Subscribe to the Crunchbase Daily

The round brings One’s total raised since its January 2019 inception to $26 million. The startup, which is based in San Francisco and Sacramento, previously raised $9 million from its chairman and co-founder .

We’ve been covering the rise of neobanks globally. Just last week, for example, I wrote about , a New York-based digital bank aimed at small and medium businesses (SMBs), raising a $21 million Series A.

This news caught my attention for a couple of reasons. For one, One’s co-founders are serial entrepreneurs with deep industry experience. Former CEO and founding CEO serves as One’s chairman. who co-founded PushPoint (which was ), is CEO of One.

I’m also intrigued by the company’s emphasis on the middle class. To be clear, there are other digital banks focused on this demographic (, which neared unicorn status last year with a $100 million Series C, being a prime example). But there’s no doubt that as the country faces a potential recession fueled by the coronavirus pandemic, the middle class will be among the hardest hit.

The company told me: “We are focused on middle-income families across the US. This includes traditional families, but also single partners, people who support parents, kids and other family members; roommates and more.”

I also find it interesting that Obvious Ventures, an impact investor, put money in the round. One, which today said it is opening up early access to its private beta, also claims to be the first digital banking service to integrate credit with the goal of “making it seamless to save, spend and borrow money.” The thought behind that is that in the current financial system, people’s money is broken up into siloes, according to Hamilton.

“Most people have a balance in their checking account that earns nothing and outstanding debt on their credit card that costs too much,” he said in a written statement. “One is designed to maximize a family’s hard-earned paycheck by unifying saving, spending and borrowing into one account. When this money is being managed from one place, people save more, are charged less and gain control.”

To Harris, One addresses a gap in the banking industry.

“Traditional banks cater mostly to affluent customers and new digital banks target younger individuals with simpler financial needs,” Harris said in a written statement. “Middle-class American families are being left out.”

One is planning for a public launch this summer, and its new capital will help it scale toward that goal. The company currently has 40 employees.

Illustration:

Subscribe to the Crunchbase Daily

Boston-based led the round, which included participation from and . The financing brings NorthOne’s total raised since its 2016 inception to $23.3 million.

NorthOne aims to provide small business owners (such as hairdressers and bakers), freelancers and startups  with an easy-to-use banking application. The company says its offering includes multi-language customer service teams, enhanced deposit and payment features for cash-reliant businesses, and “seamless” overseas vendor payments, among other things. NorthOne recently moved its headquarters from Toronto, Ontario, to New York.

CEO co-founded the startup with his own upbringing in mind.

“I grew up in a family of small business owners where everybody would be going through occasional painful cycles of closing books and chasing invoices,” he told Crunchbase News. “So that in many ways influenced who we are trying to target.”

NorthOne spent a few years building out the product, conducting research with 100 small business owners across America, undergoing compliance testing and “finding the right partners.”

The startup launched its API-enabled, mobile-first banking platform in private beta last June, at which time Bensoussan said, the company already had a waitlist of 100,000 businesses requesting accounts. The startup had accomplished all its “in beta goals” by August, so went public on the app store at that time. In November, it released on Google Play. It currently has the “bare bones” of a desktop product in place. It serves as a SaaS (software as a service) operator, offering monthly subscriptions.

“The role of a bank is not to just keep money safe and move it around occasionally,” Bensoussan said. “We want to go beyond banking and into the back office of companies and take the busy work right off their plates so the owners can have more time to focus on building their business.”

The company’s strategy is to “uniquely” address each community, incorporating new products and services based on the differing needs of businesses depending on their markets.

Specific features include branch-free banking; dedicated sub-accounts for things like rent and payroll; mobile check deposits; integrations with software such as Quickbooks and Expensify; and the ability to give your bookkeeper “read access.”

Growth

Since its launch last August, NorthOne has been growing nearly 130 percent month over month and counts “thousands” of small businesses as customers, according to Bensoussan. The company has grown its staff from about 12 a year ago to nearly 40 today.

“The kind of businesses we’re growing with are the kind I used to know growing up. They’re the core of industry across America, the ones you walk by on the way to work,” he told me. “That really means a lot to me personally.” Many have 20 or fewer employees. Some of the NorthOne’s largest markets are in the South and the Midwest.

NorthOne also aims to visualize cash flow for its customers so they can “prevent oops moments” such as buying a $10,000 oven when the money may not all be there.

“The vast majority of failures are due to cash flow mismanagement and illiteracy,”  Bensoussan said. “That’s the problem we’re attacking by trying to educate in a non-intimidating way and making it super easy to understand the health of a business, and get that information in real time.”

Looking ahead

The company plans to use its new capital to expand its marketing efforts and speed up the growth of its customer acquisition programs. It also wants to hire more product, software engineering and customer service staff.

All of what NorthOne is doing sounded a bit like what an Austin-based SaaS operator, , is working on as well. (I wrote about that company’s raise last year.) ScaleFactor is focused on building a back office for small- and medium-sized businesses.

So I asked NorthOne how similar (or not) they are.

Its answer: “ScaleFactor can be a great solution for bigger companies that have more complicated expense management needs. For most small businesses, the burden doesn’t come from expense management but from the burden of daily banking. So while Scalefactor’s product is awesome, it isn’t set up to replace their bank account.”

That said, NorthOne is apparently compatible with ScaleFactor’s software.

Meanwhile, Battery Ventures’ Shiran Shalev said his firm has been closely following the rise of challenger banks in Europe.

“It’s inevitable that similar disruption would hit the U.S. market next–particularly in business banking,” said Shalev, who is joining NorthOne’s board, in a written statement. “We believe NorthOne is well on its way to building a leading challenger bank for SMBs in the U.S., and are excited to partner with management to realize this vision.”

Illustration: