By David Nault, Laviva Mazhar & Rohan Monga, September 17, 2024
We’re investing in Loop Financial! Luge is excited to join a combination of new and existing investors including Mistral Venture Partners, Graphite Ventures, Wedbush Ventures, and Conconi Growth Partners in a $6.4M round of financing to equip Loop to help businesses grow globally.
The explosive growth of cross-border commerce means consumers have the luxury of purchasing products and services from all over the world and, conversely, businesses can sell to new markets easier than ever before. The teams that power these businesses are getting more global as well, with the new normal of remote work having accelerated a growing trend of increasingly distributed company workforces.
We believe that this increased access to international markets represents a huge opportunity for businesses. That said, as these businesses grow beyond their borders, they face challenges from the fact that their banking partners often operate and support them only locally. This is especially true for smaller businesses.
Most large corporations have people to manage their cross-border treasury strategy and often set up international entities in order to enable them to have the multiple banking relationships (and bank accounts) necessary to pay and get paid in other countries without continuously changing currencies. On the other hand, smaller businesses, especially in Canada, do not have these same resources. This can be a major pain when growing, which you would know if you’ve ever tried to open a foreign bank account. Despite there being hundreds of thousands of Canadian SMB importers and exporters that buy, sell and transact in various countries and currencies, the segment remains underserved when it comes to banking. To make matters worse, many founder-led businesses use a credit card (and often a personal one) to pay for things, piling up payments in multiple currencies and racking up currency conversion fees as a result.
That’s where Loop Financial comes in with their full-stack financial operating system for cross-border businesses to more easily and affordably transact in multiple countries. With Loop, businesses can easily and securely set up Canadian, US, UK, and EU-domiciled bank accounts in just a few clicks, be issued multi-currency corporate credit cards with built-in expense management, send payments to over 180 countries in 37 different currencies, easily get paid with direct ACH and EFT payments, leverage best-in-class FX rates, access capital, and more.
To illustrate the power of Loop’s platform, put yourselves in the shoes of an entrepreneur leading a Canadian business. Things are going well and you’re getting increasing customer traction south of the border, meaning you want to explore options to receive your revenue from the US and manage expenses or payroll for a potential US-based team. Then you come across Loop and, in less than 24 hours, you’re able to set up an FDIC-insured US-domiciled bank account with access to the ACH network enabling you to pay and get paid cost-effectively. Getting paid by your American customers in USD enables you to, in turn, use these funds to pay your US-based team, vendors, and suppliers without needing to convert currencies back and forth. The same is possible for a number of other countries that you might want to buy from and sell into. When you do need to convert currency, you’re able to leverage FX-rates typically only accessible to corporations 10x the size of your business. You use Loop’s multi-currency credit cards, allowing you and your team to not only manage spending but also to extend your day-to-day working capital. Loop’s platform also helps you efficiently manage your payables and receivables, and as your business grows you use it to pay and get paid quickly and securely in countries around the world. Any one of these features would be a value-add to your business, but having all of it in a single OS is even better. The breadth of Loop’s offering is one of the things that really excites us, and we believe it can become a superpower for businesses to both be more capital efficient and accelerate expansion into international markets.
Of course, a complex business like this requires strong people behind it – something Loop has. Their awesome team is led by CEO and founder Cato Pastoll, who you may recognize from his previous venture Lending Loop, a loan marketplace between retail investors and small businesses, which expanded to become Loop Financial. Through his experience in having provided over $100M in capital to SMBs across the country, the modern identity of Loop Financial is a direct result of Cato’s knowledge of the problems facing Canadian businesses. Cato is supported by Anthony Scolaro, Nikhil Nampalli, and Sarah Sheikh – a team that cumulatively brings decades of fintech experience across product, operations, finance, and compliance from both large organizations as well as startups. In just a few years, the Loop team has done a remarkable job building a comprehensive platform that is loved by thousands of customers.
Looking ahead, we expect the trend of more and more businesses working with international suppliers and vendors and selling to international customers to only continue. We’re excited to be backing Cato and his team at Loop, and by extension, the millions of SMBs across the continent that need better tools to operate globally.
If you’re building in fintech at the early-stage, we’d love to hear from you! You can contact us here.