Stripe and Shopify have changed the face of retail for small business users. However, when it comes to putting that money somewhere, SMEs have found that banking options are not quite as transformative.
Wise is a new challenger bank designed specifically for small businesses. As a key service provider, the startup would like to fit into the repertoire of small businesses by bundling the banking business with the payment services operated by Stripe. Customers can receive payments, manage their cash and pay employees via the Wise app.
CEO Arjun Thyagarajan informs TechCrunch that his company has completed a $ 5.7 million starting round led by Base10 Partners . Abstract Ventures, Backend Capital, The Fund and Two Culture Capital also took part in the round.
While the advent of challenger banks has helped drive many innovations on the consumer banking side, Rexhi Dollaku, Principal at Base10, who led the Wise deal, said “very little of this innovation has happened in the business banking context . “
Thyagarajan and his investors hope that the startup can minimize churn by embedding a wider range of financial services products in its core product and going beyond the traditional scope of banking functions by offering payroll and accounting functions.
Instead of getting into direct customer sales, Wise works with giant platforms like Shopify to integrate small businesses where they already are. “When you look at others [banking] Options out there go straight to the customer; We have learned that it is better to be a partner, ”says Thyagarajan. “You are logging into these ecosystems, so we want to work with these ecosystems.”
The small team has already built up a customer base of 1,000 companies. The average Wise customer has between 2 and 10 employees and collects ARR between $ 500,000 and $ 5 million, the company said. Bank accounts on the Wise platform are FDIC-insured up to USD 250,000 thanks to the startup’s partnership with banking partner BBVA USA.
While Thyagarajan says online spending has increased, the COVID 19 pandemic has hit many of Wise’s potential customers and has urged the company to remain flexible in the companies they serve. “I think a lot of industries are accelerating and moving forward,” he says. “The customers we want to serve are modernized quickly.”
In addition to announcing funding, the startup announced that Raghav Lal, a former general manager of Small Business at Visa, will join the startup as president.