Galileo Financial raises $77 million for its fintech services that were 19 years in the making

Clay Wilkes had already been retired for six years when he launched Galileo Financial Services in 2000.

The serial entrepreneur, who had been an early pioneer in telecommunications technologies (like voice over internet protocols), saw the need for better connectivity between secondary services and financial institutions 19 years ago, just as new digital services around payroll processing, transit vouchers, store cards and other services were launching.

Now the company runs the backend integrations with financial institutions for some of the biggest names in financial technology and has just raised $77 million in financing from Accel Partners.

Not that Galileo necessarily needed the money. The company has been profitable for years since its bootstrapped beginnings and counts fintech giants like Chime Banking, Robinhood, Monzo and TransferWise among its customers. In fact, the debit and credit card service provider will process nearly $26 billion in financing by the end of the year, according to the company.

For financial services companies that are launching these days there are a few ways to get to market quickly. One is to partner with a financial institution that will handle the money for them in accounts that are FDIC assured; the other is to become a financial provider that’s fully regulated themselves.

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Most companies have opted for the second route, and when they do, they need to find a way to hook into a bank’s financial system and the payment technologies that form the backbone of transaction processing through the debit and credit cards that a huge portion of the world relies on to buy things.

Accel partner John Locke, who is joining the Galileo board of directors, calls the company almost the flip side of the Braintree and Stripe investments that power transactions for most online merchants.

Rather than focus on the companies that are taking online orders and processing payments, Galileo deals with the consumers who are spending the money and powers the ways in which companies are trying to offer new services to get those consumers to switch from traditional banks to their upstart challengers (ironically still mostly powered by traditional banks).

“Through the API what they’re doing is creating and managing accounts, authorizing merchant transactions, monitoring fraud, initiating disputes and chargebacks, being able to configure products and a wide variety of product,” said Wilkes. “We support [direct deposit accounts] and we do credit products… all of these capabilities are capabilities that fit on our platform.”

Wilkes wouldn’t talk about the company’s valuation except to say that it’s worth “a substantial amount.”

What he will talk about is how Galileo will use the money it has raised. The Salt Lake City-based startup is planning to greatly expand its geographical reach beyond North America. It’s “actively pursuing opportunities in Brazil and Colombia and Argentina,” according to Wilkes. In fact, the company plans to open an office in Mexico City in the coming months to service new Latin American business.

Meanwhile, it already has something of a stranglehold on the market in the United Kingdom. “The top five largest fintechs in the U.K. are all clients today,” Wilkes said.

Unlike other companies in the market that take a fixed percentage of transactions, Galileo charges a variable amount of a few cents for every transaction that it processes to connect a startup with its banking back end. 

“We’re in a golden era of fintech innovation and Galileo has quietly built the API infrastructure layer powering the industry’s most innovative products,” said Locke in a statement. “Clay and his team have built a very impressive business with many parallels to companies like Qualtrics and Atlassian: bootstrapping first to build a quiet, profitable powerhouse and now, ready to go big globally. We’re excited to help Clay and team take Galileo to the next level.”

Source. TechCrunch, Johnathan Schreiber October 16, 2019

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ZenBusiness Raises $15M in Series A Funding

ZenBusiness, an Austin, TX-based online platform to create and run small businesses, closed a $15m Series A venture capital financing.

The round was led by Greycroft, with participation from Lerer Hippeau, and Revolution’s Rise of the Rest Seed Fund and new investors Rosecliff Venture Partners, Interlock Partners, and Recruit Strategic Partners (RSP).

The company intends to use the funds to further expand its presence and continue to build out the platform and community features.

Led by Ross Buhrdorf, CEO, ZenBusiness provides a leverages Machine Learning (ML) and automation online platform that gives everything needed to start a company as an LLC or Corporation, and operate it over time through a wide array of business services including accounting, taxes, banking, lending and credit, website, domain, and email.

Since its public launch in early 2018, the company has served thousands of small businesses via its platform.

ZenBusiness is a Public Benefit Corporation.

Source. FinSMEs, September 25, 2019

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Aspire raises $32.5M to help SMEs secure fast finance in Southeast Asia

Aspire, a Singapore-based startup that helps SMEs secure working capital, has raised $32.5 million in a new financing round to expand its presence in several Southeast Asian markets.

The Series A round for the one-and-a-half-year-old startup was funded by MassMutual Ventures Southeast Asia. Arc Labs and existing investors Y Combinator — Aspire graduated from YC last year — Hummingbird and Picus Capital also participated in the round. Aspire has raised about $41.5 million to date.

Aspire operates a neo-banking-like platform to help small and medium-sized enterprises (SMEs) quickly and easily secure working capital of up to about $70,000. AspireAccount, the startup’s flagship product, provides merchants and startups with instant credit limit for daily business expenses, as well as a business-to-business acceptance and other tools to help them manage their cash flow.

Co-founder and CEO Andrea Baronchelli tells TechCrunch that about 1,000 business accounts are opened each month on Aspire and that the company plans to continue focusing on Southeast Asia, where he says there are about 78 million small businesses, leaving plenty of room to scale (applications can be made through Aspire’s mobile app and are reviewed using a proprietary risk assessment engine before getting final approval from a human). Aspire claims it has seen 30% month-over-month growth since it was founded in January 2018 and expects to open more than 100,000 business accounts by next year.

Baronchelli, who served as a CMO for Alibaba’s Lazada platform for four years, says Aspire launched to close the gap left by the traditional banking industry’s focus on consumer services or businesses that make more than $10 million in revenue a year. As a result, smaller businesses in Southeast Asia, including online vendors and startups, often lack access to credit lines, accounts and other financial services tailored to their needs.

Aspire currently operates in Thailand, Indonesia, Singapore and Vietnam. The startup said it will use the fresh capital to scale its footprints in those markets. Additionally, Aspire is building a scalable marketplace banking infrastructure that will use third-party financial service providers to “create a unique digital banking experience for its SME customers.”

Baronchelli adds that “the bank of the future will probably be a marketplace,” so Aspire’s goal is to provide a place where SMEs can not only open accounts and credit cards, but also pick from different services like point of sale systems. It is currently in talks with potential partners. The startup is also working on a business credit card that will be linked to each business account by as early as this year.

Southeast Asia’s digital economy is slated to grow more than six-fold to reach more than $200 billion per year, according to a report co-authored by Google. But for many emerging startups and businesses, getting financial services from a bank and securing working capital have become major pain points.

A growing number of startups are beginning to address these SMEs’ needs. In India, for instance, NiYo Bank and Open have amassed millions of businesses through their neo-banking platforms. Both of these startups have raised tens of millions of dollars in recent months. Drip Capital, which helps businesses in developing markets secure working capital, raised $25 million last week.

Source. TechCrunch, Manish Singh, Catherine Shu, July 31, 2019

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Brex raises $100 million at $2.6 billion valuation for startup-friendly credit card

By Paul Sawers

It has been a whirlwind 12 months for fledgling fintech startup Brex, which launched last June with $57 million in funding from some big-name investors, including PayPal’s founders and Y Combinator. Brex, which has created a corporate credit card for startups and scale-ups, raised another $125 million series C round in October, at a valuation of $1.1 billion, and made its first acquisition (a blockchain startup, no less). It also raised an additional $100 million debt round a couple of months back.

Today, Brex has announced another $100 million in funding in a series C extension round led by Kleiner Perkins Digital Growth Fund, with participation from existing investors, including  Y Combinator Continuity, GreenOaks Capital, IVP, Ribbit Capital, and DST Global. This takes Brex’s total equity funding to $315 million, with a valuation of $2.6 billion — a considerable growth trajectory for a company founded in 2017 that has been widely available for less than a year.

Brex it

By way of a quick recap, Brex launched as a corporate credit card for startups, which typically find it more difficult to gain access to lines of credit from traditional lenders. Brex effectively serves as an underwriter and sets credit limits based not on credit history, but on factors such as who has invested in the startup and the equity they hold and the startup’s cash balance and spending patterns. Startups don’t pay any fees for the first five cards, after which they pay $5 per month for each card — of course, Brex also makes money from transaction fees similar to other credit cards.

Brex offers a number of other useful features, such as the ability to capture receipts with a smartphone camera and match them to a statement, and it directly integrates with accounting tools, including QuickBook, Expensify, and Xero.

Brex was cofounded by Brazilians Henrique Dubugras and Pedro Franceschi, known as the teenage creators behind online payments processor Pagar.me, which they sold for an undisclosed sum in 2016. Fast-forward to March, 2017, when Brex was born, this time in Silicon Valley and with a vast target market spanning the entire U.S.

After graduating from Y Combinator, Brex went on to accumulate around 1,000 customers during its private launch, including Affirm, Algolia, Flexport, and Y Combinator itself. Though Brex’s initial offering was aimed at startups, it has expanded its focus to larger tech companies and specific verticals such as ecommerce.

With another $100 million in the bank, Brex will invest in specific spend-management features, its rewards program that launched back in October, and efforts to target new customers.

“At Brex, we build corporate payment technology to accelerate entrepreneurs and scaling companies,” said Dubugras, who serves as co-CEO. “We recognize that each business is unique and therefore tailor our product to meet their specific circumstances. With this new funding, we can deliver relevant and unique financial products to an increasingly broad customer base.”

Source. VentureBeat, Paul Sawers, June 11, 2019

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