Two years after pivoting from peer-to-peer lending to international financial management, Toronto-based FinTech platform Loop has announced a $6.4-million CAD seed extension.
The all-equity, all-primary extension, which a Loop spokesperson told BetaKit closed in May, was co-led by returning investors Mistral Ventures and Graphite Ventures, and new investors Luge Capital, Wedbush Ventures, and Conconi Growth Partners. Unnamed investors also participated in the round.
Since pivoting, Loop says its revenue jumped 130 percent in year one and nearly quadrupled in year two.
The seed extension comes approximately two years after Loop’s $4-million CAD seed financing round, bringing the startup’s total funding to $10.4 million CAD.
For the past two years, Loop has offered a platform to help small and medium-sized businesses manage their international financial operations.
Originally launched in 2014 as Lending Loop, the startup offered a peer-to-peer lending platform for Canadian small businesses.
Lending Loop began to face challenges during the COVID-19 pandemic. In addition to the immediate and unexpected halting many small business’ growth financing plans, the pandemic also led to the creation of several federal loan programs for businesses that rendered Lending Loop’s offering obsolete.
These changes prompted the startup to pivot to helping SMBs manage international financial operations and removing the cost and friction for merchants conducting business in multiple currencies.
RELATED: How Lending Loop pivoted from peer-to-peer lending to a cross-border banking platform for e-commerce
Loop’s revamped product suite includes a corporate banking card, international payments solution, global business bank account setup for the United States, the United Kingdom, and the European Union, an expense management tool, and a billing service. While Loop no longer provides peer-to-peer lending, it does offer lending and credit products that are embedded into its product suite.
Positioning itself as an alternative for small businesses to manage money globally, Loop addresses a gap that CEO and co-founder Cato Pastoll says traditional banks have largely overlooked.
“Modern companies are built to operate globally, yet the process of setting up banking services to conduct business in a foreign market in order to send, receive, and manage money is an expensive and challenging barrier to overcome for businesses,” Pastoll said in a statement.
David Nault, general partner at Luge Capital, believes these businesses often struggle to find a banking partner that can serve their needs in multiple geographies and currencies.
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“Loop’s platform perfectly serves the needs of those businesses and is well positioned to capture this growing opportunity,” Nault said in a statement.
According to a Loop spokesperson, the startup’s revenue jumped 130 percent in the first year of its pivot and nearly quadrupled in year two. The company says it has processed over $1 billion in payments to date, and expanded its customer base by 125 percent in a 12-month period.
Currently, over 3,000 businesses use Loop, including Montréal-based sporting goods company Ciele Athletics, Toronto-based Tab Commerce, and Kitchener-Waterloo-based retail startup Junip.
The startup will use its new funding toward product expansion, specifically delivering additional services to its customers as they are managing their money globally through Loop’s platform. The spokesperson said Loop plans to launch a new program to customers in the fourth quarter of this year.
Feature image courtesy Loop.