Fintech startup rings up $1.7m funding from Sequoia and Seedplus to help digitize SMEs

The CardUp team / Photo credit: CardUp

Do you ever wish you could use your credit card to pay for things like rent, taxes, or your employees’ salaries? CardUp founder and CEO Nicki Ramsay certainly did, and the Singapore-based fintech startup is the result of that wishful thinking. And it has managed to snag a seed round worth US$1.7 million by enabling users and businesses to do just that.

The round was led by Sequoia India and early-stage VC fund Seedplus. Barring an initial angel investment, this is the first time that CardUp has raised funding from institutional investors.

CardUp has created a website where users can set up recurring payments through their credit cards to pay rent, taxes, season parking, insurance, car loans, and more, that are usually made through bank transfers or checks. Transactions made through the platform this way go to recipients via bank transfer so that landlords, insurance firms, and the tax service don’t need to be enrolled on it themselves to get paid.

Businesses can use the platform to pay taxes, payroll, or suppliers in the same way. CardUp allows them to use their credit cards as a financing tool so that they have access to cash immediately, without having to apply for costly and time-consuming loans. They can then repay that credit simply by paying off their credit card bill.

Consumers and enterprise users have the additional incentive of earning rewards like rebates and air miles that traditionally come with credit card usage, but were not previously available to them for this kind of payments. The platform accepts “all major credit cards” in Singapore at the moment, and it has partnered with several banks and operators like Visa and Mastercard.

Small-business woes

Ramsay started CardUp in 2016, after spending most of her career in various roles at credit card operator American Express. During her stint, one of her goals was to spur more credit card usage, but one obstacle to growth she discovered was how some types of payments can’t really be made via cards. She herself was frustrated she couldn’t use them to pay off large expenses like rent.

Ramsay always had an entrepreneurial streak, and CardUp was one of several business ideas she had explored in the past. “They all got binned so they’re not worth talking about,” she jokes.

But the idea for CardUp was different. Through her corporate position, she had made the right connections and acquired the necessary expertise to give her the confidence to quit and start up. CardUp was part of Finlab’s inaugural fintech cohort in Singapore and cultivated early relationships with Mastercard as well as banks like United Overseas Bank and Citibank.

CardUp allows SMEs to use their credit cards as a financing tool so that they have access to cash without having to apply for costly and time-consuming loans.

The funding will help CardUp to further improve its business offering, which is aimed at small and medium-sized enterprises (SMEs). Such companies often face problems with cash flow because of delayed payments from their customers. A survey by entrepreneurship agency SPRING Singapore found that three in five SMEs in the city-state have to deal with such delays, which affect their working capital.

CardUp wants to enable those businesses to secure a line of credit by using their credit cards on the platform to ensure cash flow. “We offer short-term financing solutions, which I think have been missing from the market,” Ramsay says. By just paying off their credit card bill, businesses have an easier time getting credit than seeking loans from financial institutions.

The website also offers invoicing tools and features such as automated recurring payments. Ramsay hopes that in this way, CardUp can be part of the initiative to digitize Singapore’s small businesses, which is spearheaded by Singapore’s Info-communications Media Development Authority.

CardUp is also looking to staff up. Recent key hires include Sandra Ernst, who was CEO of peer-to-peer invoice financing startup SmartFunding. Ernst left SmartFunding last summer, and joined CardUp as head of operations in late 2017.

Splitting the bill