FAKTUS, a neobank focused on construction SMEs, secured significant funding to bridge the financial gap in the €2.5 trillion construction market. Their innovative platform connects small builders with institutional investors amidst ongoing financial challenges within the sector. With FAKTUS stepping up, small and medium-sized enterprises (SMEs) can access necessary resources in a traditionally underserved market. Their services could significantly alleviate common issues these businesses face, such as cash flow shortages and extended payment delays.
Previously, construction SMEs, accounting for a significant portion of Europe’s GDP, faced substantial challenges regarding financial resources. High up-front costs and payment delays created barriers in market participation. FAKTUS is now addressing these issues with its AI-driven platform. The company’s €56 million financial package includes €9 million in equity from Lakestar and Foundamental, and €47 million in debt from Insight Investment and Fost Capital. This combination allows for rapid deployment of funds, addressing liquidity issues that have historically hampered growth in this sector.
How Does FAKTUS Address the Financing Challenges in Construction?
FAKTUS provides solutions to major financial challenges faced by construction SMEs. Their AI-powered platform offers services like real-time project cash flow tracking and invoice financing. This technology accelerates underwriting processes, compressing what usually takes weeks into a mere two hours. Such advancements help address payment delays averaging 85 days, offering SMEs the liquidity needed to commence and complete projects on time.
What Are the Key Financial Strategies Employed by FAKTUS?
Key elements of FAKTUS’ strategy include a unique mix of equity and asset-backed debt, empowering them to serve as a bridge between institutional investors and construction SMEs. The funds obtained through this strategy are used to create business accounts, provide upfront material advances, and issue retention bonds. These offerings tailor the financing precisely to each project’s needs. FAKTUS has financed more than 470 construction sites, covering vital infrastructures like schools and hospitals.
Réda Kabbaj, Co-Founder of FAKTUS, highlighted the growth and impact of their approach.
“By combining construction-specific and financial expertise, we bring funding directly to the real economy,”
he mentioned. This statement underscores the company’s mission to integrate SMEs into the larger financial ecosystem effectively. By expanding its client base by 300%, FAKTUS is rapidly connecting construction SMEs to financial opportunities.
Patric Hellermann, General Partner at Foundamental, emphasized FAKTUS’s growth stages.
“When we led FAKTUS’ pre-seed round in 2023, we were excited by the team. Just 9 months later, when Lakestar led the seed round, we had become excited by the product. And now 2 years in, we have the data to be excited by FAKTUS’ execution and customer feedback.”
His remarks reflect the developing confidence in FAKTUS’ market potential and product strength over time.
FAKTUS plans an ambitious expansion into new markets, targeting major European countries by 2026. They aim to finance projects worth €500 million in the next 18 months alone. As the company focuses on comprehensive regional coverage, including in France, the UK, and Germany, it will continue to leverage its funding and technological solutions to support SMEs effectively.
FAKTUS represents a shift in financial accessibility for SMEs in the construction industry. By leveraging AI and a strategic mix of equity and debt financing, they address historical barriers these businesses have faced. As financial inclusivity becomes increasingly important in today’s economy, FAKTUS’ model could prove instrumental in reshaping the European construction landscape. Their upcoming plans suggest a sustained commitment to expanding resources and support for SMEs across several key markets.
