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Payment flows API startup Formance raises $3.1m pre-seed

Formance's $3.1m pre-seed raise will help it expand its offering that tackles fintechs’ and marketplaces’ final pain point

By Amy O'Brien

Formance cofounders Anne-Sybille Pradelles and Clément Salaün

Even in the current climate, payments shows no sign of cooling off as the most lucrative frontier of fintech — Paris-based YC alumni Formance has just raised a $3.1m pre-seed to scale up its product offering and onboard new global marketplace and fintech clients. It is yet another example of just how infinite the payments possibilities for fintechs are. 

What does Formance do?

Formance has developed four tech API products that are designed to make it easier and quicker for companies with complex payments networks (like online marketplaces and fintechs) to track payment flows between pay-ins and payouts in real time and across different merchants and intermediaries. 

Most of Formance’s offering is open-source and free, then it charges for any more customisable building blocks (which are cloud-based) that companies may want to add on top of that, on a subscription model. 

Who’s investing in Formance? 

Formance has an impressive list of investors, including what’s probably the world’s best known accelerator. Investors include:

What’s the payments market like? 

Payments is an extremely well-capitalised, well-trodden path when it comes to European fintech, but there are evidently still pockets that new startups can tackle. 

So far, there have been different approaches to the problem of monitoring complex payments processes. The global bigwigs like Stripe and Adyen enable customers to track the payments made through their platforms — but not all the pay-ins and payouts a company might have.

The closest solution out there to the problem Formance is trying to solve so far? US-based Fragment, which is at seed stage and has also developed a ledger API for finance teams to build a database of payments flows. 

What’s next for Formance? 

Formance is in the fortunate position of not needing a licence for what it does — and so it’s already talking to marketplace and fintech companies based all around the globe. 

So far, it’s been piloting its APIs with one fintech since February. With the fresh funds, it’s going to launch with more of the clients it’s been speaking to — which cofounder and COO Anne-Sybille Pradelles says are mainly based in Europe, the US and Africa. 

It’s also planning on growing its team to 12 people this year, mostly hiring in engineering..

“We want to be conservative with hiring at the moment and focus on having a really strong core team of developers to work on the product before we scale,” Pradelles tells Sifted. 

For now, Formance is targeting startups and SMEs that are categorised as marketplaces or fintechs, but Pradelles says that next year the company hopes to start working with enterprise customers. 

Sifted’s take? 

Formance seems to have identified a niche gap to fill when it comes to payments processing, something that’s tricky to do with all the payments noise out there. If it manages to convince enough companies to migrate away from the systems they’ve built in-house to its more simple solution, it could be onto something.

The hard bit will be elbowing through the crowd of European payments giants to gain market recognition among startups and SMEs for what it can actually do to help. 

Amy O’Brien is Sifted’s fintech reporter. She authors Sifted’s fintech newsletter and tweets from @Amy_EOBrien.

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