Settle Secures $15 Million Series A Funding to Empower E-commerce Businesses

Alek Koenig, formerly head of Credit at Affirm, dedicated four years to the company observing the significant impact of alternative lending.

He identified an opportunity to extend this beneficial model beyond consumers, directly to businesses.

Foundation and Early Growth

Consequently, in November 2019, Koenig established Settle, aiming to provide e-commerce and consumer packaged goods (CPG) companies with access to non-dilutive capital.

Recognizing that not all companies seek venture funding, Settle launched its platform in June 2020, designed to streamline cash flow management.

Shane Moriah, a former colleague, later joined as Settle’s CTO, bolstering the company’s technical capabilities.

Funding Announcement

Today, Settle announced a $15 million Series A funding round, spearheaded by Kleiner Perkins.

This follows a previously undisclosed $6 million seed round led by Founders Fund in November 2020.

Additional investors include SciFi, Caffeinated Capital, WorkLife Ventures, Background Capital, and AngelList Venture CEO Avlok Kohli.

Addressing Cash Flow Challenges in E-commerce

The surge in digital and online shopping, accelerated by the pandemic, presented e-commerce and CPG businesses with the challenge of scaling to meet demand while effectively managing their finances.

A primary issue was the discrepancy between accounts receivables and accounts payables.

“Companies in this space frequently encounter substantial cash flow gaps stemming from inventory purchases, the time required for delivery, and the subsequent conversion into revenue,” Koenig explained.

“We provide a streamlined solution, enabling companies to extend payment terms to their vendors.”

How Settle Operates

Settle achieves this by integrating with a business’ accounting software and leveraging its proprietary working capital products.

Essentially, Settle covers vendor payments, allowing brands to reimburse Settle once the cost of goods sold (COGS) is converted into revenue.

The platform also reduces expenses associated with costly wire transfer fees.

“Businesses prioritize quicker access to funds to optimize their operations,” Koenig stated.

“Our focus is on reimagining the CFO toolkit for brands, beginning with integrated financing and bill payment solutions.”

Competitive Landscape

The concept of non-dilutive capital isn’t novel, with several startups exploring different approaches.

For instance, Pipe facilitates upfront revenue access for SaaS companies by connecting them with investors willing to pay a discounted rate for annual contract value.

Settle’s Focused Approach

Settle distinguishes itself by concentrating specifically on the e-commerce sector and developing a tailored product for this market, according to Koenig.

“Our strategy is to excel within a specific vertical, rather than offering a generalized, mediocre product,” he emphasized to TechCrunch.

Impressive Growth and Current Clients

Since its launch last June, Settle has experienced a 1,000% increase in business, although originating from a relatively small base.

Currently, Settle serves over 300 brands, including Lalo (baby strollers), Spiceology, and Disco (men’s skincare).

Notably, all of this growth has been organic.

“The pandemic-induced shift to e-commerce created a surge in demand, but many companies faced stockouts and missed sales opportunities,” Koenig noted.

“By utilizing our platform, they were able to increase inventory levels, ultimately boosting profitability.”

He explained that bulk purchasing, facilitated by Settle, allows businesses to secure lower per-unit costs and reduced shipping expenses.

Future Plans

The newly acquired capital will be allocated towards expanding the team of 20 and increasing available debt for continued lending to businesses.

Investor Perspective

Monica Desai Weiss of Kleiner Perkins highlighted Koenig and CTO Moriah’s combined expertise in underwriting, capital markets, and e-commerce as a unique and valuable asset.

She also praised the company’s integrated approach.

“Unlike many lending businesses that are transactional, Settle is deeply integrated into its merchants’ forecasting and growth strategies,” she told TechCrunch.

“This approach fosters inherent virality, and the timing is ideal – the pandemic has fundamentally altered consumer behavior and created significant opportunities for e-commerce entrepreneurship.”

Weiss believes e-commerce will continue to expand, and Settle is positioned to play a crucial role in enabling this growth.