New York–based Zazma has emerged from stealth, announcing Tuesday it raised $10 million from Sequoia Capital and Spark Capital to help expand its team and services. The startup, founded in 2011, offers short-term credit through an online platform to small businesses. That credit is for small sums, up to $5,000 per transaction, to pay invoices and other business needs.
CEO and co-founder Benjy Feinberg says the capital Zazma offers is typically used as a supplement to other business financing options. He says his service can come into play when a business wants to grow faster with fewer hassles. “For a lot of smaller businesses, banks wouldn’t give them the attention and time they need because it would be prohibitive to do these [smaller] transactions,” he says.
Here’s how Zazma tries to meet those needs: Users enter information on the platform about what they need—for example, new equipment from a supplier—Zazma pays the order, and then users have up to 60 days to pay Zazma back on somewhat flexible terms.
Business owners may already have credit with a bank or credit cards to cover expenses, but it can take time to increase their credit limits. “If they have a customer who walks through the door and wants to place an order and [the business owner] needs financing, they can go to the Web and get another $5,000 from us for a specific need,” Feinberg says. The businesses might use Zazma to free up their other financing resources for such needs as hiring employees, he says.
Now that Zazma is out of stealth, Feinberg says the company plans to use its latest funding to flesh out its operations, including additional sales and marketing staff in New York. The company’s development team is based in Israel.
