Toronto-based FinTech startup Relay has secured approximately $44 million CAD ($32.2 million USD) in Series B funding led by existing investor Bain Capital Ventures (BCV) to build on its growth and fuel its product development plans.
Relay caters to small and medium-sized businesses (SMBs) in the United States (US), helping them manage their cash flow through its business banking software platform.
In an interview with BetaKit, Relay co-founder and CEO Yoseph West said that amid what has become a challenging market for tech companies and FinTech firms in particular, the timing was right for Relay to invest in growth.
“They’re long-term investors. They’re multi-stage. They get FinTech.”
Yoseph West, Relay
“With the state of the FinTech funding market, and the opportunities that that presented, and the strength of our business, it made sense to take on more capital so we can continue to accelerate,” said West, who noted lots of room for Relay to layer on more financial services.
Relay, which was founded in 2018 by West and vice-president of engineering Paul Klicnik, offers an online business banking and money management platform designed to help automate the finance function for SMBs by integrating with their back-office systems. The company caters to employer SMBs across the US in the professional services, retail and e-commerce, non-profit, trades, and real estate spaces.
The FinTech firm’s latest financing comes three years after Relay’s $18.2-million CAD Series A round, which was also led by BCV. Relay has been busy since then growing its business, launching a slew of new products, and expanding from 20 to 140 employees.
At the time of its Series A round, Relay set its sights on serving more than 100,000 SMBs in the US within the next three years. West said the startup recently surpassed that customer count. While he declined to disclose Relay’s current revenue, West claimed that Relay is on track to become profitable next year and reach a $100-million USD run rate by the end of 2025, on the back of 25x revenue growth over the past three years.
Relay’s all-equity, all-primary Series B financing, which closed in February, was largely an inside round from existing Relay investors, including San Francisco-based BCV, Better Tomorrow Ventures, and Tapestry, and Kitchener-Waterloo’s Garage Capital, with participation from a new backer in San Francisco-based Industry Ventures. It brings Relay’s total funding to approximately $70 million CAD.
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West claimed Relay was offered multiple term sheets and that its Series B was “a significant up round” relative to its Series A financing, but declined to disclose the company’s latest valuation. There are no board changes as part of the round.
“Relay had other offers but chose BCV to lead the round,” BCV partner Kevin Zhang told BetaKit. “Relay’s growth rate is what impressed us and made us eager to get behind Relay again. The company is entering its next phase of growth, and we are aligned with their vision to reach the unique needs of the SMB market.”
Speaking to the continued support of BCV, which has backed Relay since its seed round, West described the American venture capital firm as a “tried and true FinTech investor” with a strong understanding of the opportunity before Relay. “They’re long-term investors,” he added. “They’re multi-stage. They get FinTech.”
“They have a core thesis around this idea that banking is going to change pretty dramatically, and based on their exposure to Relay and the team, [BCV] felt pretty clear that we’re going to be the number one player in this space,” said West.
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Through its software, Relay seeks to increase financial visibility and security for SMBs and reduce time spent on administration. Relay provides its financial products, including chequing and savings accounts and its recently launched credit cards, in partnership with member FDIC Thread Bank. Among other capabilities, the company also offers accounts payable and receipt management.
“Small business banking experiences have been historically overlooked despite the massive size of the SMB market,” said Zhang. “Relay offers a superior product with tailored functionality like integrations for cash-flow visibility and multiuser collaboration that has led the company to an incredible trajectory. As others in the industry have had to pivot and find new footing, they passed 100,000 customers last month.”
As other Canadian tech companies have cut costs amid the downturn, West claimed that Relay has managed to grow without having to lay off staff or take any other “drastic measures.”
“It’s certainly been a crazy five years … And there have been a number of Black Swan events that have occurred in the world,” said West. “The thing that has remained true and will continue to remain true is that small business owners struggle with their cash flow, and that’s where we focused and we found our path.”
Relay recently surpassed 100,000 SMB customers.
As Relay looks to build on its growth with its Series B financing, West said Shopify co-founder and CEO Tobias Lütke’s recent call for Canadian tech entrepreneurs to stop going for bronze and aim higher at BetaKit Town Hall resonated with him.
“This is something we’ve quietly instilled in [Relay’s] culture is this notion of going for gold, and really building something world-class and ambitious,” West added. “And it’s hard. It’s not easy. It’s not for everyone, but this is what we signed up to do because we believe we have a shot at building an enduring company.”
Relay plans to put this capital towards building spend management technology, smart credit products, and a financial application programming interface marketplace as it looks to help more SMBs across the US manage their cash flow. To help it get there, Relay plans to grow to approximately 200 employees by the end of 2024.
“All this is towards our overarching goal of delivering [artificial intelligence]-powered cash flow analytics for small business owners,” said West. “We think that’s the next frontier.”
Feature image courtesy Relay.
