Fintech startup Rho Technologies has lined up $100 million in debt financing to grow its business banking platform.
The financing comes from San Francisco-based Community Impact Management, a social impact investment firm that provides debt financing to fintech companies.
“The closing of this credit facility heralds an exciting new chapter for Rho,” Everett Cook, co-founder and CEO of Rho, said in an April 29 news release.
New York City-based Rho offers a one-stop digital shop for business banking, expense management and accounts payable. Thanks to the financing, the startup plans to expand its workforce from 50 to 100 members by year’s end. Those employees will work on several new products that Rho says it has in the pipeline.
“Our ability to secure $100 million in financing this early in our growth trajectory reflects investors’ confidence in our strategy to modernize business banking, a $700 billion industry in desperate need for innovation,” said Khang Nguyen, head of credit and capital markets at Rho.
The $100 million in financing follows Rho’s $15 million Series A funding round, announced in January. M13 Ventures led the round, with participation from Inspired Capital, Rogue Capital and Torch Capital. Rho has raised more than $20 million since its 2019 launch.
Rho used part of the $15 million round to roll out Rho AP, its accountables payable offering.
Earlier this month, Pearl River, New York-based Sterling National Bank unveiled a deal with Rho that will enable Sterling to expand its banking-as-a-service platform. Sterling has more than $30 billion in assets. The bank made a splash in February with news of its collaboration with Google Pay, allowing the digital wallet platform to provide digital checking and savings accounts.
As of this April, “Rho has experienced a 50% increase in transaction volume since December 2020 on an annualized basis,” according to a press statement. Its clients include furniture retailer Burrow, home goods company Caraway, drink company Hydrant, blockchain platform Kaleido and software company Popular Pays. Evolve Bank & Trust supplies Rho’s banking services.
Jacob Haar, co-founder and managing partner of Community Impact Management, applauded Rho’s effort “to modernize business banking to create a more inclusive financial ecosystem, one that serves not just large commercial businesses but also smaller high-growth firms with first-class services that are generally inaccessible to them.”
Last year, Research Dive predicted the North American digital banking market would grow from $376.2 billion in 2019 to $721.3 billion by 2027. One example of how quickly the market is expanding: Digital bank Current just raised $220 million in a Series D funding round led by new investor Andreessen Horowitz, pushing the startup’s valuation to $2.2 billion.