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While theoretically simple, cash flow management can become quite complicated in practice. Companies can be presented with many cash flow management systems and will need something else to be suitable.
When there is high demand, it is often prudent to get a custom-built solution designed that is fit for purpose. This proved to be a significant boost for Agicap, a software startup with big ambitions.
Massive Demand
The TechCrunch article points out that, on average, Agicap’s clients manage 15 different bank accounts each. So, the chief financial officers (CFOs) working for these companies sometimes struggle to ensure that there is enough money in the right bank account to pay employees and suppliers across different subsidiaries, countries, and currencies.
That’s also why they turn to Agicap to centralise cash-related data and forecast future cash positions. The Lyon-based startup just raised a €45 million (around $48 million at current exchange rates) Series C funding round from a single investor: AVP, the VC firm previously known as Axa Venture Partners.
The article adds that the fintech startup previously raised $100 million in 2021, right in the middle of the digital funding frenzy around the pandemic. At the time, the company reached a valuation of €415 million (or around $450 million at current exchange rates). The value of the business has since inflated “substantially,” per Agicap, though it isn’t disclosed by how much.
“We aren’t disclosing the exact valuation, but we have managed to increase it substantially since 2021,” co-founder and CEO Sébastien Beyet told TechCrunch. Pressed on this, he gave us a hint of the new valuation: Les Échos previously reported that Agicap was raising at a valuation between €700 million and €800 million (or $750 million to $860 million) — and Beyet said: “We’re sticking with this range.”
Narrow focus — ‘huge’ market
The article points out that Agicap’s relative success is due to its narrow focus on treasury management software—it isn’t trying to do everything at once like most fintech startups.
It’s also a relatively untapped market, as many companies still rely on Excel and file exports from bank accounts and ERP software. Evidence of this lies in a recent study Agicap did with 500 European midmarket CFOs. When asked about the tool of choice to manage and forecast their cash positions, 80% of them answered Excel.
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The article also notes that Agicap’s main customers are CFOs and financial departments. When teams are in charge of money like a product, they’re not going to unsubscribe anytime soon.
Agicap customers can sync data from their existing bank accounts, credit institutions and ERP solutions. It then acts as a central repository to view everything related to past and future cash flows. But Agicap isn’t just a visualisation dashboard; users can also initiate and schedule transfers directly from its interface.
“We think that we’ll be able to use cash management as the basis for what we call the CFO suite, and provide other tools to CFOs and treasurers,” Beyet said.
In that vein, more recently, the startup added accounts payable and accounts receivable. These features help you get paid faster as you can see pending invoices and nudge customers in case they’re late. Similarly, Agicap imports purchase orders so that you can pay suppliers on time and use that data for your upcoming budgets.
The startup currently has 8,000 customers with around half of them in France. Most of its remaining customers are spread across other European countries. “We focus on mid-sized companies, with an annual revenue of €5 million to €10 million on average — and up to €500 million,” Beyet said.
“We’ve already reached a break-even position on a cash basis for this quarter. So we didn’t need to raise any additional funds to continue our development. But we believe our market is huge,” he added.
The article points out that, in addition to hiring new people to find new customers, Agicap plans to use the funding to launch new features around credit management and foreign exchange risk management.
What about offering credit products directly? “We don’t want to become a bank,” said Beyet. “In other words, we don’t want to take on the financial risk of lending money ourselves. We know how to make software, and that’s what we intend to focus on.”
The benefit of custom solutions
Companies face unique challenges and unique demands from customers.
While an expensive investment, a custom-built system can address the company’s specific needs, which can be a game changer when it comes to avoiding financial distress and liquidation.
