opportunity for investors in the form of an IPO for former fundraiser Heeros Oyj in October. 

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