Relay Financial secures $18.2 million CAD to bring financial management solution to more SMBs in US

Relay Financial's team

Toronto-based FinTech software startup Relay Financial has raised an $18.2 million CAD ($15 million USD) Series A round to expand its team and help more small businesses across the United States manage their finances.

The round, which was led by San Francisco’s Bain Capital Ventures, closed earlier this month, and saw participation from previous investors Better Tomorrow Ventures, Garage Capital, Tribe Capital, Panache, and Amaranthine. The startup plans to use the funding to add customers, grow its engineering and product teams, and better integrate its platform into the small business back office.

“I think the opportunity in front of us is pretty massive.”
-Yoseph West, Relay Financial’s co-founder and CEO

Founded in 2018 by Yoseph West and Paul Klicnik, Relay aims to “fully automate the finance function for small businesses via banking that deeply integrates into [their] back-office systems.” According to the startup, its software “increases financial visibility and security” at an affordable price point while also reducing time spent on administrative tasks.

Relay offers business debit cards, integrations with accounting platforms like Xero and QuickBooks Online, accounts payable automation, and the ability to collaborate easily and securely on banking with both team members and external advisors, including accountants and bookkeepers.

“Basically our focus is being a next-generation bank for employer SMBs and really thinking about financial complexity and how we solve it for it,” said West, Relay’s co-founder and CEO, in an interview.

The startup serves small-to-medium-sized business (SMB) clients across the United States. Relay’s financial infrastructure is provided by Evolve Bank & Trust, a Memphis-based member FDIC, which permits Relay to offer FDIC-insured bank accounts.

“I think the opportunity in front of us is pretty massive,” West told BetaKit. “For us, it’s really about, how do we deliver better for these small business owners and help them be more successful, and how do we build a great team while we do that.”

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“Banking is still a key piece of the small-business back office that has not yet been automated or deeply integrated into the rest of financial management,” said Keri Gohman, partner at Relay investor Bain Capital Ventures.

“Relay is building a business banking platform that should exist—one that not only helps employer-based business owners to run their business more smoothly, but also enables game-changing collaboration between business owners and their most important financial advisors,” Gohman added.

Combined with the $5.3 million CAD ($4.4 million USD) the company raised in a seed round last October, the Series A capital brings Relay Financial’s total funding to date to around $23.5 million CAD ($19.4 million USD).

During COVID-19, Relay’s business accelerated. West highlighted the challenges SMBs have faced over the past year, referring to their resiliency as inspiring.

“In a digital banking context, you can imagine that not only are people generally either apathetic or displeased with their traditional banking options … but when they would be, perhaps, risking their life to actually go to a bank branch and spend two hours sitting close to someone else, it really forces the conversation of ‘what are the alternatives.’”

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“Where we’re really focusing is scaling up our distribution, so we can reach some more small business owners, [and] doubling down on our relationships with small business owners and their accountants and bookkeepers, so building a product that better serves them,” said West.

According to West, a lot of small businesses manage a ton of different applications. “If you look at SMBs with one to 10 employees, they use about 25 applications to run their business,” he said. “From our perspective, we think about what we can integrate into that would help automate the back office for small business owners.”

Relay claims it is on track to process $1 billion worth of transactions by the end of 2021. The startup currently employs 20 people, and plans to increase its headcount to 50 this year.

Relay claims it is on track to process $1 billion worth of transactions by the end of 2021.

The startup is looking to grow “across the board,” in sales, marketing, customer support, operations, engineering and product roles.

In addition to the new hires, Relay said the Series A will enable the company to build “robust workflows for bill payments, approvals, and reconciliation.”

“I think the long-term view, and the way we think about the business, is how do we build something for 10 years,” said West. “We’re really in this for the long haul, and we’re hopeful that we’ll be lucky enough to build something really meaningful.”

Relay currently serves thousands of SMBs across the US. “Our goal is to get 100,000 small businesses over the next few years,” said the CEO.

Photo courtesy of Relay Financial

Josh Scott

Josh Scott

Josh Scott is a BetaKit staff writer who loves to tell Canadian business and tech stories. His coverage is more complete than his moustache.