This analysis was first published in SvD Näringsliv, in Swedish, on October 23rd, 2022. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

What happens when venture capital dries up for software companies? A new industry of alternative financing emerges. Ark Kapital is one of them.

It might seem like a return to an older era. How did companies get funded before venture capitalists started investing our pension savings? Often, with loans.

Getting a bank loan when you had a factory and wanted to build another was relatively straightforward. Startups today don’t have that luxury. The risk is too high and companies are usually at too early a stage for banks to feel comfortable lending.

As venture capital becomes more cautious, a new type of player is emerging — lenders who use companies’ own business data to secure their credit decisions.

Ark Kapital connects directly to customers’ internal systems to assess risk and need. It is essentially the opposite of the big banks’ somewhat rigid model — a system built explicitly for fast-growing software companies.

Because many startups are so-called SaaS companies — offering software as a service — it is easier to forecast how their revenues will develop. With predictive models, you can also calculate what effect additional capital might have on the business.

Ark Kapital is part of a new wave of fintech companies beginning to emerge. Startups as a customer category have grown large enough that dedicated services are now being built on their terms. The established players are left standing still, at risk of missing this new wave of customers entirely.

Business model: Providing loans to software companies — a customer category that has historically struggled to get this kind of support from major banks. Founders: Henrik Landgren, Oliver Hildebrandt, Axel Bruzelius. Notable figure: Has raised 3.3 billion kronor in investment capital.