Nearside, SMB Neobank, Raises $58M Series B Led by Valar
Nearside Secures $58 Million Series B Funding
Nearside, the financial institution catering to small and medium-sized businesses (SMBs) – previously operating as Hatch – has announced the successful completion of a $58 million Series B funding round. This investment arrives only seven months following the announcement of their Series A funding.
Investment Details and Key Participants
Valar Ventures spearheaded the latest funding round, with significant contributions from Kleiner Perkins, Foundation Capital, Jim Breyer of Breyer Capital, Michael Ovitz, founder of Creative Artists Agency, Ryan Petersen, who founded Flexport, and Kevin Hartz, the founder of Eventbrite.
Company Background and Founding Principles
For a comprehensive overview of Nearside’s operations, a detailed article published by TechCrunch in April 2021 provides valuable insights into the startup’s initial launch and its $20 million Series A announcement.
Thomson Nguyen, Nearside’s founder and CEO, previously saw his startup, Framed Data, acquired by Square. Subsequently, he served as an entrepreneur-in-residence at Kleiner Perkins. During this time, he observed a critical need: many small business owners struggle with cash flow and incur substantial overdraft fees on their business checking accounts.
Innovative Financial Solutions for SMBs
Nearside provides business checking accounts distinguished by the absence of monthly, overdraft, or ATM fees. Furthermore, the company offers a unique universal 1% cashback reward program, a first within the online banking sector for SMBs.
Recently, Nearside expanded its offerings with Premium Cashback Rewards, providing cashback of up to 5% at popular merchants including Amazon, Walmart, Shopify, Squarespace, and Zero.
Growth and Future Plans
While specific customer figures are not currently being disclosed, Nguyen revealed that the user base has experienced an impressive 800% growth since the Series A announcement.
The company’s ability to provide the universal 1% cashback program stems from its internally developed onboarding, payments, and service infrastructure. This allows Nearside to minimize reliance on external vendors and retain a larger portion of interchange revenue.
Nguyen stated that Nearside hadn’t actively sought additional funding following its last round, but this Series B presented a favorable opportunity to develop new products designed to support both individual entrepreneurs and small businesses as they establish and expand.
Brand Evolution
The decision to rebrand as Nearside was driven by a desire to create a name that resonates with customers throughout their entire business lifecycle – from independent freelancers to owners of incorporated LLCs and beyond.
Nearside does not focus on any particular industry and serves both incorporated small businesses, such as Sheer Faces, a Michigan-based eyelash and brow shaping boutique, as well as freelancers, solo entrepreneurs, and individuals in the early stages of business formation.
Nguyen highlighted a growing trend: the distinction between businesses and individuals is becoming less defined as more people launch businesses while transitioning from traditional employment. These individuals require accessible, cost-free business tools and checking accounts that maximize savings.
Product Roadmap
Looking ahead, Nearside’s development plans include the launch of a Term Loan product, currently in limited beta, and Sprout, a feature that will enable SMB owners to incorporate their businesses directly from their Nearside Dashboards.
Investor Perspective
James Fitzgerald, a general partner at Valar Ventures, expressed enthusiasm for the investment, stating, “We are incredibly excited to support Nearside in its mission to broaden access to banking and financial services for a new generation of entrepreneurs.
They are redefining the concept of small businesses to encompass freelancers, gig workers, and the self-employed. Their commitment to fostering entrepreneurship in the U.S. is particularly vital in the current climate, and we are proud to be a part of their journey.”