London-based B2B Buy Now Pay Later provider Hokodo has raised $12.5 million in a Series A round led by Mosaic Ventures. Notion Capital and Anthemis also participated in the round. In a vote of confidence, the round also saw investments from notable angel investors Taavet Hinrikus, founder of TransferWise (now Wise), Thijn Lamers, former EVP, Global Sales of Adyen, Max Bittner, CEO of Vestiaire Collective and founder of Lazada, and Rich Laxer, ex-Chairman and CEO of GE Capital. Hokodo is reporting that the new funding will be used to further develop its digital credit technology as well as expand across Europe.
Founded in 2018 by Richard Thornton, Louis Carbonnier, and Sami Ben Hatit, Hokodo brings the BNPL mechanism found in the B2C market to the B2B market. Another way of saying this: Hokodo is aiming to be the B2B Klarna.
Otherwise known as trade credit, in the B2B market it’s a tedious, time-consuming, and often unobtainable process for most SMEs, one that’s remained mostly unchanged for the past 200 years. Not exactly ideal for today’s digital world and one that’s landscape has changed dramatically over the past 15 months.
“Credit terms are crucial to win business and meet customers’ expectations, especially during these trying times, yet the current processes for offering B2B trade credit are severely outdated and not fit for online trade,” comments co-CEO Thornton.
The pandemic, GDPR, and market fluctuations haven’t exactly calmed merchants, with vendors often having to pay upfront when ordering the manufacturing of their goods. All the while sitting on inventory and waiting for customers’ payments when a sale is complete. You see the catch-22 here: cash-flow issues, growth happens at a trickle, and businesses are at risk.
Backed by Lloyd’s of London via the Channel Syndicate, a unit of SCOR SE, the world’s 4th largest reinsurer, Hokodo offers merchants non-payment insurance and the ability to be paid instantly, while the buyer pays later.
“The B2B purchasing experience has long lagged behind its B2C counterpart, and trade customers are calling for more. Hokodo is building a next-generation platform for digital commerce, offering real-time credit to make it easier for businesses to purchase goods and easier for merchants to convert sales and grow. We have seen the enormous impact of "buy now, pay later" technology in the consumer market and, by solving the complexity of real-time trade finance, Hokodo is now bringing it to B2B,” says Mosaic Partners’ Toby Coppel.