Formance raises $21M to build the AWS for fintech infrastructure

If you talk to a fintech entrepreneur about their business, chances are they’ll end up talking about ledger issues at some point.

A ledger is a record of money movements that serves as the source of truth for financial assets, but when a company starts having multiple bank accounts, payment processors and funds spread across discrete services, it can become a headache to manage. Most companies end up dedicating engineering resources to build their own ledgers to solve that.

French startup Formance started out trying to capitalize on this need with an open-source, programmable financial ledger that can track all assets moving in and out of your accounts. Now, that product is serving as the backbone for a broader, more ambitious infrastructure play.

“In 2024, and even before, we were mainly focused on the ledger. And then we started to prepare to move from a single ledger product to the Formance platform with other modules — the reconciliation part, for example, connectors to payments services, etc.” co-founder and CTO Clément Salaün told TechCrunch.

Formance currently offers five products: In addition to the ledger, there’s a connectivity platform to integrate financial providers using a single API; orchestrate payments to move money across wallets and payment providers; and reconciliation.

The startup is also working on a mass payout product for marketplaces and other companies that need to issue payments. Developers can already manage payouts programmatically using Stripe, Adyen or Mangopay, but Formance wants to build middleware that works across several providers.

The company recently raised a $21 million Series A round co-led by PayPal Ventures and Portage. Existing investors Y Combinator, Hoxton Ventures and Axeleo are also participating.

A platform play

The startup believes there’s value in offering a modular platform that’s similar to Amazon Web Services’ take on cloud hosting: Customers can use a single service, but it’s more efficient if you house all your cloud infrastructure under the same roof.

“We’ll be releasing a number of other modules, particularly related to financial operations,” Salaün said. “We’re going to go further with exports for accounting tools. We’re also going to improve connectivity a step further and go down the stack and work on banking at a lower level. So we’re really going to continue to modularize the whole stack.”

At the same time, the team wants to ensure integration costs remain as low as possible for their clients if they wish to add another module.

“If you get three SaaS products to manage those, you’re going to spend, I don’t know, $150,000 on the three products and $150,000 on internal glue to link them together,” Salaün said. “The financial infrastructure is really a ‘long tail of small problems,’ each of which could be a company with $10 million in [annual recurring revenue] — something like that. But it’s really this platform play that can help us scale further than that.”

Larger fintech companies like Stripe also offer many fintech infrastructure services, but Formance wants to remain independent. It doesn’t process payments, and it doesn’t hold clients’ money itself.

The company claims that it has around 20 customers, two of which are in the U.S — according to Salaün, those two customers represent 40% of the startup’s revenue. Its other clients include Booksy, Doctolib, Liberis and Shares.

With the fresh $21 million in the bank, Formance plans to open an office in New York and hire a go-to-market team there. It also wants to flesh out its engineering and product teams in line with its aim to increase its headcount from 20 to 50 employees by the end of 2025.