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Sila banks $13M to offer single API for developing financial products, services
Sila announced Monday it raised $13 million in Series A funding for its banking and payment platform that gives software teams tools to build the next generation of financial products and services.
Revolution Ventures led the round and was joined by existing investors Madrona Venture Group, Oregon Venture Fund and Mucker Capital, as well as Wise co-founder Taavet Hinrikus. The funding brings the total investment to date for Portland, Oregon-based Sila to $20 million.
The company was founded in 2018 by Shamir Karkal, Angela Angelovska, Isaac Hines and Alex Lipton to simplify digital payments and storage in a regulatory compliant way and build on blockchain technology. CEO Karkal has a long history in the fintech space, co-founding Simple, an app unifying various accounts into one accessible bank card, in 2009. It was acquired by BBVA in 2014 for $117 million and shuttered earlier this year.
Karkal told TechCrunch that the idea for Sila was born out of frustration while starting another bank. He saw a need for financial application development, but was hindered by a banking system “still stuck in the 20th century.” He thought consumers expected a different level of service, which is why many flock to fintechs.
However, whenever a business tried to connect existing banking systems, fintechs and cryptocurrency innovators, as it built and scale, would always run into technology and compliance issues, Karkal said.
“The problem with working with banks, is that you have to figure out how to integrate with their mainframe,” he added. “In the process, you end up having to also be compliance experts just to be able to do it.”
Whereas it took Karkal three years to get bank processes set up for other companies, it took Sila 18 months. Its banking APIs enable developers to create their own digital wallets, replacing the need to integrate with legacy financial institutions. Sila also has partnerships with fintech platforms, including Plaid, Alloy, Lithic and Arcus to move money, and is backed by Evolve Bank and Trust.
Sila can now get customers up-and-running in six to eight weeks. And unlike competitors that focus almost exclusively on e-commerce, most of Sila’s customers are doing regulated payments within the fintech, insurtech, commercial real estate and cryptocurrency spaces that tend to be more complex from a compliance basis, Karkal said.
Since the company launched its platform, business was building steadily, and took off in the second half of 2020. The company raised a $7.7 million seed round earlier in the year. In the last 12 months, Sila grew its revenue 10 times and customers’ end users grew over 500% in the last seven months.
Sila will use the new funding to increase headcount, target additional partners and expand product features, including its Ethereum MainNet stablecoin issuance and interoperability between FedWire and the Nacha Automated Clearing House network.
“There is a massive wave of fintechs emerging in the U.S., and we have barely scratched the surface,” Karkal said. “Places like India, Africa and Latin America could accelerate at the same time because they are mainly starting from zero. We are here to ‘arm the rebels’ and help those innovators build applications to give all end users a much better financial experience.”
As part of the investment, Clara Sieg, partner at Revolution Ventures, is joining the company’s board. She told TechCrunch she met the company’s co-founders through the Portland ecosystem.
Revolution tends to look at fintech startups from a consumer angle. Recognizing that the problem with building infrastructure meant dealing with banks, the firm set out how to find a company building the pipes to solve it, she said.
In the landscape of fintech, she considers Dwolla to be a competitor to Sila. Last week, the company raised $21 million to continue developing its API that allows companies to build and facilitate fast payments, specifically with a focus on ACH. However, it comes down to actually signing up customers, and that competitive landscape is pretty thin, Sieg added.
“Sila is building an easy way for people to program money and taking a regulatory eye to things,” Sieg said. “When Shamir was building Simple, he could see how challenging it was for incumbents to provide the tools developers need to embed financial services, and this is why we have confidence in his ability to win.”
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StepLadder, the collaborative deposit saving platform for first-time buyers, raises £1.5M
StepLadder, another London-based startup aiming to help so-called “generation rent” get onto the housing ladder, has raised £1.5 million in seed funding.
Backing the round is Spanish banking giant BBVA and fintech VC Anthemis via the London-based venture studio on which the pair have partnered. Early investor Seedcamp also followed on, in addition to unnamed angel investors.
StepLadder says it will use the new capital and support provided by BBVA/Anthemis to further develop its “collaborative finance platform.” The startup is also eyeing international expansion.
Founded in 2015 by Matthew Addison and joined by Lucy Mullins and Mihir Bhushan, StepLadder’s collaborative deposit saving platform is designed to motivate renters to save for a deposit so they can purchase their first home.
Using a financial model known as a “Rotating Credit and Savings Association” (ROSCA), StepLadder puts its members into “Circles,” whereby each individual member contributes an identical amount on a monthly basis — ranging from £25 to £1,000. A random draw then takes place each month and the winner is provided with that month’s full pot to use toward their deposit.
“For most first-time buyers, it’s really difficult to get on the property ladder,” says Addison. “Home ownership rates amongst 25 to 34-years-olds have collapsed… [with around] 250,000 fewer first-time buyers every year, for over a decade, in the U.K. alone. Raising the deposit is the biggest hurdle. At StepLadder we’re using something called a ROSCA, a form of collaborative finance where people work together in groups to help our members raise their property deposits, on average, 45% faster.”
As an example, StepLadder might match you to a £500 a month Circle for 20 months to raise £10,000. This would see it find 19 other members to be in the same Circle. “Each month the £10,000 is randomly allocated and you could be drawn at any point in that 20 months,” explains StepLadder’s Lucy Mullins. “You have to keep making your £500 a month payment for the full 20 months, so at the end everybody has paid in £10,000 and everybody has received £10,000.”
To help protect the platform from being abused, Mullins says that while a member is still part of a Circle, the startup will only release the pot to their solicitor for use as a property deposit. “So, if somebody stops paying after they have been drawn then we wouldn’t release their payout until they had made catch-up payments.”
StepLadder also supports members along the house-buying journey. The app lets members engage with a community of like-minded people and access group-buying discounts on services such as mortgages, solicitor fess and surveyors. The latter forms part of the company’s revenue stream.
“We introduce our members (at their request) to high-quality service providers, such as mortgage brokers, lending banks, surveyors and insurance providers,” says Addison. “In return, these partners pay us fees or commissions. We offer discounts on these transaction services via the combined buying power of our members in their Circles.”
In addition, there is a small monthly fee (between 2-5%) to be part of a Circle, which Mullins says covers the cost of delivering the service.
This includes holding money securely in a client money account, a payment waiver if a member were to become sick or unemployed after buying a property with their StepLadder deposit, credit bureau costs and the cost of a Circle host to support members on the journey.
“We do not aim to profit from the monthly administration fees we charge members and would usually be able to save our members much more in discounts than they pay in fees,” says Mullins.
Meanwhile, StepLadder has plans to expand the use cases for Circles and evolve the platform to also cover general savings goals and targeted “big ticket items.”
Explains Addison: “In Brazil, ROSCAs are used by nine million consumers for everything from dishwashers to cars to homes. We have already begun to demonstrate this potential with both our First Step offering (smaller circles from £25 a month) and proposed partnered launches.”
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Spanish bank launches money-transfer app focused initially on US-Mexico remittances
BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S. However,… Read More
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Atom Bank raises $102M at $320M valuation for a mobile-only bank for millennials
Atom Bank, a startup out of the U.K. that has built a mobile-only bank targeting consumers between the ages of 18 and 34, has raised another £83 million ($102 million) in funding led by BBVA, the Spanish bank and owner of Simple in the U.S. The funding gives Atom a post-money valuation of £261 million ($320 million), TechCrunch has confirmed with the company. BBVA also led… Read More
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BBVA continues its fintech acquisition run, buys Holvi, an online-only business bank
Spanish banking giant BBVA has made another M&A play as it looks for a bigger role in the next generation of financial services: today the company has announced the acquisition of Holvi, an online-only bank for entrepreneurs and SMBs based out of Finland. (“Holvi” means “vault” in Finnish.) Terms of the deal have not been disclosed but we are trying to find out.… Read More
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