Estonian fintech startup Modularbank nabs €4 million to expand operations in the UK and Europe

Modularbank, the next-generation core banking platform today announced its €4 million round of late seed funding led by Karma Ventures and BlackFin Capital Partners, with additional support from Plug and Play Ventures, Siena Capital and angel investor Ott Kaukver (ex-CTO of Twilio and Skype). The backing from this powerful combination of investors paves the way for UK, European and wider global expansion, and will enable the company to bolster its engineering and commercial teams, and further invest in its technology platform.

Modularbank’s cloud-agnostic core banking platform, built with an API-first approach, allows banks, financial services companies and any other business such as retailers, utility companies or telemedicine providers, to seamlessly integrate its modular banking technology into their existing infrastructure. Using Modularbank, they can easily roll out innovative financial services which reflect customers’ specific needs and ambitions, and boost sales and enhance customer loyalty.

Since it was founded in 2019, Modularbank has seen strong demand for its next-generation core banking platform and already achieved impressive growth. The company has been cashflow positive since inception and has gained a list of influential customers, including one of the largest financial services groups in Finland, a leading retail group and a Frankfurt stock exchange-listed financial services institution operating in 23 countries. It has also recently partnered with Nets, one of Europe’s largest payment card processors.

The funding will initially be used to set up commercial operations, including an office, in the UK, and to increase operations in France, DACH and Southern Europe from Modularbank’s European base in Berlin. The company currently has 35 staff across Europe and aims to increase headcount to 100 by the end of 2021. In particular Modularbank will be looking to make further hires to its product and commercial teams, to accompany those who have recently joined the company from the likes of PayPal, Mambu and ICBC.

Commenting on the funding round, Modularbank CEO Vilve Vene said: “Increasingly, people are demanding more flexible and convenient services that fit around the way they work and live and in response, there is a wave of digitalisation and embedded finance on the horizon, beginning to build. To harness this momentum there is a real need for lean, yet sophisticated core banking technology and that’s where Modularbank comes in, as we do exactly that. Modularbank was set up to enable banks and other customer-facing businesses to devise and roll out personalised banking services quickly and easily.

Modularbank Chief Business Officer, Rivo Uibo, added: “We are proud to receive the backing of highly-regarded investors such as Karma, BlackFin and Plug and Play and consider the combination of the whole group to be extraordinarily powerful; Karma reinforcing our position as a promising European tech start-up, BlackFin providing hugely important endorsement from the financial industry and Plug and Play enabling us to tap into the ecosystem of innovation and providing a valuable connection to the US. This funding round will play a crucial role in helping us continue to develop leading-edge solutions that move banking into the future – and establishing Modularbank as the next-generation core banking platform of choice”.

Margus Uudam, Founding Partner at Karma Ventures said: “Our reference calls with tier 1 banks and fintechs confirmed that Modularbank is unrivalled among its competitors, in terms of substance and depth of understanding of customer needs around core banking. The team has been building core banking solutions for more than twenty years and is incredibly well-positioned to become the next global leader. The traction they are already seeing from customers is just another proof point of the huge potential for Modularbank. The investment round was a very competitive one for a reason.”

Michele Foradori, Investment Director at BlackFin Capital Partners, said: “From our very first meeting with Modularbank, we had no doubt that this was the team with the right mix of motivation, capabilities and experience to build a successful company in the financial software landscape. Later in our investment process came the confirmation: an elegantly designed cloud-based core-banking platform which, in less than 24 months of development, is already ahead of many competitors. At BlackFin, we are very proud and eager to be sitting next to Vilve, Rivo and the other co-founders on their journey to become the new standard in banking core software.”