Synctera Raises $15M to Expand BaaS Platform, Adds Bolt

Synctera Secures $15 Million in Funding Amidst BaaS Landscape Shifts

The banking-as-a-service (BaaS) sector faced challenges following the failure of Synapse last year. However, this hasn't deterred Synctera, a BaaS startup, from securing an additional $15 million in funding, as exclusively reported to TechCrunch.

Empowering Fintech and Embedded Banking

Synctera focuses on equipping businesses, regardless of their size, with the necessary tools to launch and manage fintech and embedded banking solutions. This includes essential components like accounts, card programs, and payment processing capabilities, according to CEO and co-founder Peter Hazlehurst.

Series A Extension Details

Fin Capital and Diagram jointly led the Series A extension round, increasing Synctera’s total funding to $94 million since its establishment in 2020. Notable existing investors participating in this round include Lightspeed Venture Partners, NAventures, Banco Popular, Mana Ventures, Evolution, True Equity, and 1st and Main.

Financial Projections and Valuation

Hazlehurst did not disclose the company’s current valuation. He anticipates that this latest funding will enable Synctera to achieve breakeven by early 2026.

Significant Revenue and User Growth

The company experienced substantial growth in its most recent fiscal year, ending January 31, with an 80% increase in revenue and a 230% surge in gross profit. Synctera currently serves 31 customers, including companies like Bolt, Webull, Fruitful, Unified Signal, and Firstcard.

The platform now supports 416,000 end users, representing a growth rate exceeding 3x compared to the previous year, as stated by Hazlehurst.

Compliance as a Key Differentiator

Synctera distinguishes itself from competitors through its robust compliance infrastructure.

“While competitors offer the API layer for launching fintech products, Synctera provides comprehensive tools for customers and banks to effectively manage compliance and ongoing operations,” Hazlehurst explained to TechCrunch.

Efficient Growth and Team Size

Currently, Synctera maintains a team of approximately 90 employees, consistent with its staffing levels over the past year. Hazlehurst highlighted the company’s success in nearly doubling its business without significant increases in personnel.

Revenue Streams

Synctera generates revenue through a diverse model, encompassing monthly platform fees, usage-based charges for ledgers and accounts, transaction fees, fraud monitoring services, and KYC/KYB (know your customer and know your business) procedures. Additionally, the company earns revenue share from interchange and interest on deposits.

Impact of the Synapse Collapse

The collapse of Synapse had a mixed impact on Synctera.

“We saw an influx of fintech companies seeking alternative solutions and migration paths following Synapse’s failure,” Hazlehurst shared with TechCrunch.

He emphasized the importance of prioritizing consumers and banks, noting that the Synapse and Evolve situations demonstrated a departure from this approach, resulting in negative consequences for individuals and their funds.

Industry-Wide Caution

From a broader industry perspective, the events surrounding Synapse and Evolve have led to increased caution in the market, impacting funding for new fintech ventures and the entry of new banks into the ecosystem.

“This has resulted in more thorough due diligence processes with partners, banks, and customers, which ultimately benefits consumers and the industry,” Hazlehurst noted.

Strategic Partnership with Hawk

Synctera recently established a strategic partnership with Hawk, a company specializing in the use of artificial intelligence to combat financial crimes, including money laundering.

Future Plans and Expansion

The new funding will be allocated towards expanding the sales team, currently consisting of three members, and furthering product development. Synctera also identifies significant opportunities for expansion in Latin America, where it has observed substantial demand and already serves several large clients.