Only Up From Here: 2024’s State of Fintech and the Hero’s Journey
We’re at the scary part of “the hero’s journey” in fintech, with a bottom for funding and a BaaS crisis, but we’re about to enter a new, exciting stage.
Relay is reinventing banking with more software and intelligence for every small business owner.
We first invested in Relay four years ago, and since then the company has made tremendous progress toward giving every small business the tools they need to monitor and address their total financial health.
Relay has stayed true to its core mission of building new and different technology-enabled banking experience for small business employers, layering in powerful functionality around automated transfers, receipt management and much more to help business owners understand their cash position.
Relay has partnered with accountants and other business advisors, not to mention business management communities like Profit First, which can leverage Relay’s collaborative banking experience to better serve small business clients.
The early Relay team has been joined by new, experienced executives and talented engineers, business analysts, risk professionals, support team members and more, helping the organization mature, deliver better user experience, minimize fraud and, most importantly, build a winning culture that can continue to attract top talent (they’re hiring!).
Importantly, Relay is committed to low fees and minimal hidden charges, so the company mostly succeeds only as customers choose to work with us, and only as they grow and succeed themselves. Thanks to their support, Relay grew revenue 3x in 2022, took off with nearly 6x expansion in 2023, and has had a screaming start in 2024. Having just passed the 100,000 customer mark, Relay is really just getting started, with tens of millions more business owners out there to convert—in fact, after registering a nonprofit organization recently, I’m fortunate to be a new Relay cardholder myself!
We’re grateful to co-founders Yoseph West and Paul Klicknik, and the rest of the Relay team. It’s because of their vision and execution that BCV participated in their seed round in 2020, led the Series A in 2021 and then this year led their $32.2 million Series B, joined by BTV, Garage, Industry Ventures and Tapestry.
For Yoseph West, co-founder and CEO, Relay is the culmination of a successful track record at the cross-section of business accounting and banking.
Bain Capital first met Yoseph when former BCV partner Keri Gohman led Xero’s acquisition of Hubdoc in 2018 — it was at Hubdoc where Yoseph, as its head of marketing, helped build the company from zero revenue into an industry leader in small business receipt, bill, and other financial document collection. That was only the latest stint in a career that has also included founding Vuru, a financial analysis product, and later joining Wave Accounting (now H&R Block) when they acquired Vuru.
Yoseph launched Relay in the fall of 2018, and soon enlisted the aid of Paul, who was an engineer at Flipp. Yoseph’s unique track record in small business finance and accounting technology paired perfectly with Paul’s 13+ years in software engineering leadership, which included building scaled, secure and hyper-reliable platforms at IBM.
Paul and Yoseph make for dynamic partners, and each member of the team they’ve brought on board has been similarly impressive.
Long-standing, responsible businesses are more likely to work closely with their accountants and bookkeepers — yet few banking products today take into account this critical relationship. This leads to ersatz solutions, like accountants maintaining sheets full of client login information, for example.
Relay understands the importance of this teamwork, and is built from the ground up to support it. Customers can provision separate user accounts and thoughtfully manage permissions, including for their accountants, who in turn can use one login for visibility across client accounts. Critically, Relay also built a powerful, two-way sync with Quickbooks and Xero, streamlining transaction categorization, monthly reconciliation and reporting.
Beyond accounting, small businesses have moved the rest of their back office to the cloud, too, relying on software for invoicing, payroll, expense management, accounting and other finance workflows. Our team has seen this first-hand, as investors in innovators including Justworks and Homebase. Relay has found that businesses with 1-10 employees rely on 24 different applications, while those with 50–100 employees use an average of 75.
Despite this shift, business bank accounts remain a silo, creating friction when managing and transferring funds, and forcing teams to spend time reconciling ledgers. Relay is breaking down this barrier, seamlessly connecting with the financial applications that small businesses already use, including Gusto, Transferwise, Bill.com and Expensify. Data can flow securely between systems, reducing busywork and increasing financial visibility for business owners, so they have clarity, control and confidence when it comes to managing every dollar in their business.
Relay is innovating in other ways, too — for example, by pioneering the integration of bill payments directly into the general ledger, with critical detail captured for the business owner and accountant. These features, superior data integration, and accounting collaboration add up to a much clearer picture of business finances; when small businesses fail, cash-flow issues are to blame 82% of the time, so spending less time and getting better visibility into the numbers is critical to survival and growth.
Relay is building what it’s calling an all-in-one financial command center.
The team is getting to work on new credit products, developing better spend management features and preparing to launch a new Advisor Directory that will help small businesses find the financial support they need.
Beyond that, Relay has plans for a full suite of tools that are going to take cash flow visibility to the next level.
This article is an update of one originally published in 2021, for the Series A fundraise.
We’re at the scary part of “the hero’s journey” in fintech, with a bottom for funding and a BaaS crisis, but we’re about to enter a new, exciting stage.
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