Unit Raises $51M Series B to Expand Banking-as-a-Service

The Expanding Fintech Landscape

The assertion that “Every company is a fintech” is gaining traction. Increasingly, businesses outside the traditional financial services sector are integrating fintech elements into their offerings.

A surge in demand for banking as a service is benefiting a new wave of startups. Unit, a prominent example, recently secured $51 million in a Series B funding round to accelerate its mission of enabling companies and fintechs to develop banking products rapidly.

Series B Funding Details

Accel, a Silicon Valley venture capital firm, spearheaded the investment in Unit. This brings the company’s total funding, since its founding in 2019, to almost $70 million.

Existing investors – including Better Tomorrow Ventures, Aleph, Flourish Ventures, and TLV Partners – also contributed to this latest financing round.

Founders and Company Origins

Itai Damti and Doron Somech, the founders of Unit, possess a proven track record in company building. Previously, they co-founded and independently financed Leverate, a B2B trading technology provider based in Tel Aviv.

Unit maintains dual headquarters, strategically located in Tel Aviv and New York City.

Established in late 2019, Unit initially focused on quietly developing its platform. Their core objective was to empower companies to seamlessly integrate financial services into their products, thereby reducing their time to market.

The platform officially launched in late 2020. Over the subsequent three months, Unit experienced a deposit volume increase exceeding 300% and a 600% growth in new end users, though originating from a relatively small user base.

Platform Capabilities and Customer Base

Unit’s platform allows companies across diverse industries – such as the freelance/creator economy and personal financial management – to directly incorporate financial products into their software.

This capability enables the creation and swift launch of innovative bank accounts, cards, payment systems, and lending products.

Current customers include Wethos, Lance, Benepass, Moves, and Tribevest, among others.

Expanding Financial Access

“Our mission is to expand financial access for all, and we achieve this by empowering the next generation of fintech builders,” stated Damti.

He clarified that only approximately 20% of their clientele are traditional fintech companies. The remaining 80% are businesses seeking to embed banking as a service into their existing offerings.

Simplifying Banking Integration

Damti asserts that Unit transforms a historically “very expensive and complex process” – typically taking 18 months – into a streamlined experience.

This process previously involved securing and managing a bank relationship, establishing a compliance team, and constructing a comprehensive technology infrastructure. Unit consolidates this into a single API and dashboard, enabling companies to launch banking products within five weeks.

Introducing Unit Go

Alongside the funding announcement, Unit unveiled Unit Go, a new offering designed to allow companies to create functional bank accounts and issue both physical and virtual cards in a matter of minutes.

Founders and developers can test Unit Go by creating a free account, building within the live environment, and utilizing real funds. Currently in beta, Unit Go is slated for public release in the fall of 2021.

Future Plans

The newly acquired capital will be allocated to expanding Unit’s team of 26 and accelerating the development of Unit Go.

Furthermore, the company intends to broaden its platform to encompass additional financial products, software development kits (SDKs), and integrations – including its existing integration with Plaid.

Competitive Landscape

Unit operates within a rapidly growing banking-as-a-service (BaaS) market, facing competition from companies like Railbank, Treasury Prime, and Stripe.

Damti believes Unit differentiates itself through several key factors.

Prioritizing Compliance

Unit intentionally prioritizes compliance, placing it at the core of its operations. This commitment is exemplified by the appointment of Amanda Swoverland as its chief compliance officer earlier this year.

A Direct Approach to Banking

Damti emphasizes that Unit differs from companies like Synctera, which function as matchmakers or marketplaces.

“We act as a company that connects banks to the tech ecosystem, and banks are critical vendors and partners to us, but we see them as a built-in element within Unit,” Damti explained. “We believe that the most excellent experience in this ecosystem can only come from software companies.”

Owning the Ledger

Technically, Unit distinguishes itself by building its own ledger, which Damti describes as “the most critical and sensitive part of the ecosystem.”

By maintaining control over the ledger, Unit is “able to offer a radically better experience,” particularly regarding transaction transparency, data quality, and fee control.

Industry Shift and Future Outlook

Accel partner Amit Kumar observes a significant shift in the industry. The focus has moved from fintech startups competing with established institutions to thousands of tech companies launching fintech businesses within their respective verticals.

“Unit’s strong emphasis on managing compliance addresses the risk typically associated with offering banking services and allows customers to bring these products to market much faster than previously possible,” Kumar stated. “Unit is building the platform to power the next generation of fintech.”