Parker, a startup offering a corporate credit card for e-commerce businesses, emerged from stealth Thursday with $157 million in equity and debt funding, much of which closed in 2022.
The company touts itself as “the first charge card for e-commerce” with raised limits that are on average 10 to 20 times higher than traditional business credit cards, like CapitalOne, American Express and Brex.
Co-founders Yacine Sibous and Milan Ray were more into computing before they kind of fell into the world of e-commerce. They were building internet-based businesses to help people build passive income when they came across the problem around financials in e-commerce.
“We imagined building better financial products for e-commerce founders with the mission of increasing the number of financially independent people,” CEO Sibous told TechCrunch.
Sibous and Ray founded Parker in 2019 and were part of the Y Combinator winter 2019 cohort. The company focuses on the middle market — companies doing $3 million to $100 million in annual sales.
Parker’s “secret sauce” is its underwriting process, which assesses cash flow so that e-commerce brands can have credit limits that make sense for their business; for example, up to $10 million in credit, Sibous said.
In addition, the company offers payment terms that Sibous said make sense in the context of e-commerce — think net terms on every transaction. For example, if you buy something on March 1 and then on March 3, you can have net 30 or 60 days on each of those and not pay on that transaction until May 1 and May 3, respectively.
“We’ve essentially changed the way statements work for credit cards, so instead of operating on a monthly statement, we have the option to work on daily or weekly statements,” Sibous added. “That helps these brands a ton with cash flow.”
Sibous believes Parker has a good opportunity to compete in the crowded credit card space that includes other venture-backed companies like Moss and Emburse. Sibous also pointed out that corporate card companies like Brex, American Express and Ramp do a broad reach to startups and don’t niche down to a certain industry to focus on custom needs like Parker does.
“We tried to use those cards for our own business and the cards just kept breaking,” Sibous added. “We realized no one’s really solved the problem in a way that makes sense. Because we had been working in fintech and e-commerce startups for so long, we knew all the vendors in the landscape pretty well and were very well-positioned to actually tackle this problem.”
Parker’s revenue comes from interchange and transaction fees, and since its launch, has surpassed $300 million in transaction volume. It also has a run rate of close to half a billion dollars, Sibous said. Customers include Amour Vert, Italic, SpikeBall, Canopy and Caraway.
The company started raising venture capital after graduating from Y Combinator and is now announcing all of its previously unannounced funding, most recently $31.1 million in Series A venture funding led by Valar Ventures that followed $5.9 million in seed funding. In addition is $70 million in debt, comprised of venture debt from Triple Point Capital and warehouse debt from Jefferies. The warehouse debt facility also includes an uncommitted option to upsize by $50 million.
“Parker has identified an opportunity as a massive segment of e-commerce has been underserved by traditional banks, startup cards and merchant cash advance companies,” said Andrew McCormack of Valar Ventures, in a written statement. “The company has seen great product market fit among companies that require flexible financing terms and innovative underwriting to be successful and unlock growth.”
Sibous said Parker has maintained a solid runway through the global pandemic, which enabled it to not need as much additional funding over the years. The funding will deploy into research and development across product, engineering and go-to-market as it readies to expand across the country this year.
Parker is also working toward profitability, and the company is working on scaling to access the cheaper cost of capital and upsell other products, though there is a path to profitability on just the card business, Sibous said.
“We want to become the de facto card for profitable e-commerce brands looking to scale,” Sibous added. “We want to build the best-in-class card experience and solve the problem space of cash flow, management and profitability. Once we’ve met that goal, we’ll look into expanding our product lines, including other financial products these brands might need.”