French startup Spendesk just had a weird funding round with no new investors - and it may be a sign competition for star fintech firms is heating up

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French startup Spendesk just had a weird funding round with no new investors - and it may be a sign competition for star fintech firms is heating up

Spendesk

Spendesk

Left to right: Jordane Giuly, Spendesk's head of product; Rodolphe Ardant, CEO; Guilhem Bellion, lead developer

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  • French fintech startup Spendesk has closed an "internal" funding round from its existing venture capital backer Index Ventures. Index previously led a $9.9 million round in the startup, and one source pegged the new round at $30 million.
  • Two sources with knowledge of the deal characterised this as an internal round, which is led by an existing backer rather than a new investor.
  • One source with direct knowledge of the deal said the unusual internal round suggested Spendesk had struggled to attract new investors amid significant competition.
  • Spendesk sells spend management software to businesses, and the raise is expected to be smaller than recent rounds from rivals in the space. Soldo raised $61 million in July, while Pleo raised $55 million in May.
  • Click here for more BI Prime stories.

Spendesk, a French startup that sells spend management software to businesses, closed a funding round led by its existing venture capital backer Index Ventures, according to two sources with knowledge of the deal.

A source with knowledge of the deal said it was in the range of $30 million to $40 million - they indicated that $30 million was the initial amount and could have changed upon closing.

Two sources characterised the new raise as an unusual "internal" round, which means that no new backer joined in.

An internal raise can indicate that no new investor was confident enough to lead the new round, one source said, but that existing backers were willing to provide the cash to keep the business alive.

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The new round was led by the firm's partner Dominic Vidal, who led a previous $9.9 million round in the startup last year in conjunction with investors including Michael Benabou, Laurent Asscher and Showpad cofounders Louis Jonckheere and Pieterjan Bouten.

An internal raise can also indicate that an existing backer - Index - is doubling down and choosing to keep new backers out. The source added that this is extremely rare.

Spendesk's apparent struggle to find new investors is unusual in an environment where startups are awash in capital, especially in hot areas like fintech. European tech investment boomed in 2018 to $23 billion, up from $19.6 billion in 2017, according to research by venture capital firm Atomico.

Index and Spendesk declined to comment.

Paris-based Spendesk provides companies with expense management services and competes with other European fintechs such as Soldo and Pleo, both of which also raised money this year. The market for these services is competitive, according to VCs who spoke with Business Insider about the deal, indicating that the raise was key to staying close to rivals.

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Soldo raised a $61 million Series B in July while Pleo secured Denmark's largest Series B in May with a $56 million round.

Founded in 2016, Spendesk provides corporate cards to employees to help manage expenses and had raised a total of $22 million prior to this round.

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