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Exclusive: Synctera raises $18.6M for international expansion

Illustration of a hand holding a bank building.

Illustration: Gabriella Turrisi/Axios

Banking as a Service provider Synctera raised an $18.6 million Series A extension led by existing backers Lightspeed and Fin Capital, the company tells Axios exclusively.

Why it matters: The funding news comes amid broader turmoil in the Banking as a Service sector.

Context: This is actually the second extension Synctera has raised since announcing its $33 million Series A round in June 2021.

  • The previous extension — a $15 million round led by National Bank of Canada's venture arm NAventures — was announced last March.
  • Following the completion of that last extension, the company expanded north and had its first Canadian customer launch in December.

Zoom in: The new funding includes participation from previous backers NAventures and Diagram, as well as new investors Banco Popular and Mana Ventures.

  • Along with the financing, the company announced it has hired Leigh Gross, formerly an executive at fintechs Array and Summer, as chief revenue officer.

Between the lines: Synctera again plans to use the new funds to expand its capabilities internationally, recently signing LatAm investment bank BTG Pactual as a customer.

  • Through that partnership, BTG Pactual will be able to offer U.S.-based bank accounts to its international wealth management clients.
  • Synctera also has struck a deal with African payments startup Flutterwave to broaden its capabilities in the U.S.

What they're saying: "What's happening right now is a game of who's going to survive the bad sentiment curve and get back on the other side," Synctera CEO Peter Hazlehurst says.

  • Hazlehurst adds that Synctera has significantly raised the bar for potential customers to qualify for partnership with the company.
  • "At the start, we were onboarding folks with half a million to a million dollars of fundraising," he says. "Now the minimum bar is $5 million, which is obviously significantly different."

The bottom line: As it seeks to partner with more international firms that want to offer U.S.-based services, compliance is key to making those programs work.

  • "You can't cut any corners, and the onboarding flows — whether they're in the U.S. or Brazil or Mexico or wherever — have to be consistent and meet the minimum bar of the United States' regulatory regime," Hazlehurst says.

State of play: While Synctera is announcing new financing and partnerships, other players in the BaaS market are struggling.

  • Synapse laid off staff last fall, was sued by one of its largest clients, Mercury, and was kicked off banking partner Evolve Bank.
  • Solid (also an Evolve partner) was also sued in the fall by its Series B investor FTV Capital, which claims the company's founders lied about their revenue numbers and customer churn.
  • Blue Ridge Bank, Choice Bank and Lineage Bank have all been hit with consent orders or enforcement actions related to their BaaS programs.
  • Treasury Prime laid off staff last month as it pivots away from selling to fintechs and focusing instead on solely offering its middleware to banks who would directly manage their own fintech partnerships.
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