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 TC.
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 TC. “Unit is building the platform to power the next generation of fintech.”
