Participated · Seed · Mar 2019

Novo is a fintech company that provides a checking account and a fintech platform built for small businesses. The company offers an app marketplace called Novo Apps with dozens of native integrations and over one thousand connections to third-party applications. Novo also provides cash-flow accelerating products including Novo Boost (same-day access to Stripe payments) and Express ACH for same-day ACH processing. Led by CEO Michael Rangel, Novo has processed more than $12 billion in lifetime small business transactions and serves over 180,000 small business customers. The company intends to use its new funding to scale app partnerships and consolidate its market position. Novo is a neobank building banking services from the ground up for small and medium businesses. The company has built its core banking stack in-house with a large development team largely based in India, while Middlesex Federal Savings handles the banking license, FDIC insurance and rails. Novo operates a Marketplace with APIs for roughly 1,000 apps and services (POS, e-commerce, invoicing, payroll, etc.) to extend non-core functionality. The startup has 150,000 SMB customers in the U.S. and has processed $5 billion in lifetime transactions (up from $1 billion last June) and was on track for $7 billion in lifetime transactions for 2022. Novo plans to use new capital to build out infrastructure to support recent rapid growth, add new products—most notably a lending product that pulls in diverse data to underwrite loans—and acquire more customers. The company favors in-house core infrastructure over fully embedded finance approaches to retain product control and tighter margins, while using APIs for peripheral features. Novo offers a neobanking platform built for small businesses with a drag-and-drop dashboard that integrates dozens of finance apps so SMBs can view activity across tools in one place. Its product emphasizes integrations (the article says the average SMB uses seven apps) and the company plans to build technology to monitor and automate interactions between those apps. Novo defines its customers as businesses with $25,000–$500,000 in annualized revenues and reports about 100,000 SMB customers and $1 billion in lifetime transactions. The startup grew from roughly 5,000 accounts through 2019 to 24,000 in 2020 and has seen accelerated growth recently, including four-fold growth in the last six months. Novo has not yet launched lending or cash-advance products but lists them on the roadmap and is using customer integration data to prioritize new features. The company positions itself to expand services by marrying incoming and outgoing activity across connected apps to surface actionable cash insights for SMBs. Novo provides no-fee, FDIC-insured digital business checking accounts with debit cards that customers can apply for in under 10 minutes via a mobile app, with no minimum balance or paperwork. The company builds proprietary technology on top of a community bank sponsorship from Middlesex Federal Savings to offer transaction monitoring, free bank transfers and checks, and integrations with tools like Slack, Stripe, Zapier, Xero, and TransferWise. Since launching in September 2018, Novo has focused on entrepreneur- and founder-friendly banking, deploying new features frequently as an alternative to legacy banks. Novo aims to become a "financial watchtower for small business," offering data analytics through partners and real-time financial insights and notifications. The company plans to onboard customers from its waitlist, create strategic partnerships and value-added services, and expand its team and product ecosystem. Novo is based in New York City with a full-time development team in India.