This funding will enable this Miami startup valued at $700 million to grow its headcount, line of products, and customer base
New York-turned-Miami startup Bank Novo has secured a $90 million Series B fundraise led by growth equity firm Stripes. The round included participation from Peter Thiel-backed Valar Ventures, Crosslink Capital, Rainfall Ventures, and BoxGroup. This tranche of funding brings Novo’s total funding to over $135 million and gives the fintech company a $700 million valuation. The startup has gained traction by providing free banking services to small businesses.
In an interview with Refresh Miami, co-founder and CEO Michael Rangel noted four main ways Novo will use this funding. Top of the list: hiring. “We are expanding our headcount in a massive way,” he said. These new positions will be across all business verticals and in all three offices: Miami, New York, and Gurgaon (India). The company has about 150 employees across its three offices. Currently, 16 of its 40 US employees are based in Miami. As of writing, Novo already has a couple of dozen jobs listed on their careers page.
Second, Rangel said that the company plans to double down on customer acquisition. “Historically, we never really focused on customer acquisition,” he explained. “Now we’re going to dig deep and get really involved in some creative tactics of being where all of our customers are across the country.” Novo has amassed more than 150,000 customers since launching in 2018.
Third, Novo plans to develop new financial products. Exact details are under lock and key, but Rangel signaled that the company plans to devise “a modern version of lending” this year. Tyler McIntylre, CTO and co-founder of Novo, offered some further insights: “As we look towards the rest of 2022 and beyond, one area we’re particularly excited about is providing short-term capital for reducing cash flow friction, and implementing technologies that can automate this process.” Novo’s $40.7M Series A in June 2021 saw the creation of a handful of new product features, including an app marketplace, an invoicing system, and cash flow analytics.
And fourth, Novo will continue to invest in the core tech stack infrastructure that keeps Novo’s wheels turning on a daily basis.
Novo has processed more than $4 billion in transactions in 2021 alone and the startup is entering 2022 with a run-rate transaction volume of over $7 billion. Saagar Kulkarni, Partner at Stripes, said that “what sets Novo apart is a fundamentally different approach to helping small businesses succeed.”
Kulkarni continued: “Instead of opting for incremental change, Novo built its banking platform from the ground up so that it could not just deliver a great digital banking experience, but actually deliver de novo financial products to a customer base that is yearning for them.”
In April, Novo announced that it was planning to increase its footprint in Miami. Rangel, a native Miamian, met McIntyre at the University of Miami.
Miami Mayor Francis Suarez called Novo “one of the quintessential success stories of the Miami Movement.”
“After going to school in Miami, they left to build their company elsewhere, but came back last year to an ecosystem that had changed dramatically,” Suarez said in a statement. “By raising $130M+ in 6 months, Novo is further positioned to be a leader in Miami’s Fintech sector and will help us build towards our goal of becoming the ‘Capital of Capital.’”
According to Rangel, Miami did not come up too much in conversations with investors. That’s a good thing, he argued. “Previously, if you would have said that you are Miami based, that would have been a big cautionary red flag for investors – especially for investors who are investing this much capital. That literally didn’t even come up in conversation at all. In fact, the thing that did come up was, ‘hey, I’m super excited to go down to Miami for board meetings.’”
Rangel also shared that his experience hiring in Miami has been positive on balance. He has learned that it can take time to persuade people to move to our area. However, for Miamians, it’s an easy sell because, in Rangel’s words, they are excited that “one of the leading FinTech companies in the nation exists here.”
READ MORE ON REFRESH MIAMI:
- Small business-focused challenger bank Novo lands $40.7M Series A round
- Novo launches new tool to help small businesses keep track of their finances
- Miami is a microbusiness powerhouse, research from GoDaddy confirms
- Why is South Florida becoming a hub for FinTech?
- Digital bank Novo sets sights on growth in Miami
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