The banking-as-a-service space took a hit last year when Synapse collapsed. But that hasn’t stopped BaaS startup Synctera from raising another $15 million in funding, it tells TechCrunch exclusively.
Synctera works to provide companies “of all shapes and sizes with everything they need to launch and operate fintech and embedded banking products,” including: accounts, cards, and payment products, said CEO and co-founder Peter Hazlehurst.
Fin Capital and Diagram co-led the Series A extension round, which brings Synctera’s total equity raised since its 2020 inception to $94 million. Other existing investors include Lightspeed Venture Partners, NAventures, Banco Popular, Mana Ventures, Evolution, True Equity, and 1st and Main.
Hazlehurst declined to reveal the company’s valuation. As for business fundamentals, he said he expected the latest capital infusion to get Synctera “to breakeven” by early 2026.
The company saw an 80% increase in revenue and a 230% increase in gross profit year-over-year for its fiscal year ending January 31, according to Hazlehurst. Its 31 customers include one-click checkout company Bolt, Webull, Fruitful, Unified Signal, and Firstcard, among others. Synctera has 416,000 end users on its platform, which Hazlehurst said is up over 3x compared to a year ago.
He said the company’s biggest differentiator lies in compliance.
“While all of our competitors similarly provide the API layer needed to launch fintech and embedded banking products, Synctera’s key differentiation lies in the tools and infrastructure we offer to customers and banks to manage compliance and ongoing operations,” he told TechCrunch.
Presently, Synctera has about 90 employees, around the same as it has had in the last year. Hazlehurst said he’s proud of the fact the company has been “able to nearly 2x the business without requiring incremental staffing.”
The company makes money in a variety of ways, including charging monthly platform fees, usage-based fees for ledgers and accounts, transactions, fraud monitoring and KYC/KYB (know your customer and know your business). It also gets a revenue share on interchange and interest on deposits.
As for the impact of the Synapse collapse, Hazlehurst says the debacle hurt in some ways and helped in others.
“We experienced a number of fintechs coming to us looking for a solution and migration path to a new banking relationship,” he told TechCrunch.
“I have always built with consumers and banks in mind first and foremost. What we witnessed with Synapse and Evolve clearly didn’t follow that approach, which was, and is, horrible to see the massive impact on real people and their money,” he added.
From an industry perspective, the whole situation had “a pretty material impact” on new fintechs being able to be funded and new banks coming into the ecosystem, in Hazlehurst’s view.
“It has slowed down and caused a lot more caution in the market as a whole. We certainly see more in-depth due diligence processes with new partners, banks, and customers, which I think is ultimately a good thing for consumers and the industry at large,” he said.
Recently Synctera also inked a strategic partnership with Hawk, a company that uses artificial intelligence to fight financial crimes such as money laundering.
Looking ahead, the new funding will in part go toward expanding its sales team of three as well as toward product development, according to Hazlehurst. The startup also sees a big opportunity to expand in Latin America, where it has seen a lot of demand and has a couple of large customers.