Today, Miami- and New York-based challenger bank Novo announced a $40.7 million Series A fundraising round. Peter Thiel-founded Valar Ventures led the round, with participation from Crosslink Capital, Rainfall Ventures, Red Sea Ventures and BoxGroup.
Michael Rangel, CEO and co-founder of Novo, told Refresh Miami that this funding will unlock the neobank’s potential: “We’re now going to be able to invest in a lot of areas that we couldn’t before. We plan to build out a growth team and further develop our brand.”
In a statement, Miami Mayor Francis Suarez said: “This is it. This is THE Miami story — I want to thank Novo for putting faith in their city and further proving exactly what Miami businesses are capable of.”
This announcement marks a milestone in FinTech history. The funding raise is among the largest Series A rounds of any challenger bank, easily surpassing other FinTech challengers like Nubank and Current, which respectively raised $14.3 million and $20.2 million Series A rounds. This achievement is particularly noteworthy considering the competitive neobank landscape in 2021, which saw the closure of digital banks Azlo and Simple, as well as Latino-focused lender Aura Financial.
“The ability of the Novo team to grow the company rapidly during a year where businesses have faced unprecedented challenges is impressive,” said Andrew McCormack, founding partner at Valar Ventures, in a statement. “Novo tripled its small business customer base in the first half of 2021! Their custom infrastructure and banking platform put them in prime position to expand their services at an even faster pace as we come out of the health crisis. All of us at Valar Ventures are excited to join this team.”
For his part, Rangel praised Valar as having “some of the best FinTech experience in the industry.” He added: “Their portfolio is incredibly relevant to Novo, and they have seen a lot of different FinTech trends.”
This funding will enable Novo to develop the new features its users crave, highlighting two areas in particular. The first is customization: “We plan to further develop our platform as an ecosystem that connects the disparate tools our customers use on a daily basis,” like Stripe, Shopify, and Square, Rangel said. The second theme has to do with helping users “manage cash flow better by speeding up money movement,” and processing payments as quickly as possible.
Now with more than 60 employees, Novo plans to double its headcount over the next year. The startup plans hiring across all business functions and in all its offices, with a particular focus on South Florida, Rangel said. “Miami is definitely a place we’re going to invest a lot in. We’ve been pleasantly surprised by the quality of the people and companies coming down here. We’ve also been really impressed with our local hires. This bodes well for our hiring roadmap for the future.”
Co-founded by Rangel and Tyler McIntyre, Novo’s CTO, the startup launched in 2018 and now has more than 100,000 small business customers. The challenger bank gained notoriety for offering free checking accounts that are packed with premium features such as invoice generation and integration with third-party services, and this year surpassed $1 billion in lifetime transactions. “Novo will continue to focus on solving the top problems small businesses face: cashflow through faster payments, and access to lending products banks traditionally do not offer to small businesses,” McIntyre said.
The startup opened an office in Miami earlier this year. “I’m really bullish on Miami,” said Rangel. “I’m excited to take part in more local tech events as Novo becomes more of a brand.”
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