Leanpay, which is developing in the most popular fintech niche – Buy Now Pay Later (BNPL) and allows consumers to make purchases in installments at the point of purchase, has closed a new round of Series B financing, securing a total investment of 10 million euros! The round was led by BlackPeak Capital and Catalist Romania Fund II, both of which are new investors in the company’s portfolio, joined by South Central Ventures and Lead Ventures, which had already invested in Leanpay in the previous rounds (2019 and 2021).
Few fintech companies in the region, perhaps even none, have reached this milestone and size, and we are especially proud that they have been a part of the STP Belgrade community since their beginnings.
Leanpay started its business at the Science Technology Park Belgrade in 2016. In the initial stages, we supported their participation in the TLV Global Launchpad accelerator program at the Tel Aviv University Entrepreneurship Center which gave a boost in the startup’s early development. Through our network and cooperation with Technology Park Ljubljana, we helped them start a business and open an office in Slovenia, which is mapped as the most important market in the region. Over the years, we have followed their growth and supported their expansion and development through consulting, international connections and access to investors.
Since then, they have grown to 100 employees with offices in Belgrade, Slovenia, Romania and Hungary, and plan to double the number of employees soon. The new round will also allow them to strengthen their position in the Slovenian market, and expand operations in the Romanian and Hungarian markets, as well as continue with the introduction of innovative services in order to become a champion in digital consumer lending in the Central and Eastern European region.
From one of the first offices of Leanpay at STP Belgrade
As one of the founders, Miša Živić does not hide his enthusiasm for the new investment. The experience he has is valuable and, as it is of great importance to other founders also, he generously shares his first impressions and lessons learned after a new investment with the community on our blog.
How did you handle the new round and how long did it take to close it? What were the biggest challenges?
– The entire fundraising process lasted a little less than 11 months. We decked the Series B round at the end of August 2023, and closed the round in mid-July 2024. The process was as efficient as possible, but now investors want to learn a lot more about the company. In addition, we have a complex structure because we operate in several countries, and we have a separate company in each country, so the process of due diligence and drawing up investment documentation lasted longer.
The competition in the fintech scene is increasing, what strategies have you used to stand out among other fintech companies looking for funding? What is your vision for the future of this industry and where do you see your company in it?
– Fintech is one of the most competitive niches in the tech industry. I think there are 4 things that set Leanpay apart. First, we compete in the lending sphere, while the vast majority of other companies are in the debit sphere (payments, accounts, etc.). Second, we have had very good growth in the last few years. The company doubles on average every year in terms of revenue, while we grew 3.9 times in revenue from the Series A round to the Series B round. Third, we have a team that represents the right balance of entrepreneurial and banking skills. Fourth, we have excellent “unit economics” and the company became profitable in Q2 2024.
– On the one hand, small fintech companies will have a challenge when it comes to attracting capital, because investors are looking for proven business models with positive unit economics. On the other hand, we see that almost all unicorns in fintech, such as Klarna and Revolut, have become profitable, and are now in a growth momentum. Globally, fintech has taken only 2% of the share from banks, so there is a huge road ahead of the industry and surely the momentum will help fintech companies to strengthen significantly. The two mentioned companies will soon go public, and if the IPO is very successful, it will further strengthen investors’ confidence in fintech business models.
Leanpay is already in the club of companies with investments that are worth millions. What are the lessons learned from this round?
– As I mentioned, the whole process took a very long time, so it should be started on time, while the company has enough cash reserves to withstand the whole process. Additionally, you should wisely choose the investors to whom you devote more time. Many investors are not a good fit for a number of reasons, while some do not have closed-end funds, so the company can spend a lot of energy on investors who are not actually in a position to deliver the investment on time. Finally, it is very important to prepare material about the company. The more structured the material, the greater the chance to keep the investors’ attention.
What role did your team and support network play during the process of fundraising?
– In a startup, even in the Series B phase, the team is the most important variable. Since the process is long and particularly demanding for the CEO and the top management, the company must have good middle management that will take on more during the fundraising period, because the C level has much less time for regular activities. A support network is especially important in the early stages of a company’s development. In the later stages, the influence slightly decreases, as the company should have already developed industry contacts. Of course, having the right support network is always important.
– The support of STP Belgrade was extremely important when we were at the beginning. We started in 2016, at that time only the South Central Ventures fund was active, which then invested in the company, while there were no other funds, and access to capital was quite difficult. The ecosystem was just beginning to form and knowledge about how to build a startup was limited. For example, at that moment, the financing of our stay in the accelerator in Israel by STP Belgrade was very important for our further development.
What would be your advice to startups that are now in the fundraising process, in what ways can they get a multi-million round? What are the most important factors for success?
– Many will think that it is an idea, but no. It is the team that is invested in, and the first investors will seek to gain confidence in the team, and understand whether the team has the skills and capabilities to bring the idea to the market. After the team, comes the product and the market, then the execution and so on, in stages. My main advice is, don’t hide your ideas, they are nothing without a team. On the contrary, share your ideas with as many people as possible to get feedback and improve your USP. Another tip, never go down this road alone, you need partners and co-founders, who complement you and your competences in the right way. And for everything after that, they will find the solutions themselves if they are real entrepreneurs, I’m sure of it.
With teams in Serbia, Slovenia, Romania and Hungary, how do you maintain motivation and focus, especially during challenging times?
– Currently, the company has about 100 employees. We plan to further increase the number of employees after the round, and in 2 years we will almost double the team. Maintaining personal motivation as a startup founder is a skill in itself. It takes a lot of inner strength and patience to deal with all the challenges, and good founders simply have to become very strong and stable people. Personally, I see every challenge as an opportunity to learn, and that helps me to motivate myself. When I look back, I’m more satisfied with the knowledge I’ve gained along the way than the successes we’ve made so far.
Considering the current investment circumstances, where do you see the most room for the development of new businesses and opportunities for startups from Serbia? And how can we attract more investments to this region, to Serbia above all?
– I think there is a lot of capital, maybe even too much. Funds have challenges when it comes to placing their money. But this means that there are not enough good opportunities in the country and the region. We have to be honest and open about it. Like I said, the idea doesn’t get the money, the business does. And the business integrally includes the team, idea and execution. Serbia has a lot of talent in IT and a lot of talent in management. Unfortunately, these two rarely overlap, which is why a lot of the investors’ money goes unused. It is necessary to motivate people who are experienced in running companies to enter the startup ecosystem, and to join our IT talent. The average age of a founder in America who has successfully closed a financing round is 34. People in their 20s rarely become successful founders on their first try. Certainly, the best way to learn is try and fail. But the professional investment community must be sure that this learning path in a particular ecosystem continues to give results. And that’s why we need success stories more than ever. We need 5 to 10 success stories to show the world that our ecosystem knows how to lead that learning process. And to be clear, a success story is a good advertisement for the company. Our current success is perhaps the first stop on that road, but it is still difficult to call it a success story.
Author: Ivana Bezarević, STP Belgrade