Tinder for corporate loans

As CFO of a medium-sized company, Martin Hipp himself struggled for a long time to obtain suitable financing offers. In 2019, he switched sides. With Finmatch, he now wants to bring banks and companies together more quickly.

Most recently, it looked like the hype around digital loan brokers had died down a bit. For example, Funding Circle, a UK-based and long-celebrated intermediary, fell sharply in value over the past two years. Even before the Corona crisis, in March 2020, the company laid off more than 100 employees in Germany. The US role model Lending Club laid off 460 employees in April and thus a good third of its workforce. So are digital financing platforms perhaps not the big thing after all?

In Germany, Finmatch, led by co-founder Martin Hipp, is currently taking off, announcing the opening of new locations and a growing business. In contrast to the role models from Great Britain and the USA, which also broker company loans to private individuals, founder Martin Hipp relies on company financing through banks. He only provides financing for companies that have an annual turnover of at least five million euros and need more than 500,000 euros. Money comes from banks, not from private investors.

Hipp's concept is apparently paying off. First founded in Stuttgart in 2019, the fintech now has locations in Düsseldorf, Frankfurt and, since early February, Koblenz. "We'll be opening more locations soon," says Hipp, a thick headset on his head, sitting in front of his computer. Cities like Hamburg, Berlin and Munich are next on his list.

Medium-sized companies rarely get comparative offers for loans

The numbers also look good at first glance. For Finmatch, 2020 was the first business year with a focus on sales and things are still going steeply uphill. Last year, the team around Martin Hipp was able to broker 350 million euros primarily in loans. In 2019, it was still in the double-digit millions.

Hipp is sure that the great growth is due to the focus on medium-sized businesses. Because in his eyes, it is precisely these that have major problems obtaining reasonable financing offers. He himself has struggled with this for a long time. For almost 14 years, he worked for the medium-sized company Manz, a high-tech engineering company, six years of which he was CFO. "Many company bosses only ever deal with the issue of financing when they need one," he says. "Then they generally get a quote from their local bank." The only thing is, according to Hipp, it takes too long for them to figure out what documents they need for this and to get an offer from their bank. Especially since the companies still can't use it to compare other offers.

I still see a lot of potential for us there.

Finmatch CEO Martin Hipp

Strictly speaking, however, Finmatch is not the first German fintech to court SMEs. Measured by the amount of loans brokered so far, the platform Compeon sets the tone. 400 million euros in loans were apparently brokered by the Düsseldorf-based start-up in 2020. Since its market launch in 2013, the total mediated sum thus amounts to 1.4 billion euros. Creditshelf also calls itself a "partner for SMEs" - has brokered loans worth €98.9 million in 2020, according to a report.

Matchmaking runs like a dating app at Finmatch

Getting a handle on complexity and speeding up lengthy processes are the two points where Hipp is confident it can deliver value to banks and businesses. Finmatch promises to provide businesses with binding finance quotes within ten days if they submit all the required documentation. In turn, the banks in Hipp's network have the advantage that they receive all the information they need about the company directly and only have to decide whether to submit a bid. Finmatch then plays the offers back to the company. The company can then decide which bank it wants to exchange with. So the matchmaking works similarly to a dating app. According to the fintech, it only receives money from the bank in the event of a successful referral.

This is an "awesome" market, says Hipp, referring to its size. Last year, according to his data, 1,800 billion euros in corporate financing flowed within Germany, Austria and Switzerland. Finmatch, with its 350 million, is still microscopic given this volume. Hipp, of course, sees it from a different perspective, saying the sum is a remarkable achievement given such a short time: "I still see a lot of potential for us there."