November 30, 2021

Two fintechs hoping to make debt the new equity launch in Nordics

As alternative startup funding grows in popularity, Ark Kapital launches with backing by iZettle founder and Capchase expands to Scandinavia

Mimi Billing

4 min read

The ArK team

Startup founders are looking for different ways to raise cash beyond traditional VC funding, a trend that’s driven demand for alternative financing methods like debt.

As of today, Scandinavian founders will have access to more of these products with the launch of two alternative lending startups: Sweden’s ArK Kapital and Spanish-US Capchase.

“VC is fantastic if you fit into that box, but it doesn't scale super well. Bank lending is really backwards-looking, which sort of excludes tech startups. And the fintech lenders that we see have sort of limited transformative scope”, says Axel Bruzelius, cofounder of ArK.


Alternative lending companies primarily lend to startups in the form of recurring revenue, meaning startups can receive future revenue immediately in the form of debt. As opposed to VCs, who give founders cash in return for a piece of ownership in the company, founders don’t have to give up equity when they raise debt.

VC is fantastic if you fit into that box, but it doesn't scale super well

There are already many startups providing this kind of financing, most notably Pipe in the US. Even VCs are getting in on the action; in September, American VC giant General Catalyst launched a fund to buy up future startup earnings as debt.

ArK has managed to attract three impressive investors for a pre-launch pre-seed investment for an undisclosed amount: the iZettle founder Jacob de Geer, EQT Ventures founding partner Hjalmar Winbladh and Patrick Söderlund, founder of the games studio Embark and former executive vice president of Electronic Arts. The fintech is also backed by Sequoia Ventures' scout programme.

Bruzelius and his cofounders, serial entrepreneur Oliver Hildebrandt and former EQT Ventures partner Henrik Landgren, will focus on loans to European startups in the range of €1m-10m to start off with.

“I have only built companies in the Nordics before so it's important to have investors that have the playbook to build global companies,” says Hildebrandt, CEO of ArK.

“I think Jacob de Geer, given his journey with iZettle recently, is perfect for us.”

From Motherbrain to AIM

Similar to other startups in the field, data analysis is key to being able to offer the “right” startups loans. ArK can lean on the experience of Landgren, its chief product and technology officer and a former vice president of analytics at Spotify. He was most recently at EQT Ventures, where he led the development of Motherbrain, EQT's AI-driven investment platform.

Launched in 2016, Motherbrain uses internal and external data to help identify potential investments for the company and helped EQT Ventures source companies like Peakon and Handshake.

Having worked with data analytics and machine learning for years, Landgren was frustrated that although big data and machine learning are available, the technology has not been used to offer growth companies better-tailored financing options.

Now he has led the development of the equivalent of Motherbrain for ArK Kapital — ArK Intelligence Machine (AIM). The artificial intelligence platform analyses a customer's raw business and engagement data combined with relevant external market data. AIM then applies advanced modelling techniques to estimate when a customer will become profitable, when they will require a new capital injection, and how quickly they can reasonably repay a loan.

It can also share analytics and insights with borrowers in a dashboard, to help the companies to optimise their business performance.


Capchase launches in Finland, Sweden and Denmark

ArK is not the only lender making headlines in Scandinavia this week. Spanish-American lender Capchase also announced its expansion to Finland, Sweden and Denmark today.

The company was, according to VCs, one of Spain’s most undervalued startups in 2021. But since launching in Europe in spring and with another $280m raise in July, it’s opened in the Nordics amid high customer demand in the region.

With customers such as Swedish Soundtrack Your Brand (Spotify for businesses) and Icelandic anti-money laundering startup Lucinity, Capchase sees an opportunity in the region. Henrik Grim, previously an investor at the European VC firm Northzone and a Swedish native, is Capchase’s European managing director.

Both Capchase and ArK are lending off their own balance sheet instead of offering a marketplace to match investors with startups, which rivals like Germany’s re:cap do.

Another Scandinavian startup lender with a similar model to ArK and Capchase, DBT, was in the news last week after raising €20m. The funding round was led by Öresund AB, also an early investor in Klarna. So far, DBT has lent more than €100m in growth capital to SMEs.

While DBT which is so far only available in Sweden, ArK is open to the whole of Europe from the start. With 16 fresh recruits, including former Klarna employees, it aims to continue growing the team both in Stockholm and in regions where ArK is getting the best traction.

“When we connect to entrepreneurs’ data and build the models, we’ve noticed that it's extremely scalable. The data looks the same in Norway, Denmark, Germany and in all of Europe, and actually all over the world. So what we really want to do here is to get moving as fast as possible and rollout in all of Europe from the get-go,” Landgren says.

Mimi Billing

Mimi Billing is Sifted's Europe editor. She covers the Nordics and healthtech, and can be found on X and LinkedIn