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Meet Topi, a Berlin-based startup that raised a $4.5 million pre-seed funding round co-led by Index Ventures and Creandum. The company is working on a payment solution that is both fast and capital efficient for businesses.
On the B2C front, consumer payments have evolved at a rapid pace over the last few years. When it’s time to check out, customers expect to be able to choose between several payment methods that all offer different advantages and drawbacks.
Usually you can pay with your debit or credit card, which could let you take advantage of some kind of insurance and accumulate points or cash back. You can also choose to pay with a digital wallet, like PayPal. Sometimes, you may choose to spread a big purchase over several months with Klarna, Affirm, Afterpay, etc.
And yet, B2B transactions haven’t changed as much. Businesses often face a simple dilemma — they pay directly or they spend some time negotiating a financing offer. A supplier can offer some financing options directly. Sometimes companies ask their bank directly. In all cases, it’s a lengthy, bureaucratic and manual process.
Topi wants to reach the ideal Venn diagram of B2B payments — a payment solution that doesn’t require any paperwork, but a payment method with some financing offers. Topi thinks it can offer financing options of up to five years with instant approval.
“We’re building all of that ourselves. We’re building the first product right now and it’ll come on the market during the course of next year,” co-founder Estelle Merle told me.
This payment solution would be particularly useful for expensive purchases — a new machine, a big event or an upgrade for the restaurant kitchen. Topi expects to integrate its payment solution directly in the checkout flow of popular B2B merchants.
Many merchants already offer financing options, but they usually just link to a help page with some information to go further. “We’re digitizing this manual process and brining it straight to the point of sale,” Merle said.
This isn’t just a technical challenge as there’s some financial risk involved with SMB financing. The company wants to be able to make smart decisions without asking for too much input. A customer should be able to know if they are eligible for financing options in just a few minutes.
“We have an in-house risk team,” co-founder Charlotte Pallua told me. “What we don’t want to do is ask SMBs to upload financial statements from three years ago. Everything has to be digital.”
She then gave me some hints about data sources. For instance, Topi could get some sales data from a payment processor, or e-commerce performance from a Shopify account. With open banking rolling out across Europe, you could also imagine entering your business bank account login information to let Topi fetch the past few months of transactions.
In addition to Index Ventures and Creandum, several business angels invested in the startup, such as HelloFresh founder Dominik Richter, N26 founder Max Tayenthal, Adyen founding team member Thijn Lamers and WeFox founder Fabian Wesemann.
Topi’s two co-founders Charlotte Pallua and Estelle Merle originally met during their MBA at Harvard. Pallua spent some time working for Apple on financing programs while Merle has previously worked for Goldman Sachs and Via Transportation. Topi’s CTO Ernesto Jiménez worked for GoCardless and led a big engineering team there.
When you look further down the road, Topi’s vision goes beyond simplifying payments. If the startup manages to become an important brick in B2B transactions, companies who use Topi could end up spending a lot of time on Topi’s portal. They could see upcoming payments and manage early repayments.
But Topi’s portal could also become a SaaS product on its own. For instance, customers could choose insurance products from Topi directly. Once you control the customer relationship, there are a lot of possibilities to expand horizontally. And Topi is well aware of that opportunity.
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