Embedded finance — where companies tap into APIs to integrate banking and other financial tools without having to build everything themselves from the ground up — has been one of the major trends in fintech in the last decade. Today, one of the biggest startups building those APIs and the backend technology behind them is announcing a major round of funding to double down on the opportunity.
Mambu, which has built a set of APIs to power lending, deposit, and other banking products, along with a wide plethora of analytics and other tools to build financial services, has raised €235 million, a Series E that values the company at €4.9 billion (in today’s exchange rates that’s about $266 million at a $5.5 billion valuation).
The funding is being led by EQT Growth, the European private equity firm, and Amsterdam/London-based Mambu is not disclosing other investors. (Its last round, when it raised $135 million in January, was led by TCV, with participation from Tiger Global, Arena Holdings, Bessemer Venture Partners, Runa Capital and Acton Capital Partners. Its valuation has more than doubled since then.)
The company today has over 200 customers that collectively work with some 53 million users in some 65 countries. They include big neobanks like N26, but also incumbent banks like Raiffeisen Bank, BancoEstado and ABN Amro.
More widely, Mambu is also working with newer entrants to financial services like telcos and e-commerce companies that might not be equipped or interested in building financial services from scratch but can see an business or operational opportunity to provide their customers with some of these tools more directly, and to invest in building more tailored financial services tapping into building blocks provided by another company (that is, Mambu) — a model that opens the door to a much wider set of customers for Mambu down the line.
Indeed, Eugene Danilkis, Mambu’s co-founder and CEO, has big ambitions for where he believes Mambu can sit in the wider world of financial services.
“Our vision is to create in financial services and banking what Salesforce did in CRM,” he said.
On that note, Salesforce’s own ambitions are pretty big, too. Still, these days, it is not a competitor but a strong partner, Danilkis said: part of Mambu’s power lies not just in the financial services APIs that it provides, but in the webbing it also has built so that those services “play nice” with all of the rest of the IT infrastructure and apps that a company might use. Alongside Salesforce, Mambu integrates with a number of other third-parties like AWS, Google, Marqeta, Comply Advantage, Deloitte and many others. The number of API calls that Mambu handles daily now number at about 130 million.
Mambu still had a lot of money in the bank prior to this raise, so the plan for this latest round will be to use the funds to double down on expanding its business to more markets and to start considering what other adjacent areas the company would like to tackle next. Areas like insurance, Danilkis said, are definitely on its radar, although he declined to say when it might launch services, and what those services might be. One logical area, for example, could be property insurance, since it already offers mortgage APIs and works with those already active in property finance.
More immediately, he sees a lot of opportunity still in the area of simply improving on the financial services and the building blocks for creating them that it already offers. He actually bristles a little when you mention “embedded finance.” The company’s preferred term for what it does is “SaaS banking platform,” which speaks, he says, to the more fundamental role that Mambu is playing in helping its customers build tailored financial services for themselves.
“If we step back in industry what most banks and fintechs are focused on are high volume products that need to be very digital but still need to feel customized for the individual,” he said. “It goes beyond lending and deposits.” Longer term, he said, Mambu wants to help them build “more complex commercial products where you might have lower volumes but higher values, too.” He notes that there remain challenges also with integrations and middleware in financial services, which is another area Mambu will be providing better tech to the market. The focus, he said, is “how to integrate better in the ecosystem,” which will include creating more pre-built integrations for third-party solutions. “We’re investing in bringing a lot of that ecosystem together,” he added. (That’s the Salesforce ethos right there.)
There may also be acquisitions, something which Mambu has yet to do, having grown only organically up to now. The space it’s working in is ripe for consolidation, though. There are for starters a number of direct competitors to Mambu itself, such as Thought Machine, Rapyd, and Airwallex (among many others). All three of these are also very well capitalized, with the first raising $200 million just at the end of November; Rapyd now with over $800 million raised to date; and Airwallex coming out of Asia now at a $4 billion valuation. There are also a number of smaller regional players and many “point solutions” handling different aspects of financial services and financial infrastructure in the cloud.
EQT was actually talking to Mambu ahead of the previous round but is only just investing for the first time in this Series E.
“We have been following Mambu’s journey and stellar execution for several years now,” said Carolina Brochado, a partner within EQT Growth’s Advisory Team. “We feel a strong connection to the vision of Mambu as an organization, given the close alignment on values of responsibility and sustainability, and believe that Mambu’s solution is making the financial system more accessible and affordable for millions around the world. We are excited to partner with one of the leading fintech companies and management teams in Europe, which offers an industry-unique and leading modern cloud platform to address the massive €100 billion market serviced by traditional banking software vendors and in-house solutions.” She will be joining the board with this round.