FundKite

How Fundkite Grew to a $70M Revenue Fintech Powerhouse in 8 Years

March 13th, 2025

Founded By

Alex Shvarts

Monthly Revenue

$5.83M

Founders

Employees

91 (est.)

Profitable

Yes

Year Started

2015

Customer

B2B

Founded By
Alex Shvarts: Monthly Revenue
$5.83M: Founders
1

Employees
91 (est.): Profitable
Yes: Year Started
2015

Customer
B2B

Who is Alex Shvarts?

Alex Shvarts, the CEO and founder of FundKite, has a background in finance and technology and has previously engineered and sold proprietary technology within the fintech industry. Originally from New York, he has been active in leading FundKite's growth since its founding in 2015.

What problem does FundKite solve?

Small businesses often struggle to secure funding from traditional banks due to strict credit score requirements. FundKite bypasses this by focusing on cash flow history instead, providing flexible, quick funding for businesses overlooked by conventional lenders. This approach helps them access necessary capital to grow and manage operational fluctuations, making FundKite a vital resource for entrepreneurs needing financial support without credit constraints.

Fundkite

How did Alex come up with the idea for FundKite?

Alex Shvarts came up with the idea for FundKite after noticing a gap in the financial sector where small businesses were underserved by traditional lenders. He realized that banks were heavily reliant on credit-based assessments, which left many businesses without access to necessary funding due to lower credit scores. Shvarts identified that focusing on cash flow rather than credit scores would provide a more accurate assessment of a business's financial health, presenting a unique opportunity to assist those in need of flexible funding solutions.

To validate his idea, Shvarts delved into the challenges small businesses faced, which included inconsistent cash flows that traditional loans couldn't accommodate. Through market analysis and conversations with business owners, he determined that many companies required a model that adapted to their fluctuating sales and operational histories. This led to the development of a funding approach where payments were tied to a proportion of a business’s receivables, offering a more adaptable solution tailored to each business’s needs.

Shvarts refined his concept by leveraging automation and technology to assess cash flow data effectively, allowing FundKite to process applications swiftly and offer rapid funding. Despite the risks involved in this flexible approach, he maintained a clear focus on managing defaults actively. The journey taught him the importance of understanding customer needs deeply and creating financial products that are not only innovative but also truly supportive of businesses in real-world conditions.

How did Alex Shvarts build the initial version of FundKite?

FundKite's initial product development focused heavily on leveraging technology and automation to streamline operations for providing funding to small businesses. They utilized a sophisticated tech stack to automate the reading and analysis of bank statements, allowing them to process applications swiftly. This enabled them to assess a business's cash flow and operational history over traditional credit scores, which was more indicative of financial health for their clients. The first prototype of their system likely involved building algorithms and scoring models for this purpose, significantly reducing processing labor costs and enhancing offer generation. The development wasn't explicitly mentioned, but given the complexities involving financial and coding expertise, it was undoubtedly a challenging journey. They achieved a setup capable of handling up to 5,000-7,000 applications monthly, with aspirations to scale even further, showing a robust blend of finance and technology.

What was the growth strategy for FundKite and how did they scale?

Strategic Partnerships and Market Expansion

FundKite focused on strategic partnerships to grow its business. By entering the credit card processing world, they identified opportunities in funding merchants, especially those using platforms like Square and Shopify. These platforms have large numbers of merchants with credit card sales, but many are underserved by traditional lenders.

Why it worked:

The partnerships allowed FundKite to tap into an existing pool of businesses already generating sales through credit card transactions. This made it easier to assess potential funding opportunities and provide capital to merchants who might not have access to traditional loans. The company's approach of purchasing future receivables based on past sales data helped mitigate risk while providing needed capital to these businesses.

Automation and Technology

FundKite invested heavily in automation and technology to streamline its processes. They built systems to efficiently process a large number of applications and generate funding offers quickly based on cash flow histories rather than just credit scores.

Why it worked:

By focusing on automation, FundKite could process up to 7,000 applications monthly, making it more cost-efficient and allowing for rapid scaling. The technology allowed them to extend offers based on business performance rather than just credit profiles, opening up funding to businesses that might be overlooked by traditional banks.

Customer-Centric Approach

FundKite employs a flexible model with no fixed repayment terms, instead collecting a percentage of future sales. This adaptability helps businesses manage cash flow better, especially those with variable incomes.

Why it worked:

This model puts less strain on businesses compared to traditional loans that have fixed repayments. It builds trust with customers since FundKite adjusts collections according to sales performance, which can lead to stronger customer loyalty and repeat business.

Active Risk Management

Managing charge-offs and defaults is critical to FundKite’s success. They write off about 6.8% of life receivables but recover at least 50% from collections.

Why it worked:

FundKite’s strategy of close communication with merchants helps prevent complete defaults. By being proactive and adjusting payment collections based on sales, they manage to resolve potential issues before they escalate, reducing the overall impact of defaults on their financial health.

What's the pricing strategy for FundKite?

FundKite prices its funding by purchasing future receivables at discounts ranging from 10% to 28%, collecting repayment based on merchant sales fluctuations with no fixed repayment terms.

What were the biggest lessons learned from building FundKite?

Focus on Cash Flow, Not Credit: FundKite prefers evaluating cash flow over credit scores, allowing them to support businesses traditional banks might overlook. This method has enabled them to serve a wider range of small businesses effectively.
Embrace Flexibility in Operations: FundKite’s adaptable model, which includes no fixed repayment terms, helps them better align with the unpredictable nature of small businesses. This adaptability is crucial for managing client relationships and ensuring repayment aligns with the merchants' sales cycles.
Leverage Technology for Efficiency: Automation and custom scoring models have allowed FundKite to handle massive application volumes efficiently, reducing labor costs and processing times. This focus on technology enables them to scale operations without proportionally increasing expenses.
Understand Industry Dynamics: By choosing not to fund higher-risk industries such as transportation and construction, FundKite mitigates potential losses. They continuously adapt their strategies based on industry trends and macroeconomic factors, which informs their underwriting decisions.
Maintain Active Risk Management: With a charge-off rate of 6.8%, FundKite emphasizes the importance of managing defaults actively. They work closely with merchants to adjust payment plans based on sales performance, showcasing their commitment to proactive risk management.

Discover Similar Business Ideas Like FundKite

	Idea	Revenue
Stratton Equities Build This Idea ->	"Nationwide private lending for real estate investors."	$1M monthly
Builder To Cont... Build This Idea ->	Financial consulting for moms mastering their money.	$30K monthly
Anchor Loans Build This Idea ->	Private lending for fix and flip entrepreneurs.	$100M monthly
Net Net Hunter Build This Idea ->	Niche investment community for net stock enthusiasts.	$12K monthly
Free Cash Flow Build This Idea ->	Tax and accounting services for online influencers.	$25K monthly
The Good Life C... Build This Idea ->	Comprehensive support services for independent financial advisors.	$2M monthly
shurjoPay Build This Idea ->	Online payment gateway for Bangladeshi e-merchants.	$2M monthly