AI startup Flex raises US$60 million to offer finance tools for mid-sized businesses

A person types on a keyboard on June 6, 2024, in Portland, Ore. (AP Photo/Jenny Kane, File)

Flex, an artificial intelligence startup that aims to be a one-stop shop for the financial needs of mid-sized business owners, said on Thursday it has raised US$60 million in a Portage Ventures-led funding round.

The Series B round valued the firm at around US$500 million, according to a person familiar with the deal. It takes Flex’s total equity raise to US$105 million.

The company said it is targeting “jumbo shrimps” — mid-sized profitable businesses earning between US$2 million and US$100 million a year — often overlooked by traditional fintech platforms and mainly served by regional banks.

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Unlike AI startups looking to tackle specific tasks such as accounting or expense management, Flex aims to bundle private credit, business finance, personal finance and payment tools into a single solution.

“We have a very broad kind of product suite but an extremely narrow customer base,” founder and CEO Zaid Rahman told Reuters, noting many medium-sized businesses lack large finance teams that handle such tasks at bigger enterprises.

“Our customer base are a few hundred thousand jumbo shrimp business owners. These business owners touch 40 per cent of American payroll.”

Despite a funding surge for AI startups, doubts remain about real-world adoption, with an MIT study earlier this year finding that only about five per cent of AI projects advance beyond the pilot stage.

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Flex is trying to minimize inaccuracies by ensuring AI outputs are checked by financial experts. Growing adoption of its tools - which include a business credit card - has helped it triple payments volume to US$3 billion in 12 months.

The company is launching a new invite-only consumer card called Flex Elite that would compete with Amex Centurion, typically used by high-net-worth individuals.

It will use the new funds to accelerate product development and attract more clients by expanding its 80-member team.

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Reporting by Aditya Soni in Bengaluru; Editing by Sahal Muhammed