Tinder for corporate loans

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

Recently, it looked as if the hype surrounding digital credit brokers had died down somewhat. Funding Circle, for example, a long-acclaimed broker from the UK, has seen its value fall sharply over the past two years. Even before the coronavirus crisis, in March 2020, the company laid off more than 100 employees in Germany. US role model Lending Club laid off 460 employees in April, a good third of its workforce. So are digital financing platforms perhaps not the big hit after all?

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

Hipp's concept appears to be paying off. Founded in Stuttgart in 2019, the fintech now has offices in Düsseldorf, Frankfurt and, since the beginning of February, Koblenz. "We'll be opening more locations soon," says Hipp, a thick headset on his head, sitting in front of his computer. Cities such as Hamburg, Berlin and Munich are next on his list.

SMEs rarely get comparative offers for loans

The figures also look good at first glance. For Finmatch, 2020 was the first financial year with a focus on sales and things are still on the up. Last year, Martin Hipp and his team brokered 350 million euros in loans in particular. In 2019, it was still in the double-digit million range.

Hipp is certain that the strong growth is due to the focus on SMEs. After all, he believes that they in particular have major problems obtaining reasonable financing offers. He himself struggled with this for a long time. He worked for the medium-sized company Manz, a high-tech engineering company, for almost 14 years, six of which he was CFO. "Many company bosses only ever deal with the issue of financing when they need it," he says. "Then they usually get an offer from their house bank." According to Hipp, it just takes too long to find out which documents they need and to receive an offer from their bank. Especially as the companies are still unable to compare other offers.

I still see a lot of potential for us.

Finmatch CEO Martin Hipp

Strictly speaking, however, Finmatch is not the first German fintech to court SMEs. In terms of the amount of loans brokered to date, the Compeon platform sets the tone. The Düsseldorf-based start-up apparently brokered 400 million euros in loans in 2020. Since its market launch in 2013, the total amount brokered amounts to 1.4 billion euros. Creditshelf also calls itself a "partner for SMEs" - according to a report, it brokered loans totaling 98.9 million euros in 2020.

Finmatch brokers loans like a dating app

Getting to grips with complexity and speeding up lengthy processes are the two areas in which Hipp is confident it can deliver added value to banks and companies. Finmatch promises to provide companies with binding financing offers within ten days if they submit all the required documents. The banks in Hipp's network, in turn, have the advantage that they receive all the necessary information about the company directly and only have to decide whether they want to submit an offer. Finmatch then sends the offers back to the company. The company can then decide which bank it would like to deal with. The matchmaking process is therefore similar to a dating app. According to the fintech, it only receives money from the bank in the event of a successful match.

It's a "cool" market, says Hipp, referring to its size. According to his figures, 1,800 billion euros in corporate financing flowed within Germany, Austria and Switzerland last year. Finmatch, with its 350 million, is still microscopically small compared to this volume. Hipp naturally sees it from a different perspective, the sum is a considerable achievement given the short time: "I still see a lot of potential for us."