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Synctera is developing a tool to connect certain financial institutions, such as credit unions and community banks, with fintech companies.
The San Francisco-based startup received $12.4 million in seed funding to streamline this partnership, and made its first match: Coastal Community Bank, a local bank near Seattle, and San Francisco digital banking platform One.
The round was led by Lightspeed and joined by Diagram Ventures, as well as a group of strategic angel investors, including Zachary Perret, Max Levchin, Alexa von Tobel and Henry Ward.
Synctera CEO Peter Hazlehurst joined the company in September as the third co-founder with Kris Hansen and Dominik Weisserth, who founded the company in April as part of Diagram’s Canadian incubator program. Hazlehurst previously held leadership roles at Uber Money, Google Wallet and Yodlee.
“We were investigating if there was an interest for banks to have a platform stack to work with fintechs,” Hazlehurst said. “Smaller banks and credit unions are reluctant to partner with fintechs because of a concern about regulatory compliance and being able to work with them.”
The company plans to use the new funding to hire more engineers and work on product development. Hazlehurst expects to hire approximately 50 employees over the next six months to join Synctera’s current nine-person workforce.
While new fintechs start every day, there are a finite number of banks that can work with them, and they are busy backlogged with customers, Hazlehurst said. He expects to onboard groups of banks next year to alleviate that demand.
Among the thousands of small banks across the U.S., Synctera’s sweet spot is banks with between $300 million and $500 million in assets.
“We’ve probably had conversations with 20 banks in the last few months,” he added. “Everyone is looking for a solution. We plan to spend the next few months working with our first customers and addressing the demand.”
Meanwhile, Ansaf Kareem, lead investor at Lightspeed and a Synctera board member, said his firm has spent a lot of time looking at the financial infrastructure stack, particularly in banking-as-a-service, and when he met Synctera, felt the company “was uniquely positioned to unlock real value in the ecosystem.”
“Peter’s unrivaled and deep experience at Yodlee, Google Wallet and Uber Money gives him the unique advantage of knowing what is needed, how to build it and where existing solutions fall short,” Kareem said in a written statement. “We are at a critical crossroad in the ecosystem where banks and fintechs are eager to partner with each other, and Synctera is providing that bridge. Synctera is rapidly becoming the foundational infrastructure layer for the financial services of the future.”
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