Finom, a digital bank catering to small- and medium-sized businesses, has raised €92.7 million (approximately $105 million) in a growth investment from General Catalyst's Customer Value Fund. This significant infusion of capital will be utilized exclusively for growth, with no allocation towards operational expenses or product development, according to Kos Stiskin, Finom's chairman and co-founder.

This non-traditional funding round is notable, as General Catalyst does not take any equity in Finom. Stiskin emphasized that the company's core operations are generating positive cash flow, and the new investment will be channeled directly towards attracting new clients. This strategic move is expected to propel Finom's expansion across Europe, where it already counts over 100,000 businesses as customers across Germany, France, Spain, the Netherlands, and Italy.

Finom has been expanding its offerings beyond digital banking services, unveiling an "autonomous AI accounting agent" for entrepreneurs and freelancers in Europe earlier this year. In March, the company ventured into direct lending, incorporating an AI-powered scoring engine. The credit offering, currently available in the Netherlands, is slated to be expanded across Europe by the end of the year.

The company's revenue model is primarily subscription-based, with additional revenue streams generated through transaction fees for certain services and a competitive cashback program. The recent foray into lending has also opened up a new revenue stream through interest on credit lines. While Stiskin declined to disclose hard revenue figures, he revealed that Finom doubled its annual recurring revenue in 2024 and has achieved EBITDAM (earnings before interest, taxes, depreciation, amortization, and marketing) profitability.

Finom's closest competitor, Qonto, a Paris-based challenger bank, secured a massive €486 million Series D funding round in January 2022. However, Stiskin believes that Finom's stronger localization strategy and more comprehensive product suite set it apart from its rival. The company has grown its workforce by 31.5% compared to last year, with 505 employees currently on board. In September, Finom appointed Alessandro Camilotti, former head of finance and analytics EU at Klarna, as its CFO.

Finom has raised nearly €190 million (approximately $214 million) since its inception in 2020. This latest growth investment follows a €50 million Series B equity round of funding co-led by General Catalyst and Northzone in February 2024. The company's valuation remains undisclosed, but according to PitchBook, it was valued at $150.7 million post-money in November 2021 after a €30 million seed funding round.

Zeynep Yavuz, partner at General Catalyst, praised Finom's strong execution in a market that is still deeply underpenetrated. She highlighted the company's modular infrastructure, which enables efficient scaling across geographies while allowing for localization where needed. Yavuz also emphasized the significance of Finom's proprietary anti-money laundering and know-your-customer engine, which provides a standout advantage not only for compliance but also for customer experience.

As Finom continues to expand its presence in Europe, this growth investment is expected to play a pivotal role in deepening its offerings for SMEs and solidifying its position in the digital banking landscape.