• French startup Karmen has raised €9M in equity and debt funding to enhance its short-term financing solutions for SMEs using a data-driven approach.
  • With around 600 clients, Karmen leverages advanced risk assessment tools and embedded partnerships to address cash flow challenges for businesses.

French startup Karmen has raised €9 million (approximately $9.4 million) in an equity-and-debt funding round to enhance its short-term financing products for small and medium enterprises (SMEs). The round includes equity investment from Seventure Partners, with additional debt financing from Financière Arbevel and Bpifrance.

Karmen provides revenue-based financing, a growing sector aimed at addressing the working capital challenges faced by SMEs. Traditional banks often struggle to meet the needs of smaller businesses due to fragmented markets and low margins, leaving a gap that fintech companies like Karmen aim to fill.

Since securing a €100 million debt vehicle earlier this year, Karmen has served around 600 businesses, offering loans ranging from €20,000 to €3 million with terms spanning two to 24 months. On average, clients borrow €200,000 for six months. Customers include one-person businesses generating €300,000 annually and larger firms with revenues up to €160 million.

Karmen's approach has gained traction, with 80% of its clients returning for additional financing. The company’s hybrid distribution model combines direct client relationships with partnerships.

Currently, 40% of its customer base comes through integrations with fintech platforms, enterprise resource planning (ERP) systems, and e-commerce marketplaces such as Qonto. The startup aims to grow this embedded financing channel to 75% of new clients by the end of 2025.

To manage risks, Karmen uses advanced data-driven tools, analyzing 60 financial metrics in near real-time to assess loan applications. It integrates data from bank accounts, accounting software, and invoicing tools to evaluate a company’s financial health.

Co-founder and CEO Gabriel Thierry said:

“We limit risks through our data-driven approach, which gives us granular visibility into our clients’ financial and operational performance. We are also investing heavily in AI-powered risk assessment technology to strengthen this approach.”

The new funding will enable Karmen to further refine its financing solutions, which have already attracted prominent clients such as Maison Kitsuné, Balibaris, and Les Raffineurs. The company’s growth reflects the rising demand for flexible, tech-enabled financial services in the SME sector.

Edited by Harshajit Sarmah