A conversation with any fintech entrepreneur will inevitably dwell on the complexities of ledger management. A ledger, which is a detailed record of all financial transactions, is the cornerstone for managing financial assets. However, when business expands to multiple banking partners, payment processors, and funds scattered across various services, managing the ledger becomes a daunting task. To combat this, many companies resort to developing their own ledgers.
Identifying this problem, French start-up Formance began providing an open-source, programmable financial ledger that tracks all monetary transactions in and out of your accounts. This product has now become the foundation for a more comprehensive and ambitious infrastructure project.
Formance initially focused solely on the ledger. However, in 2024, it began to expand its range of services. According to co-founder and CTO Clément Salaün, Formance began to transition from offering just a ledger to providing a full platform with additional modules. This includes components like reconciliation, connectors to payment services, and more.
Currently, Formance offers five products. Alongside the ledger, they provide a connectivity platform that integrates financial providers through a single API. They also offer payment orchestration to facilitate transactions across various wallets and payment providers, and reconciliation. Furthermore, they are developing a mass payout product for marketplaces and companies that need to issue payments. While developers can manage payouts using Stripe, Adyen, or Mangopay, Formance aims to create middleware that works across multiple providers.
The company has recently secured $21 million in a Series A funding round, with PayPal Ventures and Portage co-leading the round. Other participants included Y Combinator, Hoxton Ventures, and Axeleo.
Formance believes in the value of providing a modular platform akin to Amazon Web Services’ approach to cloud hosting. Customers can use one service, but efficiency improves when all cloud infrastructure is under one umbrella. They plan to release more modules, particularly for financial operations. They also aim to improve connectivity and delve deeper into banking functionalities.
Simultaneously, the team is committed to keeping integration costs as low as possible for clients who wish to incorporate additional modules.
While larger fintech companies like Stripe also offer many fintech infrastructure services, Formance strives to maintain its independence. It does not process payments nor hold clients’ money.
Formance claims to have about 20 clients, two of which are based in the U.S. and constitute 40% of the start-up’s revenues. Other clients include Booksy, Doctolib, Liberis, and Shares.
With the recent $21 million funding, Formance plans to establish an office in New York and recruit a go-to-market team. They also plan to expand their engineering and product teams in sync with their goal to increase their workforce from 20 to 50 employees by the end of 2025.
