Novo secures $125M to provide small businesses with working capital
By Riley Kaminer
More than three quarters of small businesses surveyed by Goldman Sachs said that they are worried about access to credit. In a context where small businesses represent 99.7% of all employers and generate two out of every three new jobs, this funding uncertainty can have major knock-on effects to the broader economy.
Miami-based fintech Novo, which provides services to small businesses, is acutely aware of these challenges – and doing something about it. Today the company announced that it has received a $125 million facility from Victory Park Capital to provide their users with access to working capital. They will deploy this through a new feature, Novo Funding.
“When a small business owner wants to invest in their business growth or simply needs additional funding to cover an upcoming payroll cycle, they have incredibly limited options for accessing capital,” Michael Rangel, founder and CEO of Novo, said in a statement.
“Some use credit cards with exorbitant interest rates, while others attempt to go through a weeks- or months-long application process with a traditional lender and are not able to access the capital until long after they need it,” Rangel continued. “Novo Funding is built to support small business owners’ short-term financial needs and long-term ambitions with a seamless working capital experience.”
Novo reports that users can apply for funding in less than 10 minutes and have their application reviewed within 24 hours. Successful applicants will have the funds hit their account immediately. Users only pay for the funds accessed, up to $75,000. Typically, users will be expected to repay their loans within six months. To be eligible, small business customers must have been in operation for at least six months and have at least six months of account history.
Kevin Phillips, Novo’s EVP of Credit, explained that thousands of the small business owners on its platform accessed more than $35 million through a pilot of Novo Funding. “There’s simply no other small business working capital product on the market that combines the speed and simplicity of Novo Funding,” Phillips asserted.
“Small businesses represent a significant segment of the U.S. economy, and Novo has created a user-friendly product to alleviate a frequent pain point for them,” commented Jason Brown, Partner at Victory Park Capital. “Michael and the Novo team have thoughtfully expanded their offerings to meet the financial needs of small business owners, and we are pleased to be partnering with them to support the new Novo Funding product.”
Last November, Novo raised $35 million in a round led by GGV Capital. Novo has raised more than $170 million in equity fundraising since the startup launched in 2018. Co-founders Rangel and Tyler McIntyre are Miami boomerangs, having grown up here, moved to New York to launch Novo, and then returned to Miami in 2021 to scale the company.
Since Novo’s last fundraise, the team has developed a wide range of new products including a revamped debit card offering, an integration with payroll platform Gusto, and an invoicing tool.
This story may be updated.
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