Fintech
BCV leads Relay’s second round, while SME-focused FinTech closes C$44 million Series B
The startup is aiming for profitability and a run rate of $100 million by the end of 2025.
Toronto-based FinTech startup Relay has secured approximately C$44 million (US$32.2 million) in Series B funding led by existing investor Bain Capital Ventures (BCV) to consolidate its growth and fuel its product development plans.
Relay targets small and medium-sized businesses (SMBs) in the United States, helping them manage cash flow through its business banking software platform.
In an interview with BetaKit, Relay co-founder and CEO Yoseph West said that in what has become a challenging market for technology companies AND FinTech companies in particular, it was the right time for Relay to invest in growth.
“They are long-term investors. They are multistage. They get FinTech.
Yoseph West, relay
“With the state of the FinTech funding market, the opportunities this presented and the strength of our business, it made sense to take on more capital so we could continue to accelerate,” said West, who noted plenty of room for Relay to layer more financial services.
Relay, founded in 2018 by West and VP of Engineering Paul Klicnik, offers an online business banking and money management platform designed to help automate the finance function for SMBs by integrating with their back-office systems. The company targets SME employers across the United States in the professional services, retail and e-commerce, non-profit, commercial and real estate spaces.
The FinTech company’s latest funding comes three years after Relay’s $18.2 million Canadian dollars Serie A round, also led by BCV. Since then Relay has been busy growing its business, launching a number of new products and expanding from 20 to 140 employees.
At the time of the Series A round, Relay aimed to serve more than 100,000 SMBs in the United States within the next three years. West said the startup has recently outgrown its customer base. While he declined to disclose Relay’s current revenue, West said Relay is on track to become profitable next year and reach a run rate of $100 million dollars by the end of 2025, on the back of growth in revenues 25 times over the last three years.
Relay’s all-equity, primary Series B financing, which closed in February, was largely an internal round from Relay’s existing investors, including San Francisco-based BCV, Better Tomorrow Ventures and Tapestry and Garage Capital of Kitchener-Waterloo, with participation from a new backer from San Francisco-based Industry Ventures. It brings Relay’s total funding to approximately C$70 million.
West said Relay was offered different terms and that its Series B financing represented “a significant improvement” over its Series A financing, but declined to disclose the company’s latest valuation. There are no board changes as part of the round.
“Relay had other offers but chose BCV to lead the round,” BCV partner Kevin Zhang told BetaKit. “Relay’s growth rate is what impressed us and made us eager to support Relay again. The company is entering its next phase of growth and we are aligned with their vision to meet the specific needs of the SME market.”
Speaking about the continued support of BCV, which has backed Relay since its seed round, West described the American venture capital firm as a “tried and true FinTech investor” with a strong understanding of the opportunities ahead of Relay. “They are long-term investors,” she added. “They are in multiple stages. They get FinTech.
“They have a fundamental thesis around the idea that banking will change quite dramatically, and based on their exposure to Relay and the team, [BCV] I felt pretty clear that we were going to be the number one player in this space,” West said.
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Through its software, Relay aims to increase financial visibility and security for SMEs and reduce time spent on administration. Relay provides its financial products, including checking and savings accounts and recently launched credit cards, in partnership with FDIC member Thread Bank. Among other features, the company also offers accounts payable and receipt management.
“Small business banking experiences have historically been overlooked despite the enormous size of the SME market,” Zhang said. “Relay offers a superior product with tailored features like cash flow visibility integrations and multi-user collaboration that has taken the company on an incredible trajectory. As other industry players had to pivot and find a new position, they surpassed 100,000 customers last month.”
AS other Canadian technology companies have cut costs during the crisis, West said Relay has managed to grow without having to lay off staff or take other “drastic measures.”
“It’s certainly been a crazy five years… And there have been numerous Black Swan events that have happened around the world,” West said. “What has remained true and will continue to remain true is that small business owners struggle with cash flow, and that’s where we’ve focused and found our way.”
Relay recently surpassed 100,000 SMB customers.
As Relay looks to consolidate its growth with its Series B funding, West said recent Shopify co-founder and CEO Tobias Lütke call for Canadian tech entrepreneurs to stop aiming for bronze and aim higher BetaKit Town Hall resonated with him.
“This is something we have quietly instilled [Relay’s] the culture is the idea of going for gold and really building something ambitious and world-class,” West added. “And it’s difficult. It’s not easy. It’s not for everyone, but that’s what we’re committed to because we believe we have the ability to build a lasting company.”
Relay plans to invest this capital in building spend management technologies, smart credit products and a financial application programming interfaces marketplace in an effort to help more SMBs in the United States manage their cash flow. To help it get there, Relay plans to grow to about 200 employees by the end of 2024.
“This is all towards our overall goal of delivering results [artificial intelligence]based on cash flow analysis for small business owners,” West said. “We think this is the next frontier.”
Featured image courtesy of Relay.