Many consumers today are making transactions through Paypal, GooglePay and other payment platforms, but businesses have yet to catch up with this trend. Melio wants to change this by making B2B payments easier and more efficient. Apparently, others agree and Melio is becoming a top Israeli investment. It has risen in value to a $4 billion valuation after a $250 million funding raise in a series D round.
Melio is one of the fastest-growing start-ups in the Israeli fintech sector. In January 2021, its valuation was just $1.3 billion after a $110 million fundraise. This kind of growth is much-needed and unusual in a sector that faces regulatory challenges and bureaucracy. Like many other Israeli startups, Melio broke its own records for fundraising during the pandemic and managed to thrive under substantial economic headwinds.
Upgrading B2B Payment Methods
Melio founders Matan Bar, Ilan Attias, and Ziv Paz launched Melio in 2018 to upgrade B2B payment methods. It is ironic that customers may use a variety of digital payment methods, but when businesses make deals and transactions with each other, they tend to rely on outdated and inefficient methods such as checks and conventional bank transfers.
Matan Bar, CEO of Melio, told The Times of Israel, “Our mission is to keep small businesses in business. We do this by allowing small businesses to manage payments remotely, paying when and how they want, giving them more control, and helping businesses manage cash flow. Business payments shouldn’t be more complicated than paying a friend with your phone.”
Although many businesses were feeling the crunch during the Covid-19 crisis and were making cutbacks, Melio saw a huge increase, not just in fundraises and those eyeing Melio as an Israeli investment, but from enterprise customers. From the beginning of 2020 to September 2021, Bar reported that payment processing had increased by 5,000 percent.
The reason for this huge increase may reveal why Melio is such a solid Israeli investment and why it is so popular; making the payment processes digital and more efficient saves companies money. During the pandemic, more activities became digitized. eCommerce grew substantially, the interest in digital currencies increased and workers and employers were communicating by Zoom and other conferencing software.
It became more apparent that B2B payment processes were in desperate need of an upgrade. Melio arose at just the right time to meet the digital needs of companies and to expedite payment processes when businesses need to work faster, more efficiently, and organize their finances.
Meeting the Challenge of the Fintech Sector
Melio benefited from a partnership with Capital One to increase access to financial management tools for small businesses. The Melio platform integrates with accounting software Quickbooks with a market share of 80%. This will give Melio more visibility and clients.
Melio’s huge rise in valuation is particularly impressive because of the challenges posed by the fintech sector. A white paper published by the Israel Innovation Authority identified issues faced by Israeli fintech companies, many of which are shared with similar companies around the world.
Financial regulations are designed to protect consumers and companies, but they can be an obstacle to the development of the fintech sector. To expedite this process and to stimulate the Israeli fintech sector, the Israel Innovation Authority along with other government organizations have developed a “regulatory sandbox” for testing fintech companies through a trial and error approach.
The regulatory sandbox provides a variety of complex scenarios that will test and improve the capacity of fintech companies to work within a regulatory framework.
Invest in Israel’s Fintech Sector
Melio is a standout example of a solid Israeli investment within the fintech sector. Although regulations can reduce the number of these companies, Melio has demonstrated that it can provide viable payment options to businesses that can comply with regulations.
One great way to invest in Israel’s fintech sector is through stocks and other assets such as ETFs. Many investors prefer ETFs or Exchange Traded Funds that provide broad exposure to Israeli companies and distribute risks among a large number of stocks.
An ideal way to invest in the rapidly growing Israeli hi-tech and healthcare industries is with the Jerusalem Portfolio. Accounts are available for individuals or you can give the gift of the Jerusalem portfolio for as little as $180.
About the Jerusalem Portfolio
The Jerusalem Portfolio is comprised of a fractional interest in 100 Israeli companies through a portfolio of professionally managed ETFs. The recipient will be given a plaque with a beautiful and customized image of Jerusalem. Talk to our experts today about giving the Jerusalem Portfolio to a special young person as a bar or bat mitzvah gift, birthday, graduation, or other occasions.
September 29, 2021
The Jerusalem Portfolio