The ecommerce market is on track to pass $5.5 trillion in revenue this year, reflecting not only how many consumers shop online today, but also how many businesses are now selling to them. Today, a Gothenburg, Sweden-based startup called Juni announces $206 million in funding — a $100 million Series B and another $106 million in debt — to build out an e-commerce-focused neobank, specially designed to cater to that growing group of retailers with tools to help them run their businesses.
Mubadala Capital led the $100 million equity round, with previous backers EQT Ventures† Felix Capital† Cherry Ventures and Partners of DST Global is also participating. Meanwhile, the $106 million in debt financing — which June will use to fuel its credit products — is coming from TriplePoint Capital†
Founded in 2020 and launched in 2021, June didn’t close its Series A until October of last year (it raised $21.5 million in July and another $52 million in October), but it has been at a very strong rate of growth – “several hundred percent”, CEO Samir El-Sabini said in an interview. (It didn’t give actual customer numbers.) It won’t disclose its valuation, but sources close to the company tell me it’s now in the neighborhood of $800 million.
Most established banks, and now quite a few neobanks, target small and medium-sized businesses as customers. But the gap in the market that Juni has identified and built to fill is that the needs of e-commerce SMBs, and those doing online business in general, are unique among them.
Ecommerce companies have potentially huge inbound and outbound amounts in their accounts, and that money doesn’t necessarily come in a consistent flow. They probably do business in multiple regions and multiple suppliers. And in addition to potentially selling through a number of platforms and marketplaces (all of which also complicate finance and management), they use a number of other digital tools to sell, run, and grow their businesses.
El-Sabini, who co-founded the company with CTO Anders Orsedal and Jonathan Sanders (which is no longer with the company but remains a “silent partner,” El-Sabini said), all had track records of working in digital companies where they saw, not only for themselves, but also for their clients, an opportunity to build a bank that took that into account (so to speak) and built a financial management service that matched that dynamic.
So around basic banking, Juni’s credit cards, and capital advance/cashback services (for which the debt financing will be used), accounting and analytics are all optimized for the kind of revenues and expenses e-commerce companies have. The platform includes some 2,400 integrations with tools (and the data those tools generate) that businesses may be able to use for their accounting, their digital advertising, their payments on websites, and more.
And while that sounds like a really big product with a lot of tentacles, Juni has actually narrowed its scope over the past year. The company initially launched catering for both e-commerce retailers and digital marketers as the latter group also has many similar dynamics, spends money in multiple jurisdictions and uses a variety of marketing and advertising technology. Now it has shifted its target customer and the tools it is building to the ecommerce vertical and the marketing they undertake.
“We target e-commerce companies,” says El-Sabini. “But marketing is an important function in all e-commerce businesses.”
The company was launched during the pandemic, which was sort of a stroke of luck: there were suddenly a lot more consumers buying a lot more online, and ecommerce companies were trying to both connect with and sell to those audiences without going broke, so it has of a banking partner who could help with that was one of the reasons for such strong growth for June.
Interestingly enough, and as you might expect, that need isn’t going away as the pandemic subsides. Growth is definitely slowing in that sector right now (it’s falling by at least four percent globally and will continue to do so for years to come, eMarketer says) and so e-commerce companies have to deal with that as well.
“The cost base is generally under pressure and we can provide credit with great insights into our clients’ forecasts so they understand cash flow,” and cash flow is the most important factor for these clients, he continued. “What we are also seeing is fear in the markets. So if you can have a long-term partner who can help you and understand your position, that’s obviously very important. We want long-term relationships with our customers.”
Abu Dhabi’s Mubadala Investment Company, the parent company of Mubadala Capital, is a prolific fintech investor (it has backed Brex, SpotOn, GoCardless and many others), and Fatou Bintou Sagnang, the partner who led the investment, said she and the company evaluated a number of other players in the banking world targeting SMEs before investing in June.
“It started by looking at SMBs and fintech enablement and we were looking for companies that fit that statement,” she said in an interview. “We like companies that use technology in smart ways to reduce costs.” She said they spent more than nine months getting to know the young Juni and liked the focus on e-commerce. “We actually see a many parallels with Brex in the US. We came in with some experience doing this for sectors, and our premise is that the next iteration in fintechs challenging incumbents will be more verticalization.”