Dive Brief:
- Synctera, a San Francisco startup that styles itself as a matchmaker between community banks and fintechs, said this week it has raised another $33 million, giving the 6-month-old company a striking $45.4 million war chest. The latest funding includes money from card network Mastercard in a round led by Fin Venture Capital, according to a Synctera statement Wednesday.
- Synctera plans to use the capital to triple its headcount to 150 employees by the end of the year, adding software engineers, as well as product, sales and marketing employees, the company said in the statement. Beyond building out its domestic operations, Synctera said it's also prepping for international expansion.
- Mastercard expects Synctera to enable "partner banks and the fintech ecosystem to tap into capabilities that deliver differentiated and sophisticated experiences," Sherri Haymond, Mastercard's executive vice president for digital partnerships, said in a statement provided by Synctera.
Dive Insight:
Synctera's ability to haul in so much money probably has something to do with the marquee Silicon Valley name leading the company, CEO and co-founder Peter Hazlehurst, who headed ride-hailing company Uber's management of global money flows. He left last year after Uber moved away from plans to build financial services, Bloomberg reported. Previously, Hazlehurst also led Google Wallet.
Synctera, founded last December, aims to make money by smoothing the way for fintechs to offer services using community banks' banking licenses. In that banking-as-a-service (BaaS) business, fintechs benefit from expanding their services and banks take in revenue from the fintech. Synctera expects to profit along the way, too.
Synctera seeks to serve small banks and credit unions with banking licenses: "We make it easy for community banks and credit unions to get into Banking-as-a-Service, generating new sources of incremental revenue with no upfront costs," the company said.
For fintechs, whether that's a neobank or a retailer tapping new digital tools, Synctera offers to help connect them with the right banking license for the financial services they want to provide. For instance, it may pave the way for a retailer to issue its own branded debit cards.
With a bevy of fintechs looking for these types of relationships with banks, there have been too few banks available, Hazlehurst told Payments Dive. That's where Synctera comes in. With some 4,820 community banks in the U.S., it's just a matter of finding the right ones for any given fintech tie-up.
As of last month, Synctera had signed up three banks and about five fintechs, Hazlehurst said. But demand is growing quickly, the company said. Franklin, Tennessee-based Lineage Bank and New York money management and financial planning firm Ellevest are among Synctera's initial clients, the company said in a press release.
To build its service, Synctera in April signed on tech partners CheckAlt and Socure to incorporate remote deposit capture and know-your-customer technology. The company also offers ledger services to track consumer accounts and card processing, among other services, Hazlehurst said.
In addition to Fin VC and Mastercard, big-name angel investors include Marqeta Chief Revenue Officer Omri Dahan; Feedzai Chairman and CEO Nuno Sebastiao; and Greenlight CEO Tim Sheehan. Last year, Lightspeed Venture Partners led a round that included Affirm CEO and PayPal co-founder Max Levchin.
Mastercard didn't immediately respond to a request for further comment beyond Haymond's statement.
The world of payment fintechs has become a magnet for money in the past few years, with upward of $1 billion directed at them just last month, according to a Payments Dive tally. Payments companies worldwide are attracting record amounts of capital, according to research firm CB Insights.
