Wise locks down $5.7 million to scale its challenger bank designed for small businesses - TechCrunch

Wise locks down $5.7 million to scale its challenger bank designed for small businesses - TechCrunch


Wise locks down $5.7 million to scale its challenger bank designed for small businesses - TechCrunch

Posted: 29 Apr 2020 11:09 AM PDT

Stripe and Shopify have transformed the face of commerce for small business users, yet when it comes to putting that cash somewhere, SMBs have found that the banking options aren't quite as transformative.

Wise is a new challenger bank built specifically for small businesses. The startup is aiming to insert itself as an essential service in the small business repertoire by bundling banking with payment services powered by Stripe. Customers can receive payments, manage their cash and pay employees all via Wise's app.

CEO Arjun Thyagarajan tells TechCrunch that his company has closed a $5.7 million seed round led by Base10 Partners. Abstract Ventures, Backend Capital, The Fund and Two Culture Capital also participated in the round.

While the advent of challenger banks has helped drive plenty of innovation on the consumer banking side, says Rexhi Dollaku, a principal at Base10 who led the Wise deal, "very little of that innovation has happened in the business banking context."

Thyagarajan and his investors hope that the startup can keep churn low by embedding a wider scope of financial services products inside its core product, expanding beyond the traditional scope of banking features by offering functionality to power things like payroll and accounting.

Rather than plunging into direct customer sales, Wise is partnering with behemoth platforms like Shopify to onboard small businesses where they already are. "If you look at other [banking] options out there, they're going direct to the customer; what we've learned is that it is better to partner," Thyagarajan says. "They're signing up inside these ecosystems so we want to partner with these ecosystems."

The small team has already built up a customer base of 1,000 businesses. The average Wise customer has between 2-10 employees and is pulling in somewhere between $500,000 and $5 million in ARR, the company tells us. Bank accounts on Wise's platform are FDIC-insured up to $250,000 through the startup's partnership with banking partner BBVA USA.

While Thyagarajan says they've seen online spend increasing, the COVID-19 pandemic has impacted plenty of Wise's potential customers, and has pushed the company to stay flexible in the businesses they cater to. "I think a lot of industries are going to get accelerated and fast-forwarded," he says. "The customers we want to cater to are rapidly modernizing."

Alongside the funding announcement, the startup shared that Raghav Lal, a former general manager of Small Business at Visa, will be joining the startup as its president.

Community finance CEOs: Small-scale lenders and borrowers can power local economies, especially in difficult times - Charleston City Paper

Posted: 29 Apr 2020 11:48 AM PDT

click to enlarge Hawkins (L-R), Hamilton, Saltzman - PROVIDED
  • Provided
  • Hawkins (L-R), Hamilton, Saltzman

Like so many of our fellow South Carolinians, our first thoughts during this crisis are with those who have been directly affected by COVID-19 and the healthcare workers who are on the frontlines of the medical response.

As far too many South Carolinians are feeling personally, there is also a dark economic side to this pandemic. It began in March with mass layoffs and small business closures in our hospitality industry and has continued this month with widespread job loss and furlough announcements from several major South Carolina employers like Boeing, BMW, Michelin and MUSC.

We want to be optimistic about a quick and complete recovery, but history tells us — along with several current economic projections — that such a disruption will put our economy into a significant recession in the immediate future. The truth is many of our most vulnerable small businesses and entrepreneurs will be hit the hardest. Federal resources such as the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) may never reach these small and micro businesses due to larger businesses having greater access to traditional banks or less-trusted banking relationships between smaller businesses and conventional financial institutions.

During such times, organizations like ours, Community Development Finance Institutions (CDFIs), have proven to be vital sources of economic opportunity and community development. We are mission driven non-profit financial organizations whose purpose is providing access to financial capital where it would not otherwise be available. Our average loan sizes are relatively small, less than $100,000, but fund some of the most important wealth-building opportunities and important services in our communities. Restaurants, daycare centers and beauty salons for first-time business owners are among our most common borrowers.

During an economic downturn, our organizations become even more vital to our economy as traditional institutional financing tends to become scarce during recessions. Banks have historically tightened their credit criteria at the precise time low-wealth people need it the most. Where for-profit banks and traditional finance institutions won't lend, we will. Between our three organizations, the largest CDFIs in South Carolina, we have funded hundreds of local small businesses, affordable housing developments, and community facilities.

That work is never more important than during difficult economic times, and we need your help to ensure we remain able to do our work. State and federal policies like Community Development Tax Credits and the Community Reinvestment Act are vital policies that keep us viable. We applaud the intent of the CARES Act, and hope that it is the first of many economic policies that will help us all adapt and respond to our new reality.

We ask you to advocate to your elected officials and remain mindful that we are in uncharted economic territory and we need to develop, protect, and strengthen innovative policies to keep community development finance viable during a time when it is needed most.

Tammie Hoy Hawkins is the CEO of CommunityWorks, Anna Hamilton Lewin is the CEO of South Carolina Community Loan Fund, and Steve Saltzman is the CEO of Charleston LDC.

Montgomery Leaders Announce Small Business Support Hub - Alabama News Network

Posted: 29 Apr 2020 10:13 AM PDT

20200429 110222On Wednesday, April 29, elected and business leaders launched the Recover Together Small Business HUB (Helping Business Unite), a free, one-stop clearinghouse to connect small and minority businesses to the resources and information they need most as they emerge from the COVID-19 crisis. This public-private collaboration is an early outcome of Mayor L. Steven Reed's Economic Impact Task Force.

"From the very first meeting, task force members kept coming back to what was the most pressing need on everyone's mind – finding ways to help local small businesses recover from the impacts of COVID-19 and be able to talk to someone locally that could point them in the right direction," said Charles Jinright, Montgomery City Council President and Chairman of the Economic Impact Task Force.

Montgomery County Commission Chairman Elton Dean, task force co-chair, said a one-stop hub for small business was the kind of real relief local small businesses need. "Our local small businesses are the heart of our community, and they need to find one-on-one assistance to guide them right now and moving forward," said Dean.

The Montgomery Area Chamber of Commerce, The City of Montgomery, Montgomery County Commission and the Small Business Development Center at Alabama State University are the founding partners of the new initiative.

"I want to thank the members of the Economic Impact Task Force for their leadership," said Mayor Steven Reed. "It's important that we help businesses get back on their feet, so they can be positioned to provide the vital services and products needed for our economic recovery."

A communications, counseling and case management vehicle, the Recover Together Small Business Hub will provide a free clearinghouse service that helps identify and prioritize small business requests, and then connect those small businesses to the resources they need most.

"We will have a virtual helpdesk for small business, where our frontline Hub team members can triage incoming requests and then either handle that request immediately, or connect that inquiry to a one-on-one counseling session targeted at their specific needs,"  said Chamber Chairman Arthur DuCote. "In the upcoming weeks, our goal is to scale this program to reach as many small businesses in our community as possible, and to include even more resource partners."

In addition to receiving requests for help, the Hub will be initiating community outreach to engage small and minority-owned businesses across Montgomery.

Small businesses in need of assistance should call 334-226-7529 or visit recovermgm.com. Organizations and companies interested in joining the Hub as a resource collaboration partner can contact the Chamber at 334-834-5200 or recovermgm.com.

Interested parties who complete and submit their online form will have a Hub specialist reach out to them within 24 hours after contact. The Chamber is creating a database of all those companies needing assistance and the Small Business HUB will maintain communication with them as the recovery process continues and new opportunities arise.

"Ongoing collaboration and engagement of our small business community through the Hub will be a powerful catalyst for economic growth and entrepreneurial support as we move from recovery into resiliency and beyond," said Chamber Chairman DuCote.

For more information about growing a business in Montgomery, visit www.montgomerychamber.com.

Deemed ‘nonessential,’ 15 small businesses call Gov. Walz’s closure order unconstitutional - TwinCities.com-Pioneer Press

Posted: 29 Apr 2020 01:36 PM PDT

A group of 15 small businesses is challenging the legality of statewide orders that have forced them to close during the coronavirus pandemic.

Lawyers for the businesses say Gov. Tim Walz's order to close bars, restaurants, gyms and other businesses he does not consider "essential" is unconstitutional.

"We can mitigate the risks of COVID-19 while still respecting the rights of our citizens and preserving our crucial small businesses," said Dan McGrath, spokesman for the group, which calls itself the Free Minnesota Small Business Coalition.

Walz's order, which went into effect March 17, was intended to control the spread of the coronavirus, which as of Wednesday has killed at least 319 Minnesotans. The order is set to end Monday but already has been extended twice.

The governor has defined certain business types as exempt from closure because they are considered essential. But such distinctions violate the U.S. Constitution's Equal Protection Clause, McGrath said.

The suing businesses include Yoga by Blisstopia, in Blaine; Title Boxing Clubs, which has multiple Twin Cities locations; and Trev's Kitchen and Prestige Gymnastics, in Lyon County.

McGrath said the group was organized through the Government Oppression Hotline, which he created after Walz's order was issued.

Most of the 15 businesses have at least some retail sales, including a health club that sells water bottles and T-shirts. It's wrong, McGrath said, to allow big-box stores to sell such items while forcing competing small businesses to close.

The group says that to indefinitely suspend some, but not all, economic activity is unprecedented and unlawful.

"The Governor lost his constitutional compass in sailing the state of Minnesota through the COVID pandemic," Minneapolis attorney Erick Kaardal said in a prepared statement. "The consequence of his unconstitutional categories is massive suffering for small businesses on an unprecedented scale."

Walz allowed certain industrial and office-based businesses to reopen this week. He's expected to announce Thursday which parts of his stay-at-home order will continue into next week.

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