Fintech Karmen promises more inclusive financing

This start-up is developing an algorithm that grants credits based on objective data. It claims a significantly higher than average rate of funding for women-led businesses.

The start-up Karmen offers an innovative financing system for digitally active SMEs. This young French shot grants credits on the basis of criteria defined by an algorithm. Human intervention is minimal, which allows, according to fintech, to reduce selection bias. This funding method aims to be more inclusive, particularly with regard to female entrepreneurs and minorities.

According to a study carried out in late 2021 by Pierre-Nicolas Schwab (Into The Minds), just 8.1% of European fundraising was done by female-led companies. A similar study conducted in the United States by the Harvard Business Review indicates that only 2.3% of fundraisers carried out in 2020 with Venture Capitalists (investment funds) allocated financing to start-ups led by an entrepreneur. .

A higher rate of companies led by women



“Our analyzes are 100% data-based. No other considerations come into play. This results in a much fairer funding scheme, which avoids any discrimination.”

Gabriele Thierry

Karmen CEO

For his part, Karmen claims a significantly higher rate: 20% of the companies financed through its platform are led by a woman. “Our analyzes are 100% data-based. No other considerations come into play. This results in a fairer funding scheme, which avoids any discrimination,” explains Gabriel Thierry, CEO of Karmen.

This entrepreneur launched his start-up in 2021 with his partners Baptiste Wiel and Sébastien Lubineau. Karmen’s creation follows a professional experience in New York, where he worked for a year for Outbound Ventures, an investment fund. In the United States, Gabriel Thierry has discovered a new form of financing still unknown to us, the “revenue based financing” (RBF) or income-based financingwhich he decided to import to Europe.

The RBF is a specific financing technique for growing companies, which provides for a repayment plan indexed to the income of the financed company. This alternative to traditional bank financing it is aimed in particular at companies active in the digital sector. “Bank financing doesn’t work for digital companies. Their business model is not understood by bankers, who rely solely on the company’s balance sheet,” says Gabriel Thierry.

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“Our solution is more expensive than bank credit, but cheaper than other financing systems such as factoring. It is also much cheaper than fundraising.”

Gabriele Thierry

Karmen CEO

To take into account the specificities of digital technology, Karmen has developed a solution that it connects to a whole series of figures concerning the company in search of financing. The tool sucks up data from the company’s banking apps, numbers pulled from its billing software, transactional information from payment apps like Stripe, data exported from accounting software, marketing data from Google Ads and Facebook, Instagram, LinkedIn accounts, etc. .

From all this mass of data, Karmen’s software establishes a score, a credit rating, for the company seeking funding. If the company in question meets the criteria for the software, it is eligible for a loan. The loan amount and the repayment term are set by the algorithm. The decision is made within 48 hours.

€ 250,000

average funding

Karmen grants loans to digital SMEs for an average amount of € 250,000.

The start-up grants loans for an average amount of 250,000 euros. The companies that use it are generally VSEs, SMEs or start-ups looking for quick access to liquidity to finance their growth, a marketing campaign or working capital needs. These companies have generally not found financing from the banks. “Banks are not excluded“, assures Gabriel Thierry. The CEO recognizes, however, that his company grants loans to riskier-than-average companies.” It is more risky in the eyes of others, but not for us, “he says.

Karmen covers this risk with higher rates than in the banking sector: count between 3% and 8% for funding for a period of 3 to 12 months. “It is more expensive than bank credit, but it is cheaper than other financing systems such as factoring. It is also significantly cheaper than fundraising and there is no dilution of the capital, since we do not take a stake in the funded company.” underlines Gabriel Thierry.

This year Karmen raised € 22 million. The start-up, which employs about twenty people, aims to make 10 million euros available by the end of the year. The young French recovery plans to land in Belgium in 2023.

The summary

  • The start-up Karmen is developing a algorithm for granting credit to digital SMEsbased on company data only.
  • Fintech supports a financing rate companies managed by women much above average.
  • Active in France, the start-up will be launched in Belgium in 2023.

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