Synapse, a San Francisco-based startup developing a platform that enables companies to extend financial services to their customers, today announced that it has raised $33 million in a series B round led by a16z, with participation from existing investors Trinity and Core and unnamed individual investors. This brings the startup’s total raised to $50 million, following a $17 million series A round in September 2018, and comes as the number of clients using Synapse’s cloud-based tools eclipses 3 million (up from 1.5 million in September), with 10,000 new signups and 5 million API requests every day.
Synapse says it has processed more than $2 billion in ACH and $40 million in payment card transactions for over 100 companies so far this year. In total, the company says it has facilitated more than $10 billion in transactions to date.
“[We want to] ensure that everyone around the world has access to best-in-class financial products, regardless of their net worth,” wrote cofounder and CEO Sankaet Pathak in a Medium post. “[Our goal is to reduce the] barrier to entry for developers to build and scale financial products — if we can make it easier for everyone to build and scale financial products, more developers will build them.”
Synapse, which Pathak founded with Bryan Keltner in April 2014, provides payment, deposit, lending, and investment products (like FDIC-insured white-label physical and virtual cards, high-yield savings, and wire transfers) as APIs to financial technology companies, which in turn launch consumer-facing financial services. For instance, Synapse taps machines to automate repetitive back office tasks (like verifying documents and filling forms) that typically fall to humans, and it helps clients vertically integrate their financial product offerings while applying learnings from behavioral economic research.
These innovations enabled Synapse to reduce the incremental cost of operating financial products from roughly $130 – $150 per customer per month to zero, according to Pathak. “Financial services is a hard business to be in. It gets especially harder when a company is being built the way Synapse is,” he added. “We are working as hard as we can to deliver a full stack financial infrastructure product to every developer, big or small.”
On the near horizon, Synapse plans to build direct processor integrations with both Mastercard and Visa, which it expects will speed up API calls around card issuance and open up features like just-in-time funding and dynamic spending controls. It also intends to launch a brokerage accounts product and to enhance its loan origination and servicing API by making it easier for developers to apply for a warehouse line of credit and by adding automated text and phone loan collection support.
Toward the end of this year, the goal is to launch services in Europe (including the U.K.) and Canada, with payments, deposits, and debit card issuance to start and lending and investment products to follow. Rounding out the jam-packed roadmap is a chatbot platform that will field customer support questions, along with self-servicing tools for developers, a seed investing program, improvements to Synapse’s ID verification and video authentication stack, and add-ons around duplicate profile detection and fraud and transaction monitoring.
“Since 2019 is our first year doing expansion, we do not want to take on too much at once,” said Pathak, adding that Synapse will use this latest cash infusion to expand its team. “But after 2019, our goal is to add support for two key markets each year, plus one underserved market, where we will build consumer-facing products until developer ecosystems are built.”
As a part of the series B, a16z’s Angela Strange and Michael Hoffmeyer — director at the Crews Center for Entrepreneurship at the University of Memphis — have joined Synapse’s board of directors.