FAKTUS, recognized as Europe’s pioneering neobank tailored specifically for small and medium-sized enterprises (SMEs) in the construction industry, has successfully secured €56 million through a combination of equity and debt financing. This funding round includes €9 million in equity provided by Lakestar and Foundamental, while an additional debt capacity of up to €47 million is sourced from funds managed by Insight Investment and Fost Capital. With these resources, FAKTUS aims to finance an impressive €500 million worth of projects over the next 18 months, expand its operations across France, and establish a presence in the UK, Germany, Spain, Italy, and Portugal by 2026, with a target of reaching over 800,000 SMEs throughout Europe.
Addressing Financial Strain in Construction
The construction industry represents a significant segment of Europe’s economy, valued at approximately €2.5 trillion. However, it is also plagued by financial challenges, notably with SMEs typically experiencing an average wait of 85 days for payment. This delay can hinder their ability to manage upfront costs for materials, payroll, and subcontractors. FAKTUS is striving to bridge this financial gap by offering a tailored financial platform that aligns with the everyday realities of construction businesses. The platform’s features include real-time business accounts, invoice financing with integrated validation, material advances that facilitate project initiation, and retention bonds that allow for the release of holdbacks through investment-grade guarantees. Such innovations are aimed at preventing project delays, a common issue often attributed to liquidity problems.
Innovative Technology for Timely Financing
Founded in France in 2023 by Réda Kabbaj and Alexandre Pochon, FAKTUS employs advanced artificial intelligence technology to streamline various financial processes. This includes contract parsing, invoice reading, schedule tracking, and risk assessment, which significantly reduces the time needed for funding decisions from weeks to just two hours. This rapid response is particularly beneficial in a landscape where 90% of construction firms struggle to secure timely financial assistance. The effectiveness of this model is evident, as the neobank has already financed over 470 worksites and supported projects exceeding €100 million, ranging from educational institutions and hospitals to renowned sites like Roland Garros and the French Senate.
Regulatory Structure for Scalable Operations
A crucial element of the recent €56 million funding is the establishment of Faktus Financement, a fully regulated securitization vehicle overseen by the AMF and managed by IQ-EQ. This vehicle is specifically designed to purchase receivables and extend loans exclusively to construction SMEs, allowing investors to engage with risk-assessed opportunities while simultaneously ensuring that builders receive prompt and dependable financing. FAKTUS operates as the servicer for this vehicle, leveraging its construction expertise alongside sophisticated credit evaluation methods to scrutinize contract terms, debtor behavior, and sector-specific risks. This thorough approach fosters a financing environment that is both disciplined and intricately connected to the realities of construction projects.
In just six months, FAKTUS has expanded its client base by 300%, supported by partnerships with over 20 federations and insurers, including Atradius and Coface. Co-Founder Réda Kabbaj highlighted the company’s mission to link underserved, family-owned construction SMEs with institutional investors, emphasizing the combination of industry-specific knowledge and financial expertise as a means to facilitate funding directly into the real economy. Meanwhile, Patric Hellermann, General Partner at Foundamental, expressed confidence in FAKTUS‘s ability to establish itself as Europe’s leading neobank for contractors, citing the effective execution and positive customer feedback received thus far. Enrico Mellis, Partner at Lakestar, reinforced this sentiment, recognizing the unique characteristics of the construction market and the potential for FAKTUS to thrive in this space.
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