According to the Small Business Administration, there are 32.5M small businesses in the US, which account for 99.9% of all US businesses. These businesses account for 64.5% of new jobs created in the country. Despite the importance of this segment to the economy, there are very few native banking solutions that are catered to the needs of this burgeoning market. NorthOne is a digital banking platform that is exclusively focused on the needs of small businesses. Businesses can open accounts without any minimum balances, paperwork, and long-term commitments to access the platform’s banking services for a $10 flat monthly fee that includes sophisticated payment options, budgeting tools, free deposits/withdrawals, and business debit cards. NorthOne includes an innovative budgeting function called “Envelopes” that allows business owners to allocate funds using custom rules to specifically account for upcoming expenses like rent, taxes, and payroll. The platform is integrated with leading fintech service providers including Paypal, Stripe, Gusto, Square, Cash App, QuickBooks, and Venmo allowing businesses to seamlessly transfer data within a company’s existing technology and payment stack. The company plans to expand into working capital and lending solutions for its growing base of 320,000+ customers.
AlleyWatch caught up with NorthOne Cofounder and CEO Eytan Bensoussan to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $90.3M. and much, much more…
Who were your investors and how much did you raise?
Investors in our $67M Series B round include Battery Ventures, Don Griffith, Drew Brees, Ferst Capital Partners, FinTLV, Next Play Capital, Operator Stack, Redpoint Ventures, Tencent, and Tom Williams.
Tell us about the product or service that NorthOne offers.
NorthOne is a digital banking app built for small business owners across America. NorthOne helps small business owners understand how money moves through their business and take control of their economic future. Our business banking and financial management platform features a powerful deposit account with convenient payment options, custom integrations, automatic budgeting tools, and more. By removing the burden of financial management from small business owners’ lives, we empower them to focus on growing their businesses.
What inspired the start of NorthOne?
Justin Adler and I founded NorthOne in 2016 to meet the needs of the American small businesses that remained deeply underserved by traditional financial institutions. From day one, our mission has been to make the financial system more inclusive and rebalance the economy from the bottom up.
How is NorthOne different?
Unlike other FinTech and challenger banks, NorthOne remains singularly focused on serving the small business community. This focus allows us to build a product tailored to their specific needs. We have a deep understanding of the challenges they face day-to-day and are committed to building tools and features that simplify their financial operations. As a result, the small businesses we serve have better financial outcomes.
What market does NorthOne target and how big is it? From construction workers to barbers, mechanics to restaurant owners, NorthOne was built for the 33 million small businesses on main streets across America.
What’s your business model? Small business owners can access NorthOne for one low monthly fee. Think of it like the Netflix model for financial services.
How are you preparing for a potential economic slowdown?
In a recessionary environment, products like NorthOne are even more essential to small business owners. Even in a normal environment, small businesses fail at a tremendous rate—with nearly 50% closing their doors within their first 5 years. NorthOne’s financial health and budgeting tools help our small business customers succeed. SMBs that use NorthOne fail at a 75% lower rate than the national average and 88% of our customers report that the financial health of their business has improved since they started using our services.
What was the funding process like?
Fundraising is always tough, especially right now as we find ourselves in perhaps the worst financing environment since 2008. That said, we were happy to see the strong support that investors showed with this funding round. They saw how important the problems are that NorthOne solves, and were impressed by our ability to execute with precision and speed in solving them.
What are the biggest challenges that you faced while raising capital?
We were raising during a time when the market was experiencing a major correction. We were excited to see such strong support in this tough environment.
What factors about your business led your investors to write the check?
I think it’s that NorthOne is built for main street businesses. This is a very large group who are underserved by many traditional banks. We’ve built a product that solves important problems for our customers and they pay us for our product rather than demanding it for free. Our ability to iterate furiously gave investors confidence that we’re going to execute on our plan, no matter the environment.
What are the milestones you plan to achieve in the next six months?
We have really strong product-market fit with our core products, so now it’s time to double down on our customers and continue to expand what we offer beyond the bank account and into the rest of the back office of small businesses across the country.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
First, everybody is facing the same uncertainty, so it’s okay to feel anxious. Second, and more importantly, you need to be acutely aware of how to make your business more sustainable—however you define that for your stage. Hopefully, this shouldn’t be incongruent with what investors in your vertical are looking for in today’s environment. You’ll need a clear read of your business, a key read of investor sentiment, and the courage to make incredibly difficult decisions to get yourself headed in the right direction.
Where do you see the company going now over the near term?
We’ll be bringing more software and financial products to support our customers’ financial back office needs. It’s one of the most exciting moments in NorthOne’s history. We are building some incredibly cool stuff for our customers. I can’t wait to see them in the wild.
What’s your favorite outdoor dining restaurant in NYC?
Henry Public – Such a strong sandwich game.