With the aim to fuel startup growth in a way that is faster and smarter, Swedish fintech company ArK Kapital has today announced it has secured a massive €165 million in seed funding. The funding was led by Local Globe, with participation from Creandum and angel investors including Supercell CEO Ilkka Paananen, iZettle founder Jacob de Geer, and EQT Ventures founding partner Hjalmar Winbladh.
Not only is this funding an impressive boost for the startup, which was only launched in November 2021, but also represents a big lift for the startup ecosystem as a whole, given the firm’s business proposition.
Ark Kapital fuses banking and artificial intelligence, operating as a data-driven precision finance company that enables technology companies to grow faster and smarter through long-term loans – maintaining control for founders and reducing risk for investors.
CEO and co-founder Oliver Hildebrandt, explained: “Any founder will tell you how difficult fundraising can be: retelling your story and hoping to convince the other side really adds up and results in precious time spent away from a business. We believe that entrepreneurs should retain more ownership of their companies and more transparency is needed throughout the fundraising process. After all, no matter how small, any investor equates to a long-term relationship. This is where the power of an AI-driven approach becomes clear: companies can benefit from tailored financing options based on their potential, backed up by data. As an entrepreneur-first company, we want to offer the best network for founders”.
The Stockholm-based startup targets early stage, tech-driven companies predicted to grow super-fast but not yet profitable. ArK uses its artificial intelligence (AI) platform – the ArK Intelligence Machine (AIM) – to analyse a company’s business health and to offer a suite of AI-powered financial and intelligence products. It then shares daily access of its analytics and insights in a borrower dashboard, so companies can optimise their business performance.
It’s estimated that at seed stage founders often part with 20-25% of their company when taking equity-based funding. Offering an alternative to this, ArK will initially focus on non-dilutive loans to multi-sector European startups ranging from €1m-10m. While, typically, loans are short-term and must be repaid within two years, which doesn’t give early-stage startups enough time to grow, ArK thinks long term. Offering loans lasting up to seven years that are unique to every company, the loans are based on predictions of a company’s future revenue.
Founded in 2021, by six-time entrepreneur Oliver Hildebrandt (CEO), veteran banker Axel Bruzelius (COO), and Spotify’s ex-VP of Analytics and former EQT Ventures partner Henrik Landgren (CPTO), the entrepreneurial and financial experience behind ArK makes this a potent force fueling future-facing companies.
Henrik Landgren, CPTO and co-founder, added: “We have seen the rapid evolution of tech, data and machine learning over the years, and how the fastest-growing tech startups are stellar in taking advantage of their own data to optimise their growth. This trend also grows across all industries, where now over a quarter (27%) of respondents in McKinsey’s AI adoption survey now attribute over 5% of their earnings to AI. ArK Kapital was born from the belief that connecting to companies’ raw data and applying state-of-the-art AI modelling enables both the best possible financial products and instant access to AI-powered growth analytics tools for founders. We believe we can enable many more founders to grow way faster with data-driven growth tools and smarter finance products.
The new funding will be used to continue investing in promising companies as well as for R&D and to double the 20-person team over the course of this year.
Axel Bruzelius, COO and co-founder, concluded: “Most ambitious startup journeys need to start with equity. However, it doesn’t make sense for companies with predictable revenues to be solely reliant on equity as a funding source. It’s very expensive and doesn’t scale well. We believe that, by unleashing loans as a major funding source for European tech companies, we can be a major benefactor of their growth.”