Dive Brief:

• Procurement platform company C2FO raised a $200 million venture funding round led by the SoftBank Vision fund, according to a press release emailed to Supply Chain Dive.
• C2FO calls itself a "marketplace for working capital." The platform allows suppliers to put a value on payment speed — essentially offering a discount on approved invoices in exchange for faster payment. For buyers, the platform offers a lower cost of goods sold and a leg up on supplier relationship management. For suppliers, it offers the "lowest-cost sources of working capital in the world," according to the company.
• CFO Kerri Thurston told Supply Chain Dive the massive Series G raise will go toward expanding the platform's reach in new industries and deeper into middle-market buyers. The company has been focused on the Fortune 500 class of buyers in its initial nine years, penetrating most of the U.S. retail market, oil and gas and logistics, among other industries. "A majority of U.S. retail invoices flow through our platform," said Thurston.

Dive Insight:

Buying organizations feed the invoices for suppliers on the platform into the C2FO system daily. C2FO's supplier relationship managers (SRM) then work with suppliers to decide when and how much working capital they may need and how to price it via a discount on early payment. The buyer then pays the suppliers directly at the discounted rate.

"For the buyers it represents a reduction of cost of goods sold or their operating expense and in most cases they're using underutilized cash that is making next to nothing in terms of interest rates for their balance sheet. So they’re able to improve their EBITDA and their gross or operating margins utilizing existing cash," said Thurston.

C2FO's role in managing buyer-supplier relationships can relieve the need for SRM personnel at the buying organization somewhat, said Thurston, or at least lighten the load depending on how much of a buyer's supplier base uses the platform.

"It often sits side by side with a supply chain finance program that's focused only on the very large volume suppliers. So our program can run simultaneously with those programs and serve the long tail of suppliers which helps with supply chain health," she said.

This type of alternative fintech startup is gaining popularity with investors. SoftBank is also invested in U.K.-based Greensill Capital, which turns receivables into bond-like financial instruments. Clearly bullish in the non-bank fintech space, SoftBank headed an $800 million raised for the company in May.

Working capital finance represents a $55 trillion market, according to Greensill, and traditional lenders generally favor very large clients. Solutions like C2FO judge a supplier's repayment potential based on accounts receivable as opposed to total revenue or available collateral.

"We invested in C2FO because we think their disruptive innovation offers a solution to an industry that has traditionally lacked cost-efficient alternatives for businesses of all sizes looking to free up cash quickly," said Akshay Naheta, managing partner for SoftBank Investment Advisers.

Faster, cheaper working capital can speed up economies and facilitate growth for suppliers of all sizes, said C2FO CEO Sandy Kemper in a statement.