As any successful small business owner or entrepreneur knows, cash is king. The co-founders of Miami-based startup Novo, Michael Rangel and Tyler McIntylre, clearly understood this when launching their own startup, but more so because their business model seeks to address this very challenge.
In 2018 they launched an innovative digital banking platform designed specifically to help small businesses, startups and freelancers improve their cash management and cash flow. They achieved early success with their “re-imagined” checking accounts that are supported by a network of FDIC-insured community banks. Three plus years later their platform has had over $5 billion in lifetime transactions with a run rate of $7 billion for 2022.
The co-founders caught the attention of top investors who have provided $135 million in funding to date, contributing to Novo’s $700 million valuation. $90 million of their funding came from their recent Series B round that was led by growth equity firm Stripes with support of existing investors Valar Ventures, Crosslink Capital, Rainfall Ventures, and Box Group.
“After speaking with thousands of our more than 150,000 customers over the last few years, one theme keeps coming up: the more you can help a small business remove all red tape and friction around cash flow, the better off that business is,” said Rangel, CEO of Novo. Rangel’s background includes Lead Trade Administrator and Operations for FairHolme Capital Management and Operations at Smith Barney following his graduation from the University of Miami Herbert Business School.
Now with additional funding in place Novo is confidently focusing on more product innovation such as developing modern lending capabilities, integrations, and proprietary products that facilitate the sending and receiving of money more quickly by small businesses. They are building on the foundation they painstakingly created to help small businesses grow —that their lead investor Stripes readily appreciates.
“What sets Novo apart is a fundamentally different approach to helping small businesses succeed. Instead of opting for incremental change, Novo built its banking platform from the ground up so that it could not just deliver a great digital banking experience, but actually deliver de novo financial products to a customer base that is yearning for them,” said Saagar Kulkarni, Partner at Stripes who will be joining Novo’s Board of Directors. “At Stripes, we only invest in companies building amazing products, and Novo’s rave reviews, strong retention, and incredible growth make it clear it has built something that small businesses love.”
Once a customer comes on board they have access to a range of services and products that Novo intentionally designed to distinguish their startup from their established and bigger competitors. Their services include:
- Cash flow Insights for the ready review of top income and spending categories, income comparisons by period, cash flow and inbound transactions review that is achieved outside of their accounting systems,
- Unlimited invoicing that also enables users to process credit card payments via their payment processor integrations, and
- Reserve Management whereby customer set up a maximum of five Reserves in their account for allocation of funds to different priorities and expenses.
In addition, the Novo App Marketplace provides access to dozens of native integrations and also connects small business owners and entrepreneurs to over 1,000 applications and tools that they already use. It also allows customers to customize their account, enabling them to centralize their finances and gain visibility into everything from e-commerce sales, to pending invoices, and cash-on-hand.
Co-founder and CTO McIntylre has led the charge to improve the cash flow of small businesses and foresees even further improvements in the months to come. McIntyre is also a graduate of the University of Miami-School of Business and then later attended The Wharton School at The University of Pennsylvania.
“For small business owners, the technology that powers their digital banking platform should fade into the background,” says McIntylre. “As we look towards the rest of 2022 and beyond, one area we’re particularly excited about is providing short-term capital for reducing cash flow friction, and implementing technologies that can automate this process.”
With a proven model and ongoing timely support from top investors, the two co-founders are excited about this next important growth stage as they continue to mine a segment of the economy that established banks overlooked. They know there are 30 million small businesses out there who now can improve their cash flow by using their digital banking platform that helps improve cash flow with more innovations to come.
