Fundkite Revenue (2023)

Fundkite generated an estimated $70M in annual revenue in 2023.

Fundkite generated approximately $70 million in revenue in 2023, a figure Alex Shvarts disclosed during the March 2024 interview. Shvarts clarified that this figure represents gross revenue before deducting the cost of capital on the company's promissory notes and participation arrangements.

Fundkite's average deal size is approximately $110,000, as stated by Shvarts. Target customers are businesses with annual gross sales between $1 million and $5 million. The company serves a broad range of industries, with restaurants, e-commerce merchants, and medical practices cited as representative verticals.

Fundkite processes approximately 5,000 applications per month and extends funding offers to roughly 27 percent of applicants, or about 1,300 businesses per month. The company does not disclose the number of deals it actually funds or its total active customer count. Pricing is structured as a discount on purchased receivables ranging from 10 to 28 percent, depending on risk factors, rather than as a stated interest rate. The company does not offer a free tier.

Fundkite operates a revenue-based finance model in which it purchases future receivables from small businesses at a discount, collecting a fixed percentage of the merchant's daily or monthly sales until the purchased receivable balance is recovered. The discount rate on receivables purchased ranges from 10 to 28 percent depending on risk. The company models a payback period of eight to sixteen months, though there is no fixed term because collections vary with merchant sales volume.

The company optimizes for a net interest margin of approximately 16 to 18 percent in a good year. With a $100 million deployment base turning one and a half to two times annually, Shvarts explained, the company is effectively buying $200 million to $260 million in receivables, then deducting fees, expenses, and cost of capital to arrive at that NIM. The company's cost of capital on its structured notes is at or below 12 percent per year, which Shvarts contrasted with the 13 to 15 percent per year he cited as typical for other funds in the space.

The lifetime charge-off rate through December 31, 2023 is approximately 6.8 percent of receivables purchased, representing amounts that are 100 percent written off as uncollectible after all collection and legal efforts are exhausted. Approximately 12 to 15 percent of the portfolio enters some form of collection issue or default at any given trailing period, but the company recovers roughly 50 percent of receivables that enter default before reaching the charge-off stage. Shvarts noted that the majority of defaults are driven not by merchant business failure but by debt settlement companies advising merchants to stop paying. The company holds UCC filings on receivables and pursues arbitration to recover amounts owed. Fundkite has a monthly funding capacity of approximately $30 million at any given time. The company is also expanding into credit card processing, partnering with Solara and processing through Fiserv or TSYS, targeting Shopify and Square merchants who have been capped or excluded from those platforms' own financing programs.

Fundkite employs approximately 90 full-time people as of early 2024, a figure Shvarts confirmed during the interview. The engineering team consists of five engineers. Shvarts noted that the small engineering headcount is supplemented by his own direct involvement in writing code and architecting the platform.

The company's automation initiative is designed to allow the team to scale application processing from the current 5,000 to 7,000 applications per month to a target of 50,000 to 100,000 per month without a proportional increase in labor costs.