Most people, especially those in the financial services industry, know that the COVID-19 epidemic has increased the demand for digital banking worldwide.
Fintech companies started up to try to meet this need, while traditional banks rushed to improve their digital services.
Then there were the businesses that existed before the epidemic. NorthOne, a New York-based challenger bank, is one such example. Eytan Bensoussan and Justin Adler started the company in 2016 to help small business owners like barbers, mechanics, and owners of local restaurants.
An Introduction to NorthOne
When the epidemic struck, maybe no other kind of company was as badly affected as small firms. Some businesses didn't make it, but many did because they changed their business models in the early days of the crisis.
Despite all the drawbacks, COVID, particularly in his area, helped spread awareness of digital banking, according to CEO Bensoussan.
NorthOne has worked hard to provide its consumers with more than just financial services. It also introduced solutions to assist businesses in simplifying company financial operations "by linking the data layer between accounting, receivables, payables, loans, payroll — all financial processes — and the bank account ledger."
"As our customers mature, their concerns extend beyond their money accounts," stated Bensoussan.
NorthOne re-platformed the firm in 2021 with a new banking partner, The Bancorp Bank, N.A, an investment the company claims has paid off. NorthOne's revenue climbed "4x-5x" in the previous year, according to Bensoussan, while customer growth was "in pace with revenue growth."
COO Adler said, "We were meant to serve the smaller part of the small company market." "And it made us capable of not just servicing these customers efficiently, but also having a product offering that was simply very targeted to what they needed."
NorthOne Announced Series B Funding
To drive future expansion, the company has announced a $67 million Series B fundraising round led by Battery Ventures, NFL player Drew Brees, Don Griffith, Ferst Capital Partners, Next Play Capital, FinTLV, Operator Stack, Tencent, Redpoint Ventures and Tom Williams. The funding raises NorthOne's overall fundraising to $90.3 million since its establishment. The business refused to disclose the value, simply stating that it was an "up round" that concluded in late July.
The financing comes at an intriguing moment in the world of fintech, as firms like Brex have changed their attention away from small businesses, partly due to the risk involved with insuring such projects and toward enterprises. That only spells an opportunity for NorthOne.
COO Adler stated, "Many individuals are driving quite aggressively for the upper end of the market, such as a Fortune 500 company or a VC-backed startup; however, the truth is that both sectors are extremely niche. We've doubled down on our core client base, companies you pass by on your way to work — like that café, hair salon, or dry cleaner — that are incredibly neglected by conventional banks and, increasingly, increasingly, fintech and challenger banks.”
Type of Clients NorthOne Works With
The bulk of NorthOne's clients has less than ten workers. Surprisingly, the startup's go-to-market approach depends less on the internet than one would think.
While the firm, which does not yet have a sales crew, uses the internet for leads, it also runs in-person event series in several national locations to provide instructional information to small business owners. It also collaborates with groups like Profit First, which provides financial management guidance to small enterprises.
Featured image: NorthOne
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