Greece’s startup financial firm “Viva Wallet,” one of the so-called “neo-banks” making inroads with small businesses, has raised a total of $80 million in financing to expand its footprint as well as the services it offers.
These smaller financial institutions continue to make waves in financial markets across the world, with their nimbleness making it easier for them to allow their customers to bank online and use a range of new technologies.
These smaller firms also allow for more personalization in the relationship between the bank and the customers it serves.
Viva Wallet, aimed toward servicing small and medium-sized merchants, will now be able to expand its Merchant Advance loans portfolio.
Viva Wallet soon to be a presence in 26 European countries
It is already operating in twenty-three European countries and has expansion plans for Croatia, Hungary and Sweden.
The move to fund the startup is garnering attention because of who is investing in it, according to experts. Tencent, the Chinese technology behemoth that is part of WeChat, has contributed, as well as the European Bank for Reconstruction and Development (EBRD).
Danying Ma, MD of Tencent Investment, stated “Tencent shares Viva Wallet’s aspirations of creating value for users and partners through innovation. We look forward to supporting Viva Wallet in its expansion across Europe.”
In addition, Hedosophia, the little-known fund that has dabbed in SPACs in the United States, is also in the mix, according to a report from Techcrunch.com.
Breyer Capital is also a contributor of funds to the startup. Jim Breyer said in a statement after the announcement “We are very excited to help Viva Wallet unify the fragmented European payments ecosystem across 23 countries. Viva Wallet is at the forefront of a paradigm shift for fintech and together, we expect to transform the payments industry in Europe.”
New legal entity would hold loans for Viva Wallet
Yannis Larios, Viva Wallet’s Vice President of strategy and business development, confirmed to Techcrunch that the firm is in the process of closing a large Series D that will value the company at €1.5 billion ($1.8 billion).
Although he would not disclose the actual value of the company at present, it is now seen as a formidable presence in its field.
The VP stated in the report that when his firm closed its Series C in the second half of 2019, it had a valued of €305 million ($368,985,950).
At this point it is unknown if this Series D is the same as a €500 million ($603 million) round of investment that Viva Wallet raised, according to a Reuters report in August 2020, which was meant to enable it to build a type of loan book centered on its Merchant Advances and other such loans.
If the deal is approved by regulators, investors would receive stakes in a new legal entity, which will hold the loans.
Although this is not the usual way in which loan debt is handled by neo-banks, but experts believe that the point of going through this process is to allow startups to have more agility by removing some of the risk it carries on its balance sheet.
It is unknown at present if there will potentially be less accountability regarding such loans.
2021 gains come after stellar 2020 earnings
The funding comes as Europe begins to ease its transition out of the lockdowns of the pandemic, which ravaged the continent in the past year, particularly, of course, the tourism sector, on which southern European countries are particularly dependent.
Since it has a primary focus on merchants, Viva Wallet is just the sort of nimble tech startup that may enable some businesses to reestablish themselves as the Summer 2021 tourist season begins.
Haris Karonis, the founder and CEO of Viva Wallet, said in a statement “We are excited to onboard Tencent, EBRD and Breyer Capital to Viva Wallet.
“We are confident that our investors’ extensive know-how and network of partnerships will accelerate Viva Wallet’s plan to unify the fragmented European payments market. The technology innovations that we are bringing forward to European merchants will help them provide a frictionless, localized payment experience to all their clients, and liberate them from the hassle of maintaining legacy card terminals.”
The field of Neo-banks is becoming more and more competitive, with other firms such as Finom, Wise, Monzo, Penta, Starling, and ANNA in the mix at present.
However, TechCrunch says that Viva Wallet is receiving special attention now because of its proven track record in the sector.
VP Larios has stated that his firm has been profitable as of the first quarter of 2021, adding to the gains that were made last year that totaled a whopping 40%.
Viva Wallet focuses on businesses, not consumers
As of now, Viva Wallet has 60,000 merchants using its system. Larios stated to interviewers that he expects the firm to have 100,000 such clients by the end of 2021.
Explaining that one of the ways which has enabled it to become so successful is that it has taken a “very localized approach to growth,” Larios notes, going so far as to set up offices in every country where it operates — which if course is not technically necessary in this digital-powered world.
Even as brick and mortar financial institutions close their physical locations, Viva Wallet is relying on the security that merchants may feel when dealing with an entity that has offices nearby.
“Viva Wallet is proving the resilience of its business model,” Larios adds.
The gigantic funding increase will be used not only to expand its loans program but to add to areas where Viva Wallet is already prominent, including the point of sale Tap-On-Phone option.
Unlike the system used by Square, the tap-on-phone system turns any Android device, including a smartphone, tablet or other device, into a card terminal, with which both contactless and PIN payments can be made.
No other hardware is needed for this type of transaction.
Larios also told reporters that there will be some mergers and acquisitions going up for the firm in order to expand to yet more markets.
However, he states that Viva Wallet will not be expanding into the consumer market, maintaining that this particular arena has proven to show very slim, or even no, profit margins.
Larios states that “Viva Wallet focuses on businesses only and will continue to do so. The consumer segment is not providing any space for profitability and we are seeing that all competing neo-bank business models focusing on consumers are mostly burning money away.
“We are focusing on the SMEs (small and medium-sized enterprises) of Europe, providing a pan-European payments solution which however is very much localized to address merchants’ true local needs in terms of local payments acceptance, local IBAN accounts, local BIN business debit cards etc.”
Larios holds that even though his company may have a great deal of smaller firms as customers, he notes that it also serves medium-sized businesses as well, along with even some supermarket chains, this will remain its focus area of expansion.
This means the firm has carved out its own niche to the point that larger investors will be more likely to invest in Viva Wallet as well.