The article discusses the emerging trend of embedded lending in small and medium-sized business (SMB) payments. Voiles and Welch from Pipe highlight how embedding credit within everyday business software can help spur growth, especially for consistent service-based SMBs. They emphasize a focus on understanding market dynamics to provide effective solutions.
Pipe’s flagship product is fee-based, managing growth against its own cost of capital while advancing against cash flow from merchants using their software platforms. The company takes a portfolio approach, focusing on specific SMB verticals rather than offering general installment loans. They stress the importance of compliance as an expert in this niche market to maintain competitential advantage and add value through tailored financial services like credit cards, spend management, and bill pay features within their software ecosystem.
The article also mentions that Pipe has raised $105 million in funding from Victory Park Capital. The firm aims to be present across various verticals, including healthcare, retail, manufacturing, restaurants, construction, and other services where embedded capital can drive business growth. Their approach targets providing financial solutions directly within the software tools that SMBs use daily, making it easier for them to access and manage working capital efficiently.