This week in our Finovate Fintech Halftime Review eMagazine, Senior Analyst Julie Muhn explored the trend of niche banking. Niche banking leverages the current explosion in identity-awareness to create unique and tailored banking experiences for members of a growing number of different communities.

The news that Karat Financial, a Los Angeles, California-based company that offers a credit card designed for digital creatives, has raised $26 million in Series A funding is the latest indication that this trend may only be growing stronger.

Launching its “Black Card for Creatives” last year, Karat is targeting the digital influencer economy of YouTubers, Twitch livestreamers, and others who often struggle to translate their online earnings into creditworthiness in the eyes of traditional lenders and banks. And while this challenge extends to a broader population than just digital creatives, there is no small benefit for a banking services company in being associated with one of the more vibrant developments in 21st e-commerce and entertainment.

Karat offers a business card with cash back rewards, and zero-cost credit advances for sponsorship payments. The corporate card acts much like an American Express card, with balances paid off monthly. This lack of interest charges – as well as Karat’s no-fee policy – helps keep the cost of using the card as low as possible, a priority for digital creatives with potentially volatile revenue sources.

To this point, in lieu of a traditional bank application, Karat wants to know about Instagram followers and sponsorship deals, YouTube subscriber counts and Twitch donations in order to get digital creatives the access to credit that is commensurate with their success as online influencers.

Karat was founded by Eric Wei, a former product manager at Instagram, and Will Kim. This week’s Series A round – which consisted of $15 million in debt financing and $11 million in venture funding – was led by Union Square Ventures and featured participation from GGV Capital and SignalFire.

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A pre-seed funding round of $1.7 million will help U.S. fintech startup B9 build its financial app that helps immigrant workers secure interest-free payroll advances.

“Immigrant communities and other marginalized groups are invisible to traditional banks,” B9 CEO Sergei Terentyev said. “They are hardworking people who deserve a full service banking option that fits the way they earn and spend.” Terentyev called the response to B9 “overwhelming” and said that “hundreds of thousands” of interested users have joined the company’s waiting list.

“In our view, access to banking services that allow families to share resources, build credit and plan for the future is an equality issue, and the early response we’ve seen demonstrates the magnitude of the demand,” Terentyev added.

B9 offers 0% APR pay advances of up to 15 days, as well as a free virtual Visa debit card, and access to both U.S. and international money transfers. The San Francisco, California-based company charges a monthly subscription fee of $4.99.

B9 will use the funding to add to its team, as well as make technology investments. The company hopes to have 100,000 customers by the end of the year with its focus on consumers who are not only underserved by traditional banks, but are also often preyed upon by predatory lenders. In addition to its early wage access feature, B9 expects to offer additional services such as merchant discounts and access to insurance.

In their funding announcement, the company underscored the size of the non-U.S. born population – more than 40 million – as well as the fact that the lion’s share of U.S. population growth – up to 80% – will come from the growth of the first- and second-generation immigrant population.

B9’s services are set up with this in mind. In addition to offering a low, monthly subscription rate, applicants only require a U.S. mailing address, social security number, or ITIN, as well as a government-issued ID from either a U.S. source or from the applicant’s country of origin. Multiple language customer service is available.

Alternative investment platform YieldStreet announced a Series C funding round this week totaling $100 million. The investment brings the New York-based company’s total funding to $279 million.

Contributors to the round include Mitch Caplan, Alex Brown, Kingfisher Capital, Top Tier Capital Partners, Gaingels, Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft, and Expansion Capital. YieldStreet will use the funds to attract new users and create new investment products. The company will also use the investment to fuel more acquisitions in addition to the two companies– WealthFlex and Athena Art Finance– it acquired in 2019.

YieldStreet connects investors with asset-based alternative investments that have traditionally been difficult for non-institutional investors to access, such as art, marine, legal, and real estate. Since it was founded in 2015, the company has paid out more than $950 million in principal and interest to its investors.

“These are investments that generate passive income. For example, we do a bunch of things in real estate such as financing warehouses, multifamily and distribution centers,” company founder and CEO Milind Mehere told TechCrunch. “We also do art, auto loans, or equipment finance. These are typically investments done by institutions and what we’re trying to do is really fractionalize them and get them to real estate investors. A lot of this stuff is asset-backed and it’s generating cash flow.”

The funding comes at a time when the public’s interest in investing is growing, and YieldStreet is benefitting as a part of that trend. The number of investment requests the company has seen grew by 250% from January to April of this year when compared to the same time frame last year. And YieldStreet has acquired more users so far this year than it had for the entirety of 2020. Today, the company has 300,000 consumers.

As for what’s next, YieldStreet is considering going public via a SPAC merger in the next couple of years. The company said it has been approached by a few special purpose acquisition companies and that the public markets would offer more visibility to potential users.

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Synctera has raised $33 million in Series A funding to fuel its mission to make it easier for community banks and fintechs to work together. The round, which brought the company’s total funding to more than $46 million, featured new strategic investors such as Mastercard, as well as executives from Finovate alums like Marqeta, Feedzai, and Socure. These backers were joined by several of Synctera’s existing investors including Lightspeed Venture Partners, Diagram Ventures, Portage Ventures, SciFi Ventures, and Scribble Ventures.

“Since launch, Synctera has formed one of the best teams in the industry,” company CEO and co-founder Peter Hazlehurst said in a statement. “Bringing on a group of investors with deep industry expertise will help us meet rapidly increasing demand in our next stage of growth.”

Synctera helps community banks and fintechs achieve partnership banking at scale. The company’s platform streamlines day-to-day reconciliation, operations, and regulatory compliance for banks, while enabling fintechs to launch their solutions faster and with greater flexibility thanks to its one-stop-shop API. Part of the growing trend toward embedded finance and banking-as-a-service, Synctera will use the new capital to further build its software engineering team to speed the development of its product roadmap, as well as bolster sales and marketing efforts to help grow market share and expand internationally.

As part of the funding announcement, Syncetera also announced that it would endorse the diversity commitment from the Cap Table Coalition by allocating 10% of all funding rounds to traditionally marginalized investors.

“For this next chapter—and to put action behind Synctera’s values—we pledge to reserve 10% of this round and all future rounds to diverse investors, allowing for more representation and collaboration to further innovate the industry,” Hazlehurst said.

Emerging from stealth last year, Synctera has already secured customers in Coastal Community Bank and ONE Finance, as well as Tennessee-based Lineage Bank. The company has also partnered with money management and financial wellness platform for women, Ellevest. Check out our conversation with Hazlehurst on the Finovate Podcast with host Greg Palmer from last month.

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