French fintech startup Formance has raised $21 million in a Series A funding round, co-led by PayPal Ventures and Portage, to expand its modular fintech infrastructure platform. The company, which started out by developing an open-source, programmable financial ledger, is now building a broader platform that offers a range of services for financial management and operations.

The funding round, which also saw participation from existing investors Y Combinator, Hoxton Ventures, and Axeleo, will be used to further develop Formance's platform and expand its team. The company plans to open an office in New York and hire a go-to-market team, as well as flesh out its engineering and product teams, with the aim of increasing its headcount from 20 to 50 employees by the end of 2025.

Formance's platform is designed to provide a comprehensive solution for fintech companies, offering a range of modular services that can be used together or separately. The platform includes a financial ledger, a connectivity platform for integrating financial providers, a payment orchestration service, and a reconciliation module. The company is also working on a mass payout product for marketplaces and other companies that need to issue payments.

According to Clément Salaün, co-founder and CTO of Formance, the company's goal is to provide a platform that is similar to Amazon Web Services' take on cloud hosting, where customers can use a single service or house all their financial infrastructure under the same roof. "We'll be releasing a number of other modules, particularly related to financial operations," Salaün said. "We're going to go further with exports for accounting tools. We're also going to improve connectivity a step further and go down the stack and work on banking at a lower level."

The company's approach is designed to provide a more efficient and cost-effective solution for fintech companies, which often have to use multiple services to manage their financial operations. "If you get three SaaS products to manage those, you're going to spend, I don't know, $150,000 on the three products and $150,000 on internal glue to link them together," Salaün said. "The financial infrastructure is really a 'long tail of small problems,' each of which could be a company with $10 million in [annual recurring revenue] — something like that."

Formance's independence from larger fintech companies like Stripe is also a key differentiator for the company. Unlike Stripe, Formance does not process payments or hold clients' money itself, instead focusing on providing a platform for fintech companies to manage their financial operations.

The company has already secured around 20 customers, including Booksy, Doctolib, Liberis, and Shares, with two of its U.S.-based customers representing 40% of its revenue. With its new funding, Formance is well-positioned to continue its growth and expansion, providing a comprehensive fintech infrastructure platform for companies around the world.

In the broader context, Formance's funding and growth highlight the increasing importance of fintech infrastructure in the financial services industry. As fintech companies continue to grow and expand, the need for comprehensive and efficient financial management and operations solutions will only increase, making Formance's platform a critical component of the fintech ecosystem.