Usually, especially those working in the financial services sector know that the COVID-19 pandemic has significantly increased the demand for digital banking globally.
A flurry of fintechs have emerged hoping to fill that need while incumbents are trying to step up their own digital games.
And then there are the companies that survived the pandemic well. Headquarters in New York NorthOne is one such example. Was founded by Eytan Bensoussan and Justin Adler in 2016The startup was born to serve small business owners like barbers, mechanics and local restaurant owners.
When the pandemic hits, perhaps no other type of business is as impacted as small businesses. Some did not survive, but many survived, turned around, or made it through the early days of the crisis by adapting their model.
The CEO said: “Covid, for all its terrible parts, has spurred education in digital banking – at least in our part of the world. Bensoussan.
Over the years, NorthOne has strived to provide more banking services to its customers. It has added products that will also help them simplify their financial operations “by Connects the data layer between accounting, receivables, payables, loans, payroll – all financial activities – and the bank account ledger. “
“As our customers grow, their problems grow beyond the bank account” Bensoussan said.
In 2021, NorthOne restructured the company with a new banking partner, The Bancorp Bank, NA, an investment it said was a success. In the past 12 months, Bensoussan said that NorthOne’s revenue increased “4-5x” while customer growth was “in line with revenue growth”.
“By definition, we are built to serve a smaller portion of the small business market,” added COO Adler. “And that makes it really possible for us to serve these people effectively, but also have a product offering that’s really tailored to what they specifically need.”
To help further growth, the startup announced it has raised $67 million in a Series B funding round that included participation from Battery Ventures, Don Griffith, NFL player Drew Brees, Ferst Capital Partners, FinTLV , Next Play Capital, Operator Stack, Redpoint Ventures, Tencent and Tom Williams. This funding brings NorthOne’s total fundraising to $90.3 million since its inception. The company declined to disclose pricing, saying only that it was a “bullish round” that ended at the end of the summer.
The funding comes at an exciting time in the fintech world, as players like Brex has actually shifted the focus away from small businesses – in part due to the risks involved in underwriting such business ventures – to focus on enterprises. For NorthOne, that just means chance.
“A lot of people are really actively moving towards the top of the market – like a Fortune 500 company or a VC-backed startup, but the reality of the matter is that both markets are all really relevant,” said COO Adler. “We’ve literally doubled our core customer base, which are the businesses you pass by on your way to work – like a coffee shop, hair salon or dry cleaner – that only really focused by traditional banks and increasingly by fintechs and challenger banks. “
The majority of NorthOne’s customer base has less than 10 employees.
Surprisingly, the startup’s go-to-market strategy relies less on the internet than one might expect.
Although the company does not yet have a sales team, using the Internet for potential customers, the company also organizes a series of live events in different cities around the country, which provide educational content. for small business owners. It also partners with organizations like Profit First, a group that provides financial management advice to small businesses.
NorthOne, the founders say, works to give customers access to its services in as many convenient ways as possible. For example, it takes cash deposits through a series of partnerships with companies like Walmart, 7-11, and Office Max.
“That’s important, because small businesses actually deal with cash — as much as we’d imagine that’s all online,” Adler said. “The vast majority of American businesses are still using these forms of money transfers and we need to do them.”
Battery Ventures Leads NorthOne’s $21 million Series A in March 2020 and is doubling its investment with a new increase. Partner Shiran Shalev says he was intrigued by the company’s laser focus on the SMB market.
“There is a lot of focus in the fintech world on serving tech companies and serving big businesses,” he told TechCrunch in an interview.
Having spent time in Israel and Europe, where fintech is more developed, Shalev says he “spent a lot of time looking at all the different options in this space” in the United States.
“We are very, very intrigued by what NorthOne has built,” he added. Ultimately, the company’s goal is to give its businesses the “control, clarity and confidence” they need to better manage their finances. It plans to use its new capital to build out its business software layer as well as create new financial products for its customers, such as payment rails for working capital and offering Credit.
Currently, NorthOne has about 75 employees and has no plans to continue hiring with its new capital.
“We will be adding programmatically as we bring in these new layers of software and these new products,” Bensoussan said.
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