E-commerce in Europe is expected to grow 30% this year to $465 billion, and that's giving rise to a new ecosystem of services built to cater to e-commerce merchants. In the latest development, Juni, a neobank that is built specifically for companies selling online, has closed a Series A of $21.5 million, only 12 weeks after officially opening for business.
The Series A is being co-led by partners from DST Global and Felix Capital with previous backer Cherry Ventures and other early investors also participating. Gothenburg, Sweden-based Juni had previously raised a seed round fo €2 million ($2.4 million) back in November when it was still only in waiting-list mode.
Part of the reason that the latest funding has materialized so quickly is because Juni has had very strong take-up its three short months of life: Samir El-Sabini, Juni's co-founder and CEO, told TechCrunch that startup has signed up 300 businesses from a waitlist of 3,000, representing customer growth of around 500% month-on-month. Customers, he said, were primarily those selling their own inventory; dropshippers selling on behalf of retailers; and performance marketers who have moved into selling goods.
The other reason is that Juni is doing so well on both the investor and customer fronts is because of what it has identified and understood, and is building to fix.
El-Sabini and his two co-founders Anders Oresdal (CTO) and Jonathan Sanders (COO) all come from a background of working in e-commerce and fintech (in fact, one previously was at expenses startup Pleo, which this week announced a major round of funding; and two others worked at another expense management startup) and so they know all too well the shortcomings of a lot of banking services when it comes to serving businesses carry out their business online.
As El-Sabini described it, while traditional banks have long courted SMBs as customers, they have never truly understood the dynamics, challenges and particularities of running an e-commerce business, and that has made them less responsive to the financial profiles and needs of these companies.
“What we do is that we provide insights and knowledge of the e-commerce industry,” he said. “And we can have a low risk profile because we understand all the cost centers. We understand what Taboola is, we know Shopify.” El-Sabini noted that typically e-commerce companies have money spread out across different services such as ad networks, payment gateways and their banks.
“So we give them a unified view of all those dashboards. Then we derive insights based on all that activity to give you ‘the right number',” by which he means a real idea of what the company's cashflow, incomings and outgoings are across all of these services so that you know how much you have to invest or use in other areas, and specifically on advertising to bring in more customers.
“It's all about return on ad spend and liquidity,” said El-Sabini.
Cashflow comes into play also with the payment cards that Juni provides as part of its service, he added.
“You need a card with high spending limits,” primarily to account for how you spend money over the month and then pay it back in in a delayed way (due to the time taken for revenues to clear payment gateways, etc). Without the high limits, your card might get rejected when you use it to pay for marketing and ad campaigns.
“Ad campaigns will not do well if you get a card decline,” he said, since Google and others typically demote you in its algorithms when that happens. “My previous company used to switch cards every quarter because we had so many declines.” That, of course, is a pain to sort out and definitely not what you want to be spending your time doing if you're trying to grow your e-commerce business.
And, when there is a problem, El-Sabini notes that its customer service people speak the same language as the customers, so will be able to address and cope with their issues better.
To sum up all of the above, Juni simply built the kind of bank that the founders wished they had at their previous companies, and that has resonated with others, resulting in what El-Sabini called “tremendous, fund and hopeful growth.” Case in point: the press release I was sent for the story last week noted that Juni had 250 customers across Europe, but by the time we talked the number had grown to over 300.
There is something else interesting about what Juni is doing, which points to a bigger trend in fintech that is probably worth watching, too.
Neobanks have made significant inroads into the world of finance, providing consumers with a better and more modern user experience, more personalization and often better rates than their larger, incumbent counterparts, and we have seen some major developments on that front: huge valuations, big customer growth, and now, slowly, the first of them going public.
Now we are seeing a very strong second wave of neobanks emerging, which are less widely targeted and aiming at more specific, vertical opportunities. These could be something like targeting the agricultural community, or freelancers, or SMBs, or specifically companies working in e-commerce as Juni has.
On that note, there really are a lot of fintech startups targeting smaller businesses with banking services now. They include Finom, Wise, Hatch, Novo, and many others. There is even some competition specifically within e-commerce neobanks, with companies like Viva Wallet, Incard (which appears yet to launch), Yan, and likely more also attempting to cater to the same people that Juni is.
For now it is standing out partly because of how quickly it's getting adopted, and how they have set out to own this space. That will see Juni also moving into a wider range of products to fill out more of the needs of running an e-commerce business, be it more kinds of credit products to keep cash flowing, one reason why storied investors like DST are interested.
“In just three months, Juni has already proven that it has the potential to become the next big technology solution for merchants worldwide. The product resonates strongly with their customers by solving a clear pain point and putting time back in the hands of digital entrepreneurs,” said Joseph Pizzolato and Susan Lin, investors at Felix Capital, in a joint statement. “As investors, we look for signs of ‘customer love’ and ‘digital queues’ in all our investments, and a waitlist of over 3,000 SMEs for Juni’s product is as good as we’ve seen! We immediately connected with the team and we firmly believe in their vision. Their attention to detail and understanding of their customer’s needs puts them in an ideal position to win this market.”
“Samir, Anders, Jonathan, and the team continue to amaze us,” added Sophia Bendz, a partner at Cherry Ventures. “Since Juni’s beta launch, they’ve experienced an extremely impressive month-on-month transaction volume in such a short period. They have also built a world class team across compliance, finance, tech, and marketing functions as well as fostered a deep commitment to building community and trustworthiness. They are well on their way to becoming the go-to financial companion for e-commerce entrepreneurs globally. This is only the beginning and we couldn’t be more excited to continue to back this team.”