Synctera Raises $33M Series A to Connect Fintechs and Banks

Synctera Secures $33 Million in Series A Funding

Synctera, a company focused on connecting community banks with fintech companies, has successfully completed a $33 million Series A funding round. The investment was spearheaded by Fin VC.

Recent Funding and Investors

This latest funding round arrives less than six months following a $12.4 million seed funding raise for the fintech.

Notable new investors participating in this round include Mastercard and Gaingels. Existing investors, such as Lightspeed Venture Partners, Diagram Ventures, SciFi Ventures, and Scribble Ventures, also contributed.

Furthermore, several angel investors participated, including Omri Dahan, Chief Revenue Officer at Marqeta; Nuno Sebastiao, Chairman and CEO of Feedzai; and Tim Sheehan, co-founder and CEO of Greenlight.

Commitment to Inclusive Investment

Alongside the Series A announcement, Synctera is joining the new Cap Table Coalition. This initiative, backed by Gaingels, Neythri Futures Fund, Plexo Capital, and over 20 angel investors, commits to allocating 10% of all funding rounds to investors from “traditionally marginalized” or underrepresented groups through a Special Purpose Vehicle (SPV).

Finix previously initiated this concept earlier in the year before establishing the coalition.

Peter Hazlehurst, co-founder and CEO of Synctera, stated that this approach allows them to “find great folks who we otherwise might not have known.” He affirmed the company’s pledge to reserve 10% of this and future funding rounds for diverse investors.

Facilitating Partnership Banking

San Francisco-based Synctera has created a platform to simplify partnership banking. The company was founded on the understanding that some community banks and credit unions decline collaborations with emerging fintechs due to the complexities and time commitment involved.

Synctera aims to bridge this gap by connecting these institutions through its “Banking-as-a-Service” (BaaS) platform, streamlining the partnership process.

Leadership and Expertise

Peter Hazlehurst, Synctera’s CEO, previously held leadership positions at Uber Money, Google Wallet, and related payment systems.

Essentially, Synctera simplifies collaboration between community banks and fintechs. It assesses the needs of banks and then connects them with a suitable fintech partner.

The company manages the partnership from its platform, handling aspects like regulatory compliance, which can be a significant obstacle for some companies. Managing, reconciling, and billing processes can create substantial operational overhead, according to Synctera.

A Personalized Matching Approach

Synctera has cultivated a “diverse” network of banks and fintechs, enabling a “personalized touch” to each match. This ensures alignment on factors like geography, brand values, and business objectives.

Currently, Synctera has agreements with three banks and anticipates adding three more this month. The startup has already connected Coastal Community Bank with One, a digital banking platform, and Ellevest, a fintech company.

Benefits for Banks and Fintechs

By utilizing Synctera’s platform, banks can enable their fintech partners to offer FDIC-insured mobile checking, debit cards, savings accounts, and innovative payment solutions to customers.

Hazlehurst explained that banks can also increase revenue beyond traditional interchange fees.

“Like most small businesses, community banks have been hit hard by COVID-19,” he added. “We hope to further diversify community banks’ revenue streams.”

The platform also allows banks to efficiently manage multiple fintech relationships by adopting Synctera’s technology stack.

Hazlehurst previously explained that the platform provides a “single dashboard for a bank, so there’s a consolidated position across all fintechs.” He emphasized the importance of “visibility for the bank.”

Growth and Future Plans

Synctera currently employs approximately 50 people, including around two dozen engineers, primarily located in Canada. The company plans to expand to 160 employees by the end of the year, focusing on engineering, sales, marketing, and customer success roles.

Looking ahead, Hazlehurst anticipates that the fourth quarter will focus on “support for small business fintechs.”

“We want to create a neobank for gig economy workers, and want to add lending as a service,” he said. “But our next big phase is to onboard a lot of fintechs, and learn from them.”

Industry Perspective

Logan Allin, managing general partner and founder at Fin VC, believes that Banking as a Service will fundamentally change traditional banks, credit unions, fintechs, and retailers. He suggests these entities are either seeking to integrate financial services or accelerate digitization.

Allin highlighted Synctera’s approach to integrating with legacy community banks and their core systems, which he believes will foster a “cloud native and scalable model” and made it an attractive investment. Fin VC has also invested in companies like Pipe and SoFi.

“Synctera’s peers are simply abstracting bank cores and serving as ‘API wrappers’ in a kludgy short-term approach and having come from the legacy bank and modern fintech worlds, we recognized that these players had not built sufficiently strong bridges across the ecosystem,” Allin stated.

Industry Momentum

Richie Serna, founder and CEO of Finix, expressed enthusiasm for other startups adopting similar diversity initiatives in their cap tables.

“After Finix announced our special purpose vehicle for Black and Latinx investors, the response was overwhelmingly positive,” he said. “Startups in every sector and at every stage have asked us how to recreate our SPV. In response, we started the Cap Table Coalition to make it as easy as possible for more high-growth startups, like Synctera, to take control over their cap tables,” said Serna. “We see this as an inflection point that will completely upend how the VC world functions.”

Synctera is not alone in facilitating bank-fintech partnerships. Visa recently announced an expansion of its Visa Fintech Partner Connect program, designed to connect financial institutions with a “vetted and curated” selection of technology providers.