Melio, the startup that provides digital payment solutions for small businesses, finished an astounding year by raising $110 million, based on a valuation of $1.3 billion.
Melio has developed a digital platform that allows small businesses to pay their suppliers quickly and efficiently, similar to other payment applications like Bit. Most such payments are currently conducted via bank transfers or check, requiring substantial paperwork.
The company is only operating in the United States, where its owners estimate about 40% of deals are still done using paper checks, after which a small business owner has to register the transaction into accounting software. Melio digitizes such activities.
“Melio has identified both the opportunity and duty to help small businesses manage their finances remotely and improve cash flow, in normal times as well as during this crisis, as physical payments supply chains are interrupted and overwhelmed,” commented Gilroy, a general partner at Coatue, which led the funding round, in a press release. The investment arm of Salesforce, which is becoming an increasingly bigger investment in the Israeli market, also joined the financing round.
“In January 2020, we were 30 workers. This January, we were 200, and we are still short 100 engineers, but we will also increase marketing and sales operations,” said Matan Bar, CEO and co-founder of Melio. “We grew the number of monthly active users by 2,000% in the past year.” He added that the fundraising round reflected the growth in the volume of deals and all other indices of the company’s growth.
Bar also said the company intends to invest every dollar in growth “because it’s ‘winner takes all’ when it comes to payment applications.”
Melio is available as a stand-alone service as well as a platform with partners like banks, accounting software and other companies that want to supply the capabilities of Melio to their customers. One can cautiously predict that at some point the solution will be assimilated into Salesforce’s customer relations platform.
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Bar said the coronavirus crisis was actually an opportunity for a company like Melio. “Fintech companies in general, and especially those tied to online payments, made in one year what they had made in five or ten years,” he said. “We feel fortunate to be in a field that became so significant for small businesses last year, and see great responsibility in continuing to support them in response to special constraints that this period dictates.”
Melio was founded in 2018 by Bar, COO Ziv Paz and CTO Ilan Atias. The current financing round brings the total amount of investments in the company to $256 million, $240 million of which was raised last year.