Small and medium-sized business owners check their bank accounts on daily basis to make financial decisions, but entrepreneur Yoseph West believes bank accounts often lack information and features that owners could really use.
“Small and medium-sized businesses make up 44% of U.S. GDP, are the backbone of the economy, and have a profound impact on all of us,” West said in an interview with TechCrunch. “And yet most small and medium-sized businesses only have enough cash on hand to last 27 days. They need more visibility and control over their cash flow in their banking.”
West, who studied equity and debt finance at university, co-founded Vuru, a stock market research app, in 2012. After fintech company Wave Accounting acquired Vuru later that yr, West stayed there, eventually rising to turn into Director of Product Engagement.
During his time at Wave, West had the thought for his next enterprise: relaya business banking and money management service for SMBs. West partnered with Paul Klicnik, a former IBM engineer who previously developed the core technical infrastructure at coupon app Flipp, to launch Relay in October 2018.
“Relay is an online business banking and money management platform designed to help small businesses stay in control of their cash flow,” West explained. “The platform is focused on giving small and medium-sized businesses true visibility into their cash flow.”
Relay’s platform allows small and midsize businesses to administer their income, expenses and reserves in as much as 20 checking accounts. (Relay will not be a bank itself; the corporate relies on its partner Thread Bank, which West says is FDIC-insured, for its banking services.) Through Relay, an organization can mechanically put money into savings accounts with 1 to three percent annual interest and issue as much as 50 physical or virtual Visa debit cards to employees.
Relay users can send and receive ACH transfers, electronic funds transfers, and check payments just as they’d with traditional banks, and so they can capture and store receipts so their employees can access them through role-based accounts.
The company makes money through interest on customer deposits, card interchange fees and a $30-a-month premium service (Relay Pro) that adds features like same-day payments, and competes with neobanks like Bluevine and Mercury. But West argues that Relay is one in all the few banks of its kind that does not give attention to tech startup or sole proprietor customers.
“Relay is designed for the more than 33 million small and medium-sized businesses in the United States and their in-house or outsourced finance functions,” he said. “We primarily serve small businesses in the heartland of America that have two or more employees – full-time, part-time or contract – and generate $20,000 to $200,000 in monthly revenue.”
This has proven to be a promising strategy.
West predicts Relay will reach $100 million in annual revenue by the second half of 2025. Thanks to a strong customer base that now includes around 100,000 firms, revenue grew threefold in 2022 and nearly sixfold in 2023.
This is much more impressive considering the state of the fintech industry.
Last yr, enterprise capital investment in financial services and fintech fell to $43 billion, the bottom level in six years and a decline of greater than 50% from the previous yr, when $89.5 billion was invested in 2022. after to CrunchBase. The tough financing environment contributed to the collapse of fintechs comparable to Synapsethe banking-as-a-service startup whose bankruptcy has impacted the funds of tens of millions of consumers.
To lay the inspiration for expansion into latest areas like spend management, lending and financial APIs, Relay this week closed a $32.2 million Series B funding round led by Bain Capital Ventures with participation from BTV, Garage, Industry Ventures and Tapestry. With the brand new money, the startup has now raised a complete of $51.6 million.
“We decided to raise capital because of our growth rate,” West said. “To get truly predictive cash flow analytics, SMBs need a unified view of what’s going on in and out of their back office. Relay is working toward that vision… In the future, the platform will provide small businesses with intelligent recommendations based on what’s happening across their entire back office.”
Toronto-based Relay plans to extend its workforce from 140 to 200 employees by the top of the yr.
