Information on the Target

Daylit, formerly known as Lendica, is an innovative embedded finance platform specifically designed to address the financial challenges faced by small and medium-sized businesses (SMBs). By offering a comprehensive suite of short-term credit products, including PayLater, FundNow, Offer Terms, and DrawDown, Daylit empowers business owners to manage their payables, receivables, and growth capital seamlessly.

What sets Daylit apart is its unique approach to reaching borrowers. Instead of requiring users to navigate clunky, standalone applications, the Daylit button integrates directly into the existing ERP, CRM, and POS systems where SMB operators frequently engage. This strategy not only minimizes barriers for borrowers but also enhances underwriting through real-time operating data.

Industry Overview in the Target’s Specific Country

The small and medium-sized businesses sector is critical to the American economy, comprising 99.9% of all firms, employing nearly half of the private-sector workforce, and contributing approximately 44% of the nation's GDP. From 2021 to 2022, SMBs were responsible for creating a net 2.6 million jobs, highlighting their vital role in job creation.

Despite their significant contributions, SMBs often face financial vulnerabilities. The median SMB has only 27 days of cash reserves, with many owners experiencing cash-flow challenges. Recent surveys indicate that roughly a quarter of small business owners are struggling to pay their bills, while nearly half have consequently foregone their own salaries. This financial fragility can jeopardize the sustainability of these vital economic players.

Additionally, SMBs are not only pivotal to economic health but also represent generational businesses and local institutions that underpin community stability. Their financial challenges constitute a serious issue that can ripple across families, jobs, and neighborhoods, emphasizing the need for effective financial solutions catered specifically to their needs.

The Rationale Behind the Deal

The investment in Daylit aligns directly with SixThirty’s mission of supporting companies that enhance health, wealth, property, and privacy through technological solutions. Daylit's commitment to simplifying financial operations for SMBs shines a spotlight on a significant market challenge, making it a strategic investment opportunity.

As the SMB funding landscape becomes increasingly competitive, the growing demand for working capital is undisputed. With a U.S. factoring market currently valued at $172 billion and projected to grow at nearly 10% annually, Daylit is well-positioned to capture substantial market share through its innovative approach to embedded finance.

Information About the Investor

SixThirty is a venture capital firm focused on investing in innovations situated at the intersection of health, wealth, property, and privacy. By leveraging its robust corporate LP ecosystem, SixThirty aims to empower companies like Daylit to scale effectively and deliver impactful solutions in their respective markets.

With a proven track record of backing disruptive startups, SixThirty not only provides capital but also offers vital strategic guidance and networking opportunities that can greatly enhance the growth trajectory of its portfolio companies.

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The partnership between SixThirty and Daylit represents a thoughtful investment in the future of SMB finance. As traditional financial institutions grapple with evolving client expectations, Daylit's innovative embedded model stands out by effectively addressing the real-time financial challenges faced by SMBs.

The strategic integration of Daylit’s services into the existing workflows of SMBs reduces friction in accessing credit, ultimately fostering trust and satisfaction among users. This approach positions Daylit uniquely within a substantial market ripe with opportunity and demand.

Furthermore, the strong co-investment from established firms such as Companyon Ventures and participation from NextView Ventures, complemented by a credit facility from Viola Credit, reinforces confidence in Daylit's model and scalability. Daylit has already demonstrated impressive market execution, making it a promising candidate for continued growth and success.

In conclusion, investing in Daylit is not merely an investment in a lending platform but also a commitment to the resilience of small businesses. By merging advanced technology with AI-driven insights, Daylit is poised to redefine the landscape of small business finance, making it an attractive and potentially lucrative investment opportunity.

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