Synctera, which aims to serve as a matchmaker for community banks and fintechs, has raised $33 million in a Series Aby Fin VC. The raise comes just six months after the fintech raised $12.4 million in a .
New investors Mastercard and Gaingels also participated in the latest round, including follow-on investments from Lightspeed , Diagram Ventures, SciFi Ventures, and Scribble Ventures. Several angel investors put money in Series A, including Omri Dahan, Marqeta’s Chief Revenue Officer, Feedzai Chairman, CEO Nuno Sebastiao, and Greenlight Tim Sheehan.
Alongside the Series A, Synctera is also announcing its commitment to the new Cap Table Coalition – which includes to “traditionally marginalized,” or underrepresented, investors via an SPV. (Fellow fintech Finix led the initiative earlier this before forming this coalition, but more on that later).
In a nutshell, San Francisco-based Synctera has developed a platform designed to help facilitate partnership banking. “This has exposed us to find great folks who we otherwise might not have known,” said Synctera’s co-founder and CEO, Peter Hazlehurst. “That’s why we pledge to reserve of this round and all future rounds to diverse investors.”
It was founded on the premise that some community banks and credit unions are turning down deals with young fintechs because the relationships can be too complicated or time-consuming to manage. Synctera aims to connect community banks and fintechs to streamline the process with its “Banking-as-a-Service” (BaaS) platform.
Synctera wants to make it easier for community banks and fintechs to partner with each other. It examines banks’ needs and then sets them up with a fintech best suited to them. TechCrunch recently caught up with Hazlehurst, who most recently served as former head of Uber Money and previously also led the development of Google Wallet and products related to its payments system.
It claims to “do the work for both parties,” managing the partnership from its back-end platform while dealing with issues like regulatory compliance, which can be a deterrent for some companies. According to the company, collecting, reconciling, and billing banks can result in “a lot of operational overhead and complexity”.
The company and fintech companies so that it can apply a “personalized touch to each match” and make sure that the parties “align on geography, brand ethos, and desired business goals.”
So far, Synctera has signed three banks with plans to sign on three more this digital banking platform, and Ellevest, a new fintech. . The startup has already paired Coastal Community Bank – a local bank serving the greater Puget Sound community – with One, a new
By using Synctera’s platform, the company claims, banks can more freely allow their fintech counterparts to offer FDIC-insured mobile checking, debit cards, , or innovations in payments to their prospective customers, the company claims. They can also make more money doing so, Hazlehurst said, by bringing in more revenue beyond interchange fees.
“Like most small businesses, community banks have been hit hard by COVID-19,” he added. “We hope to diversify community banks’ revenue streams further.” Banks can also more easily manage multiple relationships with various fintechs as the stack, the company claims.
“We build a single dashboard for a bank, so there’s a consolidated position across all fintechs,” Hazlehurst told me at the time of the company’s last raise. “It’s all about visibility for the bank.” Currently, Synctera has about 50 employees, including nearly two dozen engineers, most of whom are located in Canada, Hazlehurst said. The company plans to ramp up to 160 employees by year’s end, focusing on engineering, sales, marketing, and customer success staff.
Hazlehurst predicts that the fourth quarter will be “all about support for small business fintechs.” “We want to create a neobank for gig economy workers and add lending as a service,” he said. “But our next big phase is to onboard many fintechs and learn from them.”
Logan Allin, managing general partner and founder at Fin VC, believes that Banking-as-a-Service, in general, will transform legacy national and regional banks, credit unions, fintech, corporate tech, and retailers alike “as these players either seek to integrate financial services or accelerate their digitization process vertically.”
Synctera, he adds, has taken an approach with its banks and their respective cores. Allin believes this will help ensure a “cloud-native and scalable model” and make it an attractive investment. (Fin VC has also backed the likes of other fintechs such as Pipe and SoFi).
“Synctera’s peers are simply abstracting bank cores and serving as ‘API wrappers’ in a kludgy short-term approach. Having come from the legacy bank and , we recognized that these players had not built sufficiently strong bridges across the ecosystem,” Allin told TechCrunch.
For his part, Finix are following his lead in the pledge to make their cap tables more diverse. “After Finix announced our special purpose vehicle for Black and Latinx investors, the response was overwhelmingly positive,” he told TechCrunch.
“Startups in every sector and at every stage have asked us how to recreate our SPV. In response, we started the Cap Table Coalition to make it possible for more high-growth startups, like Synctera, to take control over their cap tables,” said Richie Serna, CEO and co-founder of Finix. “We see this as an that will completely upend how the VC world functions.”
Meanwhile, Synctera is not the only player trying to help banks and fintechs forge partnerships. Last week, TechCrunch reported that Visa said it had expanded its Visa Fintech Partner Connect program, which is designed to help
quickly connect with a “vetted and curated” set of technology providers.