Beyond Software: allO and Circula's Embedded Finance Journey

Hi embedded finance friend

After a month in Mumbai, I am finally back in Berlin, right in time for a few events.

I will travel to Helsinki tomorrow for Nordic’s Fintech Summit 10th edition. I will give a short keynote about banking-as-a-service and host a panel discussion. It’s not too late to get your ticket (Register here).

And next week, I will join many familiar faces for Taktile’s spring breakfast in Berlin on May 21st, which is being held in partnership with This Week in Fintech (Register here).

Please reach out if you attend any of these events and want to chat!

And now let’s dive in 👇

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Following Toast’s footsteps: European allO Launches Embedded Lending for Restaurants

What happened: Restaurant software provider allO launched financing products for its customers (allO). Restaurant owners can apply for financing up to 200,000 EUR with a revenue-based repayment method.

My comment: allO is an all-in-one software solution for restaurant owners that helps them run their business. The available features include taking customer orders, payment acceptance, reporting, and kitchen operation tools. allO closed a €5 million funding round last year led by 20VC and its General Partner Harry Stebbings explained his investment back then with “Restaurant software in Europe is broken. Restaurants have to juggle up to 10 different software products, which are fragmented, don’t speak to each other and severely hinder productivity and bottom line for restaurant owners”.

Perhaps the closest comparison to allO is the US provider and Embedded Finance role model, Toast. allO already offers payment features but is now extending its Embedded Finance product offering into lending. In partnership with Finmid, allO offers a revenue-based lending product which enables restaurant owners to apply for up to 200,000 EUR in financing. Since the restaurants already use allO for all their activity, no further documents or details need to be submitted with the funding request. The repayment is decided based on a percentage of daily sales. Such revenue-based lending products were very popular some time ago, but many providers have returned to more traditional lending models.

Overall, we are seeing various providers in the restaurant and hospitality landscape that have launched financing products for their customers in the past few years. Thus, a restaurant can nowadays apply for financing from the platforms where customers place orders (e.g., JustEat, Wolt), the vertical SaaS or integration layer (e.g., allO, Nory) or other business administration tools (e.g., cashflow or bookkeeping tools). There are plenty of places where a restaurant owner can apply for funding, but which makes the most sense? We will see based on who will continue their offering and who will not.

From SaaS to Fintech: Circula Blurs the Lines of Expense Management and Financial Services

What happened: Berlin-based Circula has announced the extension of its Series A round, which is mainly focused on developing its AI-powered autonomous expense processing (Circula, EU Startups).

My comment: I typically don’t like covering pure funding news. But either it was a quiet week with bigger announcements (there are many smaller news stories in the section below), or I just missed it. I found Circula’s funding the most interesting for two reasons.

Firstly, and very personally to me, Circula’s VP of Product, Riaan Stipp, spoke at our last Embedded Finance Review Event in Berlin. After Accountable (acquired) and Pliant (Series B funding), it seems many of the companies that participate in our events are on a roll (correlation or causation? Who knows 😉).

Secondly, Circula is an excellent example of a company that is between fintech and expense management. There are a lot of different companies in this space, and personally, I would categorise some of them as pure fintech companies (e.g., Pliant, Moss, Pleo, Spendesk) and others (such as Circula) as something in between. The first group offered card products from day one, built them as much as possible in-house, and the card offering is core to their offering. On the other hand, Circula launched its card product roughly four years after its foundation, partnered instead of building in-house, and not all its customers use the Circula card product.

That said, Circula might increasingly transform into a fintech company over time, as this is common for many non-financial brands that have launched financial products. But likely, one thing will stay true, as Toast CEO Aman Narang famously said: “Our customers come to us for the technology, but we monetise them through our financial services.”

In other Embedded Finance news

• Interview with NatWest Boxed CEO Andy Ellis about scaling Embedded Finance with trusted brands (Fintech Times).

• N26 launched a mobile phone plan in Germany (The Paypers). Revolut has launched a similar offering, and I wonder if Neobanks will launch other non-financial products as well.

• Solaris CEO Carsten Höltkemeyer discusses the company's future after the rescue financing a few weeks ago (Solaris).

• German startup GreenBanana unveils a platform that allows retailers to integrate various BNPL providers through one integration (Finextra).

• How Liberis Built a Scalable Lending Platform with Formance (Formance).

• PayPal’s Embedded Finance vision: Michelle Gill reveals how cash flow lending reshapes SMB access to capital (Tearsheet).

• US Bank and Banking-as-a-Service provider Green Dot is partnering with Samsung to develop new Samsung Wallet capabilities (The Paypers).

Event Calendar

• May 15th, Helsinki: Nordic Fintech Summit - I will be giving a keynote and hosting a panel discussion [Register here]

• May 21st, Zurich: Embedded Finance Event hosted by newly founded Swiss Embedded Finance Association [Register here]

• June 25th, Frankfurt: TechQuartier Digital Finance Accelerator - I will be hosting a Masterclass [More details]