Unit raises $51M in Accel-led Series B to grow its banking-as-a-service platform

We’ve all heard the phrase, “Every company is a fintech.” 

But these days, that’s becoming more and more true as an increasing number of companies that are not even in the financial services space seek to add a fintech component to their offering.

A group of startups poised to benefit from this shift are those offering banking as a service. One such startup, Unit, has raised $51 million in a Series B round to further its goal of making it possible for companies and fintechs alike to build banking products “in minutes.”

Silicon Valley-based Accel led the round for Unit, bringing the company’s total raised since its 2019 inception to nearly $70 million. Existing backers Better Tomorrow Ventures, Aleph, Flourish Ventures and TLV Partners also participated in the latest financing

Founders Itai Damti and Doron Somech are no strangers to growing companies. The pair previously co-founded — and bootstrapped — Leverate, a Tel Aviv-based B2B trading tech provider. Unit has dual headquarters in Tel Aviv and New York City.

Damti and Somech founded Unit in late 2019 and spent the first year stealthily building out the platform with the mission of empowering companies to embed financial services into their product, accelerating their time to market. Unit officially launched its platform in late 2020, and over the last three months, it has seen deposit volume grow by more than 300% and new end users by 600% (albeit from a small base).

With its platform, Unit touts, companies in a variety of industries — such as freelance or creator economy and personal financial management, for example — can build financial products directly into their software. This gives them the ability to build and launch next-gen bank accounts, cards, payment and lending products. Customers include Wethos, Lance, Benepass, Moves and Tribevest, among others.

“Our mission is to expand financial access for all and we do it by empowering the next generation of fintech builders,” Damti said. Only about 20% of its customers are what might be considered true fintechs, he said. The remaining 80% are companies that are not but rather want to embed banking as a service into their offering.

Unit, Damti claims, takes what was once “a very expensive and complex process of 18 months” that includes finding and managing a bank relationship, building a compliance team and building a tech stack “that gets you to a competitive banking offering, and turns it into one API and one dashboard that helps companies launch accounts cards, payments and lending within five weeks.”

In conjunction with the funding, Unit is also announcing today a new offering, Unit Go, which it says allows companies to create live bank accounts and issue physical and virtual cards in minutes. Founders and developers can try it out by creating a free account, building in Unit’s live environment and testing their products using real funds. Unit Go is currently in beta and will be available to the public in the fall of 2021. 

The company plans to use its new capital to grow its headcount of 26 and fast-track its Unit Go offering. It also wants to expand its platform into additional financial products, software development kits (SDKs) and integrations. (It’s already integrated with Plaid, for example).

Of course, Unit is not the only startup in the burgeoning banking-as-a-service (BaaS) space. It competes with the likes of Railbank, Treasury Prime and Stripe. Damti believes there are a few things that help differentiate Unit in the increasingly crowded space.

For one, according to Damti, Unit intentionally “put compliance at the front and center of what we do.” As evidence of that, earlier this year, it tapped Amanda Swoverland to serve as its chief compliance officer. 

Secondly, Damti emphasizes that Unit is not a matchmaker or marketplace along the lines of Synctera.

“We are acting as a company that connects banks to the tech ecosystem and banks are critical vendors and partners to us, but we see them as a built-in element within Unit, because we believe that the most excellent experience in this ecosystem can only come from software companies,” Damti told TechCrunch. 

And finally, he notes, Unit is technically distinct in that it is actually building a ledger, which Damti describes as “the most critical and sensitive part of the ecosystem.”

By owning the ledger and not delegating, he said, Unit is “able to offer a radically better experience.”

“As far as the transaction environment, the cleanliness of the data that we provide and the fees that our customers are able to control and tweak, owning that ledger piece is super critical for the experience,” Damti said.  

Accel partner Amit Kumar notes that in recent years, the landscape has shifted from hundreds of fintech startups “trying to beat incumbents with slightly better products” to thousands of tech companies trying to launch fintech businesses in their verticals.

“Unit’s strong emphasis on managing compliance addresses the risk typically associated with offering banking services and allows customers to bring these products to market much faster than previously possible,” he told TechCrunch. “Unit is building the platform to power the next generation of fintech.”

RSA spins off fraud and risk intelligence unit as Outseer

RSA Security has spun out its fraud and risk intelligence business into a standalone company called Outseer that will double down on payment security tools amid an “unprecedented” rise in fraudulent transactions.

Led by CEO Reed Taussig, who was appointed head of RSA’s Anti-Fraud Business Unit last year after previously serving as CEO of ThreatMetrix, the new company will focus solely on fraud detection and management and payments authentication services.

Outseer will continue to operate under the RSA umbrella and will inherit three core services, which are already used by more than 6,000 financial institutions, from the company: Outseer Fraud Manager (formerly RSA Adaptive Authentication), a risk-based account monitoring service; 3-D Secure (formerly Adaptive Authentication for eCommerce), a card-not-present and digital payment authentication mapping service; and FraudAction, which detects and takes down phishing sites, dodgy apps and fraudulent social media pages.

Outseer says its product portfolio is supported by deep investments in data and science, including a global network of verified fraud and transaction data, and a risk engine that the company claims delivers 95% fraud detection rates.

Commenting on the spinout, Taussig said: “Outseer is the culmination of decades of science-driven innovation in anti-fraud and payments authentication solutions. As the digital economy continues to deepen, the Outseer mission to liberate the world from transactional fraud is essential. Our role as a revenue enabler for the global economy will only strengthen as every digital business continues to scale.”

RSA, meanwhile, will continue to focus on integrated risk management and security products, including Archer for risk management, NetWitness for threat detection and response, and SecureID for identity and access management (IAM) capabilities.

The spinout comes less than a year after private equity firm Symphony Technology Group (STG), which recently bought FireEye’s product business for $1.2 billion, acquired RSA Security from Dell Technologies for more than $2 billion. Dell had previously acquired RSA as part of its purchase of EMC in 2016.

It also comes amid a huge rise in online fraud fueled by the COVID-19 pandemic. The Federal Trade Commission said in March that more than 217,000 Americans had filed a coronavirus-related fraud report since January 2020, with losses to COVID-linked fraud totaling $382 million. Similarly, the Consumer Financial Protection Bureau fielded 542,300 fraud complaints in 2020, a 54% increase over 2019.

RSA said that with the COVID-19 pandemic having fueled “unprecedented” growth in fraudulent transactions, Outseer will focus its innovation on payments authentication, mapping to the EMV 3-D Secure 2.x payment standard, and incorporating new technology integrations across the payments and commerce ecosystem. 

“Outseer’s reason for being isn’t just focused on eliminating payments and account fraud,” Taussig added. “These fraudulent transactions are often the pretext for more sinister drug and human trafficking, terrorism, and other nefarious behavior. Outseer has the ability to help make the world a safer place.”

Valuation information for Outseer was not disclosed, nor were headcount figures mentioned in the spinout announcement. Outseer didn’t immediately respond to TechCrunch’s request for more information. 

Float wants to provide liquidity to African SMBs in a way never done before

According to research, 85% of African SMBs have zero access to financing, and each day, African SMBs have billions locked up in receivables due to long payment cycles. This leads to cash flow problems that cause businesses to be late on important expenses and fulfilment of new orders.

Jesse Ghansah and his co-founder Barima Effah want to answer these problems with their newly launched startup Float.

Ghansah is a serial entrepreneur. Since leaving the university in 2014, he has co-founded several tech startups but made his mark globally with OMG Digital, a startup with offices in Ghana and Nigeria that wanted to become the “BuzzFeed of Africa.” In 2016, OMG Digital was one of the first African companies accepted into Y Combinator.

Ghansah had a good run with the company and left two years ago. For his newest venture, he turned his focus outside media to fintech. Formerly Swipe, Float is an 18-month-old Lagos and San Francisco-based company aiming to close the $300 billion liquidity gap for Africa’s small and medium businesses. The company took part in YC’s Winter batch 2020, making Ghansah one of the few two-time YC founders in Africa.

Float has evolved from the last time we partly covered them during their Demo Day as “Brex for Africa.” According to CEO Ghansah, Float is “rethinking the way African businesses manage their financial operations, from managing cash and making payments to accessing credit.”

After 18 months in stealth, Float is finally going live, and we spoke with the CEO to get a glimpse into its progress and what makes it different from similar platforms on the continent.

TC: What problem would you say Float is solving?

JG: If you ask any small business, cash flow will most likely be the number one problem that they face. And this stems from the whole payment cycle, which is after you provide a service or deliver a product. Businesses that serve other businesses have to wait typically for 30-90 days for their payments to come in. This is like a traditional payment cycle where you have to offer credit sales to your customers to stay competitive; that’s why you send an invoice, and the customer will pay you back within that time frame. 

That creates a lot of problems in terms of constant cash crunches. Because you’re waiting for your revenue to come in, they sometimes fall behind in meeting certain expense payments like payroll, inventory, utilities. That’s what really causes a lot of these cash flow issues, and because of that, businesses can’t grow. For existing businesses, these are the issues they face and getting credit in terms of working capital is extremely difficult if you’re dealing with banks. 

TC: Did you have a personal experience with this problem seeing as your past venture was in media?

JG: As you know, I was a co-founder at OMG Digital, and as a media company, we had to wait for months to get paid by our partners. We needed credit this time and proceeded to get an overdraft from a long-term partner bank where we had transacted more than $100,000. But the bank wanted us to deposit 100% collateral in cash before they could give the overdraft. 

I also remember taking money from loan sharks with ridiculous interest rates, sometimes as high as 20% a month, just to meet payroll. That sort of threw me into solving those problems with Float.

TC: There are a plethora of lenders giving loans to businesses. How is Float solving the credit issue differently?

JG: So our credit product is quite different regarding how we present it to the customer. It is less complex than a loan; it is more flexible than a business overdraft. Also, there’s a difference in the tools that we provide. So we don’t just give money; what we’ve provided is a software solution with credit embedded. 

Float

Right now, we’ve built what we call the cash management tool for businesses where they get credit at the critical set of moments in time. For instance, if you want to pay a lender and need credit, you can withdraw the credit and make payment immediately. We provide a credit line that businesses can tap into any time they want as soon as they onboard to our platform, and it increases and decreases based on the transactions performed on our platform. 

So that’s just on the credit side. We’ve also built tools to help businesses stay on top of their cash flow. We give them invoicing, budgeting tools and spend management tools and a way for them to manage all their bank accounts because we know that existing businesses usually have more than one bank account. On Float, they can see all their balances and transactions, and we’re building a way for these businesses to make payments from their accounts on Float. 

You can think of Float as a really well-built cash management platform. You get credit when you need it to make vendor payments or boost your working capital, which has been pivotal to our loss rate of 0%. Then two, tools that give total visibility about your businesses so you know where your money is coming in and going out.

TC: Float’s loss rate is 0%? Does that mean no business has defaulted on your platform?

JG: Yes, we’ve not had any default so far. We’ve advanced $2.8 million to our pilot customers in Nigeria, and we don’t have any losses in the last eight months; it’s because of the type of loans we’re giving. We give businesses money to boost their working capital. So we’re essentially giving you an advance for your future revenue. 

If you look like, in the U.S., Pipe has built this for SaaS companies and are building for other customer segments, which is essentially what we’re doing. So, for us, the way we’re solving the cash flow issue is that we’re sorting your future revenue and as your customers pay you through our platform, then we make deductions. 

You can think of us as a Stripe Capital, Square Capital, Pipe or the new multidimensional lending platforms we have now. When you consider lending, I’d say there are different phases. Lending 1.0 was when you’d fill an application online, and you’d get a loan decision. Lending 2.0 and 3.0 is where credit is embedded in online tools businesses already use. That’s why it has worked really well because the businesses on our platform aren’t exactly looking for a lifeline but are looking to boost their cash flow and basically step on the gas to grow.

TC: But this loss rate will likely change as soon as you onboard more businesses, right?

JG: Yes, definitely it’s going to change. The thing with lending is that with more customers, your credit model gets tested. The more customers you have, the more probability that you’re going to have default losses. But as long as you have, like a solid credit risk criteria and assessment, you must always try to keep it as small as possible. It’s almost impossible to have a 0% default rate when you begin to grow fast.

TC: What strategy does Float put in place to mitigate losses and reduce risk?

JG: The way our credit product works is that we’re constantly connected to your bank; we know who your vendors are, know who your suppliers are, and know who your customers are. We know how much money is flowing in and out of your business at any point in time. So as I mentioned, we can quickly adjust your credit limits as soon as we sense a difference in your activity. If we notice your invoice activity has dropped and we’re not receiving as much money as you were in the previous weeks, we reduce your limit. It’s a very dynamic sort of type of product, and it is really different from what you see out there today.

TC: Aside from lending, how have the other tools been helpful to businesses?

JG: With our pilot phase, we’ve been able to give credit and also processed invoicing and vendor payments for our customers worth about $5 million. 

When you think of business payments, sometimes people always think about Paystack and Flutterwave. They’re tackling a different segment which is basically consumers paying businesses. For us, we’re centred around businesses paying other businesses. Their method, as we know, is a very drawn-out process, and that market is 10 times bigger than the market Paystack and Flutterwave are serving. 

Float

L-R: Barima Effah and Jesse Ghansah

If you look at your big multinational corporations, they have thousands of vendors on their payroll every month. Globally trillions of dollars are flowing from business to business, and that is where we want to play in. We’re launching the new version of our invoicing product and vendor payments, and a product where we can pay for services upfront on behalf of our customers and they pay back in 30 days.

TC: I’m tempted to call Float a digital bank for small businesses. Would you say there are differences?

JG: Of course there are. Almost any business owner will tell you that business banking is mostly broken. Legacy banks typically provide an outdated, underwhelming user experience. Businesses quickly move beyond basic banking needs, and for them, the options are frustratingly limited.

African neo-banks are aiming to compete with traditional banks. Still, in reality, they are actually now competing with each other for a relatively tiny slice of the market due to not solving the core problems facing businesses. A marginally better UX and a quick account opening experience is the value proposition that probably resonates well with a new startup business or a budding freelancer. However, to an already operating retail business owner that struggles to make timely payments to suppliers due to poor cash flow, that’s grossly inadequate.

This, coupled with the trust matters, reconciliation, and auditing headaches involved in moving accounts, is why neobanks haven’t taken off in this market.

There are little to no switching costs using Float because we have designed our platform to run on top of existing business bank accounts and payment processors. The idea is to provide a single platform that provides businesses with the credit they need, a consolidated view of their existing business banking and cashflow activity, coupled with various payment tools to enable them to speed through their financial operations so they can spend more time actually growing their business.

How bottom-up sales helped Expensify blaze the path for SaaS

You’d expect an expense management company to have a large sales department and advertise through all kinds of channels to maximize customer acquisition. But like we’ve seen over and over through the course of this EC-1, Expensify just doesn’t do what you think it should.

Keeping in mind this company’s propensity to just stick to its guts, it’s not much of a surprise that it got to more than $100M in annual recurring revenue and millions of users with a staff of 130, some contractors, and an almost non-existent sales team.

If you’re wondering how its possible to grow to such a level without an established sales team, the short answer is: Word of mouth. To an extent, Expensify can do this due to the space it’s in, as expense reporting is such a thankless, almost mind numbingly boring task that anyone who found a good solution is bound to recommend it to their colleagues and friends.

But it’s more interesting how Expensify grows bottom-up within SMBs, its core customer base. By providing an easy and meaningful experience via the product itself, the company has come to a point where it only takes one or two users who love the service to turn their company into customers.

This approach flips the traditional sales model on its head and is now known as product-led growth, but Expensify did it long before it was an accepted business model. Though that was harder than it sounds, it also put the company in a uniquely privileged position, which it is fully intent on leveraging.

Starting the flywheel

There are many ways to get such a business model started, but as usual, Expensify threw caution and all advice out the window and banked on turning its users into evangelizers for its product.

YC-backed Ziina raises $7.5M seed led by Avenir Growth Capital and Class 5 Global

Cash is the predominant method of sending and receiving payments in the Middle East. If you owe someone a cup of coffee or a trip over a long period, repaying via cash is your best bet. This is one problem out of many financial issues that haven’t been addressed in the region.

The good news is that startups are springing up to provide solutions. Last month Telda, a now two-month-old startup in Egypt, raised an impressive sum as pre-seed to offer digital banking services. Today, Ziina, another startup based in Dubai, has closed $7.5 million in seed funding to scale its peer-to-peer (P2P) payment service across the Middle East and North Africa.

Ziina has managed to enlist top global investors and fintech founders in the round. Avenir Growth and Class 5 Global led this latest tranche of financing. Wamda Capital, FJ Labs, Graph Ventures, Goodwater Capital, Jabbar Internet Group, Oman Technology Fund’s Jasoor Ventures, and ANIM also participated.

The founders who took part include Checkout CEO Guillaume Pousaz via his investment fund Zinal Growth; Krishnan Menon, BukuKas CEO, as well as executives from Paypal and Venmo. This adds to a roster of executives and early employees from Revolut, Stripe, Brex, Notion, and Deel that joined Ziina’s round.

According to the company, it has raised over $8.6 million since launching last year. This includes the $850,000 pre-seed raised in May 2020 and $125,000 secured after going through Y Combinator’s Winter batch early this year.

Ziina was founded by Faisal Toukan, Sarah Toukan, and Andrew Gold. It’s the latest addition to the Middle East’s bubbling fintech ecosystem and is capitalising on the region’s rapid adoption of fintech friendly regulation.

The company allows users to send and receive payments with just a phone number —no IBAN or swift code required as is the de facto method in the UAE and some parts of the Middle East. It also claims to be the country’s first licensed social peer-to-peer application “on a mission to simplify finance for everyone.”

After meeting during a hackathon in the U.S., Faisal and Gold began exchanging ideas on how to build wallets, wanting to mirror the successes platforms like WePay, Paytm have had. At the time, VCs seemed to be interested in how the wallets ecosystem intersected with banking.

“The lines between wallets and banking have become really blurred. Every wallet has a banking partner, and people who use wallets use them for their day-to-day needs,” CEO Faisal Toukan said to TechCrunch.

On the other hand, Sarah, who is Faisal’s sister, was on her personal fintech journey in London. There, she attended several meetups headlined by the founders of Monzo and Revolut. With her knowledge and the experience of the other two, the founders decided that solving P2P payments issues was their own way of driving massive impact in the Middle East.

So how far have they gone? “We launched a beta for the market but it’s restricted for regulatory reasons and basically to keep ourselves in check with the ecosystem,” Toukan remarked. “Since then, we’ve gotten regulated. We’ve got a banking partner, one of the three largest banks in the UAE, and we’ve set a new wallet a month from now. That’s also what we were working throughout our period in YC. So it’s been quite an eventful year.”

The fintech sector in MENA is growing fast; in terms of numbers, at a CAGR of 30%. Also, in the UAE, it is estimated that over 450 fintech companies will raise about $2 billion in 2022 compared to the $80 million raised in 2017. Fintechs in the region are focused on solving payments, transfers, and remittances. Alongside its P2P offering, these are the areas Ziina wants to play in, including investment and cryptocurrency services.

According to Toukan, there’s no ease of making online investments, and remittances are done in exchange houses, a manual process where people need to visit an office physically. “So what we’re looking to do is to bring all these products to life in the UAE and expand beyond that. But the first pain point we’re solving for is for people to send and receive money with two clicks,” the CEO affirmed.

Starting with P2P has its own advantages. First, peer-to-peer services is a repeat behavioural mechanism that allows companies to establish trust with customers. Also, it’s a cheaper customer acquisition model. Toukan says that as Zinna expands geographically — Saudi Arabia and Jordan in 2022; and Egypt and Tunisia some years from now — as he wants the company’s wallet to become seamless across borders. “We want a situation where if you move into Saudi or Dubai, you’re able to use the same wallet versus using different banking applications,” he added

To be on the right side of regulation is key to any fintech expansion, and Toukan says Ziina has been in continuous dialogue with regulators to operate efficiently. But some challenges have stemmed from finding the right banking partners. “You need to make a case to the banks that this is basically a mutually beneficial partnership. And the way we’ve done that is by basically highlighting different cases globally like CashApp that worked with Southern Bank,” he said.

Now that the company has moved past that challenge, it’s in full swing to launch. Presently, Ziina has thousands of users who transacted more than $120,000 on the platform this past month. According to the company, there are over 20,000 users on its waiting lis to be onboarded post-launch.

Ziina has already built a team with experience across tech companies like Apple, Uber, Stanford, Coinbase, Careem, Oracle, and Yandex. It plans to double down on hiring with this new investment and customer acquisition and establishing commercial partnerships.

As buy-now-pay-later startups keep raising capital, a dive into Klarna, Afterpay and Affirm’s earnings

Venture capitalists continue to fund buy-now-pay-later (BNPL) startups, evidence of ongoing optimism regarding not only e-commerce, but the specific model for financing consumer purchases as well.

Evidence of continued investor confidence in the BNPL space cropped up several times in the second quarter. Divido, a startup that TechCrunch described as a “white-label [BNPL] platform for retail finance that integrates with e-commerce platforms,” raised $30 million. And Zilch raised $80 million for an “over-the-top” BNPL solution.


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Zilch is now worth $800 million.

There are other examples, but those will suffice to get us into the correct mindset for today’s work as we look back at data points regarding the financial performance of more mature BNPL tech companies. So, as in February when we were looking at Q4 2020 numbers, today we’re looking into the more recent performance of Klarna, Affirm and Afterpay.

Growth versus profitability

As startups scale, they focus a bit more on profitability. Super-early-stage startups aren’t often too worried about net margins, for example, as their revenues can be nascent and their costs rising as they staff up for a product launch or another similar event.

But as those same startups mature into unicorn territory, questions about their model’s profitability on a unit basis, operating cash burn and aggregate profitability will start to pop up. The Rule of 40 is a startup rubric for a reason.

And in the cases of Affirm and Afterpay, we’re in fact examining public companies. So we can safely care even more about their profitability than we might if they, like Klarna, were still waiting for an IPO.

For each, then, we’ll consider growth and profitability. Let’s start with Klarna:

Klarna’s latest data, dealing with Q1 2021, breaks down as follows:

  • Global GMV of $18.9 billion, +91% compared to the year-ago result.

Ganaz raises $7M A round to rethink how agriculture workers get hired and paid

The agriculture sector is ripe for technological improvements, but beyond satellite-based crop management and bees-as-a-service, the actual people who work in the fields should be benefiting as well. Ganaz, empowered by a $7M A round, aims to change how people with little documentation and no bank account get paid and send money with a modern workforce stack that embraces low tech as well.

Growers — that is to say, the companies that own and operate the fields and sell the crops — are under pressure from multiple directions as wages rise, regulations increase, and willing workers dwindle. They need to save money to make money, but they can’t do so by paying less; in addition to being cruel to a marginalized class of people, it would only exacerbate the labor shortage in the sector.

There are plenty of companies out there that help save costs by automating things like payroll and onboarding, but the agriculture business has some unique limitations.

“It’s still operating like it’s the ’80s,” explained Ganaz founder and CEO Hannah Freeman. The number one service these workers rely on is check cashing or payday loans, and fees from these, currency exchange, ATM fees, and remittances eat up a significant portion of each paycheck. “The workforce in our world definitely doesn’t have corporate email and rarely uses personal email. They have trouble downloading and using mobile apps, don’t use usernames. But they’re very conversant in WhatsApp and SMS — so you have to kind of know how to build for them.”

A payment card from Ganaz and text interface for asking about balance and other things.

Image Credits: Ganaz

The ecosystem has parallels to other regions that have stuck with older, cheaper technologies instead of adopting the latest and most expensive tech. Entire markets in Africa and South America, for instance, run on text-based commerce taking place on aging and unreliable infrastructure.

Ganaz has opted for a hybrid approach. The company’s platform offers several services on both the worker and employer side.

Onboarding and basic training can be done simply and intuitively for people who may not be highly literate, via tablets loaded with apps that also operate offline. The most common alternative seems to be file folders served out of a crate in the back of a pickup — that’s not a dig, it’s just what has made sense for years for this highly fluid, distributed workforce.

Payment and balance checks all happen over SMS or WhatsApp with workers, but for sensitive information they are shunted to a web app; similarly, integrated remittance partnerships are coming that will keep things simple and reduce fees.

On the employer side, the workers and all their vital stats and documents are tracked centrally in the kind of interface companies have grown to expect. And Ganaz works as an intermediary to send text alerts and questions.

Diagram showing how employers can send texts to many workers at once.

Image Credits: Ganaz

So far Ganaz has 75 employers signed up, one of which is a Costco supplier group, and all told around 175,000 workers on the platform. Their ARR and user count both approximately tripled year over year, so they’re clearly on to something.

The company has tempered its rapid growth with designation as a public benefit corporation, which emphasizes the intention to do more than grow shareholder value. I asked about the tension between needing to show a profit and working in the service of a marginalized group.

“This keeps me up at night,” admitted Freeman. “We try to make sure to set ourselves up to be true to our mission. That means the folks we hire, our board of directors… we want to make sure we’re empathizing and honoring the trust we’ve built with people.”

That includes investors as well, and Freeman noted that the company ended up going with Trilogy as lead for this round partly because of that firm’s experience with Remit.ly.

For instance, Freeman noted, while it would be easy to juice profits by bumping ATM fees, that directly harms the people they’re trying to help. Instead, when they issue their payroll Mastercard later this year, that will allow workers to skip the check cashing step and its fees, and then Ganaz gets a share of the normal card transaction fee. “We can be equally successful that way,” said Freeman, and it doesn’t just replace another predatory structure.

After the cards the plan is to automate remittances, so a user can easily choose to send money to their family in a way that minimizes handling fees and so on. And there will be other options,m accessible via text, to choose where money goes if not to the card.

Ganaz’s main market is the U.S. and Mexico, since the agriculture business and workforce are both largely binational, but there are other targets on the horizon. First, though, the company wants to solidify its position and feature set here. “There’s no breakaway winner yet, so we want to be that winner,” said Freeman.

The $7M round also had participation from Bessemer Venture Partners, Founders’ Co-op, Taylor Ventures, AgFunder and Techstars. Rapid expansion and aggressive pursuit of the roadmap are next up for Ganaz.

“We are conscious of both the huge opportunity ahead of us to digitize billions of dollars in payroll, as well as the responsibility to build inclusive, low-cost, wealth-building tools for workers,” said Freeman.

Jeeves emerges from stealth with $131M in debt and equity and a16z as a lead investor

Jeeves, which is building an “all-in-one expense management platform” for global startups, is emerging from stealth today with $131 million in total funding, including $31 million in equity and $100 million in debt financing. 

The $31 million in equity consists of a new $26 million Series A and a previously unannounced $5 million seed round.

Andreessen Horowitz (a16z) led the Series A funding, which also included participation from YC Continuity Fund, Jaguar Ventures, Urban Innovation Fund, Uncorrelated Ventures, Clocktower Ventures, Stanford University, 9 Yards Capital and BlockFi Ventures.

A high-profile group of angel investors also put money in the round, including NFL wide receiver Larry Fitzgerald and the founders of five LatAm unicorns — Nubank CEO David Velez, Kavak CEO Carlos Garcia, Rappi co-founder Sebastian Mejia, Bitso CEO Daniel Vogel and Loft CEO Florian Hagenbuch. Justo’s Ricardo Weder also participated in this round and Plaid co-founder William Hockey put money in the $5 million seed funding that closed in 2020 after the company completed the YC Summer 2020 batch.

The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering is currently live in Mexico — its largest market — as well as Colombia, Canada and the U.S., and is currently beta testing in Brazil and Chile. 

Dileep Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.

Image Credits: Left to right: Jeeves co-founders Dileep Thazhmon and Sherwin Gandhi

Jeeves claims that by using its platform, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card, noncard payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.

“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon said. 

“We’re really building two things — an infrastructure layer that sits across banking institutions in different countries. And then on top of that, we’re building the customer-, or end user-facing app,” he added. “What gives us the ability to launch in countries much quicker is that we own part of that stack ourselves, versus what most fintechs would do, which is plug into a third-party provider in that region.” 

Image Credits: Jeeves

Indeed, the company has seen rapid early growth. Since launching its private beta last October, Jeeves says it has grown its transaction volume (GTV) by 200x and increased revenue by 900% (albeit from a small base). In May alone, Jeeves says it processed more transaction volume than the entire year to date, and more than doubled its customer base. It says that “hundreds of companies,” including Bitso, Belvo, Justo, Runa, Worky, Zinboe, RobinFood and Muncher, “actively” use Jeeves to manage their local and international spend. On top of that, it says, the startup has a waitlist of more than 5,000 companies — which is part of why the company sought to raise debt and equity.

The shift to remote work globally due to the COVID-19 pandemic has played a large role in why Jeeves has seen so much demand, according to Thazhmon.

“Every company is now becoming a global company, and the service to employees in two different countries requires two different systems,” he said. “And then someone’s got to reconcile that system at the end of the month. This has been a big reason why we’re growing so fast.”

One of Jeeves’ biggest accomplishments so far, Thazhmon said, has been receiving approval to issue cards from its own credit BIN (bank identification number) in Mexico. It can also run SPEI payments directly on its infrastructure. (SPEI is a system developed and operated by Banco de México that allows the general public to make electronic payments.)

“This gives us a lot of flexibility and allows us to offer a truly unique product to our customers,” said Thazhmon, who previously co-founded PowerInbox, a
Battery Ventures-backed MarTech company that he says grew to $40 million in annual revenue in three years.

Jeeves says it will use the fresh capital to onboard new companies to the platform from its waitlist, scale its infrastructure to cover more countries and currencies as well as do some hiring and expand its product line.

A16z General Partner Angela Strange, who is joining Jeeves’ board as part of the investment, is extremely bullish on the startup’s potential.

Strange says she met Thazhmon about a year ago and was immediately intrigued.

“Not only were they working to provide the financial operating system within a country, starting in Mexico, they were designing their software platform to scale across multiple countries,” she said. “Finally — a multicountry/currency expense management & payouts platform, where increasingly companies have employees and operations in multiple countries from the start and can use a single company to manage their financials.”

Strange, who has been investing in Latin America for the past few years, notes that most companies in the region are unable to get a corporate credit card.

“That’s only the tip of the iceberg,” she told TechCrunch. “It’s cumbersome for companies to make bank to bank payouts, handle wires, and they usually also have expenses in the U.S. (and often other countries) so there is also FX. And they manage multiple bank accounts. Not only is paying hard, reconciliation on the backend takes weeks.”

As such, Strange said, with every country having their own bank transfer system, rules around who can issue a credit card, approved payment processors, currencies and bank accounts — payments and expense management across countries can be complex.

Jeeves, according to Strange, “gets as close to the networks/payment rails as possible” since it has its own issuing credit BIN versus needing to connect through legacy players.

Providing an orchestration layer on top of all the rails gives Jeeves the ability “to handle all the payment and reconciliation complexity” so “their customers don’t have to think about it,” she added.

 

Kushki, an Ecuador-based fintech, raises $86M to build financial infrastructure in Latam

Just about every week there’s a blockbuster round coming out of South America, but in certain countries such as Ecuador, things have been more hush hush. However, Kushki, a Quito-based fintech, is bringing attention to the region with today’s announcement of a $86 million Series B and a $600 million valuation.

“We never thought that we would return home [from the U.S.] and build a company that was more valuable in Ecuador than we had built in the U.S.,” said Aron Schwarzkopf, CEO and co-founder of Kushki.

Schwarzkopf and his business partner, Sebastián Castro, had previously built and sold a fintech called Leaf in the U.S. in 2014. The two are originally from Ecuador but moved to Boston for college, where they met watching soccer.

Unlike many other fintechs in Latam that are out to help the unbanked, Kushki works behind the scenes building the tech infrastructure that companies like Nubank use to transfer money. Some of the functionalities they build enable both local and cross-border payment players in credit and debit cards, bank transfers, digital cash, mobile wallets, and other alternative payment methods.

“We realized there was a gigantic opportunity to democratize and create infrastructure to move money,” Schwarzkopf told TechCrunch.

The company, which was founded in 2017, already has operations in Mexico, Colombia, Ecuador, Peru, and Chile. The Series B will be used to accelerate growth and expand to Brazil and nine other markets in Central America.

Generally, expanding to Brazil is an expensive proposition, and therefore not a path that all companies can take, even though it can be an extremely profitable move if done right. Some of the challenges include the need to translate everything into Portuguese followed by the varying financial regulations.

That’s why Kushki’s approach has to be somewhat custom in each country.

“We focus on going into the markets and we basically rebuild an entire infrastructure, so we put everything into one API,” said Schwarzkopf.

Products similar to Kushki have been successful in other regions around the world, such as in India with Pine Labs, Africa with Flutterwave, and Checkout.com that now has 15 international offices.

To build all this infrastructure, Kushki, which means “cash” in a native Andes dialect, has raised a total of $100 million from SoftBank, an undisclosed global growth equity firm, as well as previous investors including DILA Capital, Kaszek Ventures, Clocktower Ventures, and Magma Partners.

“From now until 2060, people will need servers and ways to move money, and we knew that the existing payment infrastructure couldn’t support that,” said Schwarzkopf.

Gokada to launch ride-hailing service in two Nigerian cities as part of super app plans

When two of Indonesia’s biggest companies — ride-hailing company Gojek and e-commerce marketplace Tokopedia — joined forces as GoTo Group last month, a key highlight from the merger was that the last-mile delivery space is still a huge global trend.

In Nigeria, the e-commerce and last-mile delivery market is projected to be worth over $20 billion in the next five years. Big players like Jumia have considerable market share yet smaller platforms are increasingly carving out theirs. One of such is ride-hailing-turned-logistics company Gokada.

Gokada launched in 2018 as a ride-hailing company in Lagos, Nigeria. But in 2020, Gokada began offering logistics (Gsend) and food delivery services (GShop) after a ride-hailing ban by the Lagos State government affected its operations. Today, the company is combining all these services (which have operated independently in the past) into a single application.

“In September and October, we launched GShop which is the food delivery platform for Gokada. What we realized from our customers was that while they were using the Gsend and GShop separately, they came to us asking if we could put them together,” said Gokada CEO Nikhil Goel to TechCrunch. “So doing this is more like a transition from other things we were doing and making it easier for our customers to have all our services in one platform and create a super app.”

Gokada’s super app plans are coming off the back of an impressive year for the company despite a troubling first few months during the pandemic. As early as February, the company downsized and laid off more than half its staff after the ban on motorcycles in Lagos. It quickly pivoted to logistics and food delivery and hasn’t looked back.

This past year, Gokada has crossed over $100 million in annualized transaction value. It has also helped more than 30,000 merchants on its platform to execute over 1 million food delivery and e-commerce orders.

“Before Gokada ventured into ride-hailing in Lagos, people questioned us. When we entered the delivery space, it was the same question people asked. They said we didn’t have the experience. But today, if you look at it critically, we’ve changed this market in a different manner,” Goel said. 

Goel, who took over the reins at Gokada this March after founder Fahim Saleh tragically passed on, has been instrumental to the company’s impressive growth so far. Per information shared by Gokada, the company’s volume growth has increased 3x in the last six months while revenue increased 10x within the past year.

Gokada

Image Credits: Gokada

Before becoming CEO, Goel had three roles since joining the company in 2019 — VP of Rides, COO, and acting president. Previously, he also co-founded Indian edtech startup Classplus and worked as a general manager at Indian food delivery giant Zomato. His stint at Zomato and knowledge of the food-delivery and logistics space will be key to how Gokada pulls off its super app ambitions.

Although Gokada is only present in Lagos, the company is looking to launch its services across other cities including Abuja, Port Harcourt, Ibadan and Ogun. And not only will the super app allow Gokada customers in these cities to access food delivery, e-commerce (medicines and groceries among other supplies), and logistics, but they will be able to use ride-hailing services.

The company plans to start with neighbouring markets to Lagos — Ogun and Ibadan. In the latter, there’s already a ride-hailing platform in the form of SafeBoda. The company, which is present in Uganda and Nigeria, employs a super app model in the East African country but offers only ride-hailing services in Ibadan, the only Nigerian city where it operates.

For much of last year, SafeBoda has enjoyed dominance in the southwestern city but Gokada’s arrival, especially as it plans to offer other services, might threaten its commanding position.

“We started with its ride-hailing service in Lagos. We were mostly known as one of the pioneers of ride-hailing in Lagos before the ban. So far, we’ve not ventured outside Lagos, and the reason for that has been that we wanted to remain focused on our new business here. And it’s evident that when you move across Lagos, you will see our delivery bikes everywhere on the road. But ride-hailing will always stay with us wherever we go outside the city,” the CEO added. Gokada is in talks to secure operational licenses for ride-hailing but has already acquired a NIPOST licence to mitigate future risks on the regulatory front and allow them to operate courier logistics services across the country.

While services in a super app can differ from one platform to another, payments is the defining functionality that ties those offerings together. For now, Gokada only provides a subset of that which is a wallet feature and a debit card option to pay for these services. On why this is the case, Goel said: “Before many of these companies like Grab and Gojek got into payments, they were providing other services. The idea for a super app is to provide customers with different services under one umbrella to ease their lives. That’s what we’re doing but we’re open to a payments play in the future.”

Unlike other markets in Asia, Africa doesn’t have clear leaders in the super app race. Therefore, Gokada will join a growing list of platforms clamouring for supremacy in their respective markets, a spot OPay seemed to be gunning for before shutting down its non-fintech verticals last year to focus on its payment services.