In its latest funding round, Defacto raised €16 million, led by Citi Ventures and La Maison Partners, with participation from Blast and existing investors including Headline, Northzone, and Global Founders Capital.

This funding round was facilitated by a 'perfect storm' of market conditions and regulatory changes, despite the company's previous skepticism toward balance sheet-based lenders.

The new capital will help Defacto increase its lending volume tenfold to €10 billion within four years and expand its team by hiring 10 additional employees.

The company plans to diversify revenue streams by licensing its technology to traditional banks, charging subscription fees, and earning commissions.

The SME lending sector is undergoing significant transformation due to increased private debt competition, AI-driven automation reducing costs, and upcoming EU regulations requiring digital invoice formats, all of which favor Defacto.

Defacto aims to expand across all European markets and enter the UK within the next two years, leveraging its technology licensing model and focus on industrial clients.

Defacto, a French fintech founded in 2021, has financed over €1 billion to 17,000 businesses across Europe, initially focusing on freelancers and the digital economy but now increasingly supporting industrial SMEs.