• Aeropay raised $20 million in new funding for its pay-by-bank technology.
• The round, which boosts Aeropay’s total funding to $25 million, was led by Group 11.
• Aeropay also announced the launch of Aerosync, the company’s internally developed bank aggregator.

Chicago-based payments company Aeropay announced today it has landed $20 million in new funding. The Series B round, which boosts the company’s total funds to $25 million, was led by venture capital firm Group 11 and saw participation from Chicago Ventures and Continental Investment Partners.

Aeropay was founded in 2017 to help businesses move money in a faster, less expensive way using Aerosync, the company’s internally developed pay-by-bank technology. Launching today, Aerosync is Aeropay’s bank aggregator that enables customizable integrations via open APIs.

“Payments in most verticals operate on archaic systems filled with excessive fees and risks,” said Aeropay Founder and CEO Daniel Muller. “We’ve built a bank-driven payments network that protects businesses against fraud, saves them money, and gives their customers an easy way to pay. Put simply, we are building the next-generation payments network.”

Aeropay will use the funds to expand into new markets, including financial services, wellness, utilities, QSR, and property management. The investment will also help fuel new product offerings, build on strategic partnerships, and explore new opportunities.

“For years, we’ve searched for a company advanced enough to solve the pains and inefficiencies of the card payment market, arguably the last bastion of the traditional financial services industry,” said Group 11 Founding Partner Dovi Frances. “Aeropay has tackled the most complex technological and compliance challenges, making them the most likely player to seize upon this massive addressable market.”

Pay-by-bank has seen rising popularity across the globe in the past few years, as open banking fuels new possibilities. The technology holds the promise of reducing transaction fees for retailers. End consumers, however, may remain skeptical of pay-by-bank’s security and user friendliness.

Photo by Karolina Grabowska

• Layer has raised $2.3 million in pre-seed funding for its embedded accounting solution.
• The round was led by Better Tomorrow Ventures, with participation from executives at Square, Plaid, Unit, Check, and other SMB software companies.
• Layer will use the investment to expand its headcount across engineering and business operations.

Embedded accounting player Layer raised $2.3 million in a pre-seed round of funding today. The funds mark the first investment round the San Francisco-based company has seen since it was founded last March.

Better Tomorrow Ventures led the round, which also saw participation from executives at Square, Plaid, Unit, Check, and other SMB software companies.

Layer aims to simplify financial management for small businesses by enabling software companies– such as point-of-sale systems, neo-banks, and other software companies catering to small businesses– to embed accounting and bookkeeping solutions directly within their own platforms. This eliminates the need for small businesses to import data between their accounting software, such as Quickbooks, and the small business software provider. Because Layer allows software providers to combine their own data with data from customers’ external financial accounts, it helps offer the customers a more complete picture of their accounting.

“A common burden small businesses face today is keeping their accounting software in sync with their operations,” said Layer Co-founder and CEO Justin Meretab. “We believe our platform will now give SMBs a better solution for their accounting needs by embedding it into systems they use daily. Small businesses already have so much on their plate running and growing their operations, and accounting shouldn’t be another burden.”

Layer makes it possible for software companies to embed Layer through its API and pre-built Javascript UI components. The company will use the funding to expand its headcount across engineering and business operations.

“Accounting and bookkeeping are two of the biggest pain points small business owners face, and yet the existing products in the market are intimidating and can be time-consuming,” said Better Tomorrow Ventures Principal Nihar Bobba. “There are few products in the market that truly address these issues, which is why we’re excited to join Justin and Daniel in their journey to build and provide a powerful embedded accounting platform that enables all sorts of companies to solve the accounting needs of their customers.”

Photo by Mikhail Nilov

• Identity verification solutions provider Data Zoo secured $22.7 million (AU$35 million) in Series A funding in a round led by Ellerston JAADE.
• Data Zoo will use the capital to help foster broader adoption of its identity verification technology.
• Headquartered in Sydney, New South Wales, Australia, Data Zoo was founded in 2011. Charlie Minutella is CEO.

International identity verification solutions provider Data Zoo has secured $22.7 million (AU$35 million) in Series A funding. The round was led by Ellerston JAADE, an Ellerston Capital fund; Data Zoo will use the capital to help drive broader adoption of its identity verification technology.

“There’s been a long-standing need for a more efficient and secure way to verify identities,” Data Zoo Founder and Chairman Tony Fitzgibbon said. “Data Zoo has spent years refining its solution – the result has been incredible innovation, UX optimization, and growth in a fiercely competitive market, putting us head-to-head with today’s most established identity providers.”

Data Zoo leverages direct access to authoritative data from more than 170 countries and advanced, logic-driven data sequencing to help institutions automatically verify identities based on the next best source. The company’s technology reduces dropout rates, lowers the total cost of ownership, and helps businesses boost customer approval rates and revenue realization. At the same time, Data Zoo prioritizes data protection and privacy by eliminating identity data storage.

Founded in 2011, Data Zoo is headquartered in Sydney, New South Wales, Australia. The company includes eToro, MoneyGram, and Experian among its partners, and competes in a crowded field of innovators including a number of Finovate alums such as Socure and Jumio. Earlier this year, Data Zoo announced the appointment of former London Stock Exchange executive Charlie Minutella as its new CEO. In a statement, Minutella spoke about the expansion opportunities this week’s investment will enable the company to pursue.

“Data Zoo is well-positioned to expand its footprint because of its patented ability to efficiently onboard a more diverse and global set of customers, meet compliance standards across jurisdictions, and enhance data privacy and protection,” Minutella said. “The investment from Ellerston JAADE will supercharge our capacity to operate in key markets, attract new business, and enter new strategic partnerships.”

For more coverage of fintech innovation around the world, check out our Finovate Global column published every Friday afternoon.

Photo by Nicole Avagliano

• Challenger bank Lunar raised $25.7 million (€24.1 million) in funding, boosting the company’s total raised to around $512 million.
• Lunar plans to use today’s funds to expand on its basic package offered to Swedish residents to become a more full-service bank.
• In 2023, Lunar reached 850,000 customers, marking an increase from 700,000 customers the year prior.

Challenger bank Lunar announced this week it has raised $25.7 million (€24.1 million) in a supplementary funding round. According to Crunchbase, the new investment boosts Lunar’s total raised to just shy of $512 million, around $54 million of which was brought in over the past four months.

Lunar was founded in 2015 and currently offers retail and commercial digital banking services. The company received its banking license in 2019 and on the retail side offers personal checking accounts with debit cards, youth accounts, in-app PFM tools, a BNPL tool that can be retroactively applied to purchases already made, as well as an investing platform that allows users to invest in stocks, ETFs, and crypto. On the commercial side, Lunar offers business bank accounts, automated bookkeeping, cash flow analytics, expense management tools, loans, insurance, and more.

“Securing €50.9 million in such a challenging market reflects strong confidence in our growth strategies,” said Lunar Founder and CEO Ken Villum Klausen. “We’re seeing robust growth in our newly launched business area Banking Services, where we’re extending our in-house developed Nordic infrastructure to external partners.”

Lunar plans to use today’s funds to expand on its basic package offered to Swedish residents to become a more full-service bank. The company’s banking services are currently available to users in Denmark, Norway, and Sweden.

Approaching its 10th year of operation, Lunar reached 850,000 customers in 2023– including 20,000 business users. This total user number marks an increase from 700,000 customers in 2022. Concurrently, customer activity, as measured by transactions, nearly doubled during this period.

“Our journey doesn’t stop here, “Villum Klausen added. “We’re not just broadening Lunar’s basic banking services, but we’re also evolving into a full-service bank. Our aim is to cater to both private customers and businesses in Sweden, demonstrating our commitment to growth and our vision for the future.”

Photo credit: Lunar

• Dutch-based digital bank bunq has secured $31 million (€29 million) in new funding.
• The funding announcement came after the company reported a profit of $57 million (€53 million) for 2023.
• bunq added that it will re-submit its application for a banking license in the U.S. as part of its expansion plans.

European digital bank bunq has raised $31 million (€29 million) in new funding. The capital infusion from the company’s shareholders came in the wake of bunq’s announcement that it has achieved a net profit of $57 million (€53 million) in 2023. The funds will accelerate bunq’s development strategy, as well as ensure that the company satisfies Dutch Central Bank capital requirements.

The digital bank has credited interest income for its profitability, not just in 2023, but in 2022, as well. The company reported that interest income tripled in 2023, growing from more than €41 million to more than €127 million. In addition to its profit milestone in 2023, bunq also announced that customer assets climbed from $1.9 billion (€1.8 billion) to $7.4 billion (€6.9 billion).

Bunq plans to leverage the new capital to expand more in the U.K., as well as move into the U.S. market. To this end, the institution noted that it plans to resubmit its application for a banking license with the U.S. Office of the Comptroller of the Currency (OCC). Bunq withdrew its application earlier this year citing issues between Dutch regulators, the OCC, and the Federal Deposit Insurance Corporation (FDIC). In a statement, bunq noted that it was “fully committed to resolving all the differences between De Nederlandsche Bank’s, and the FDIC’s, and OCC’s supervisory expectations.”

That said, it has not been easy for financial institutions outside the U.S. to secure approval to operate within the U.S. For example, Monzo, a U.K.-based challenger bank, tried and walked away from the process in 2021 when approval seemed unlikely. Unfortunately, new U.S.-based firms looking for bank charters have only fared a little better. For every Savi Financial, there is a New Canaan Bank.

Bunq raised $111 million last July, boosting the firm’s valuation to $1.8 billion. The company ended 2023 with the launch of its generative AI financial copilot Finn. Fundamentally, Finn will help replace the search function on the bunq app. But the technology will also assist users as they plan their finances, build budgets, review transactions, and more.

“Finn will wow you,” bunq founder and CEO Ali Niknam said when the product was launched. “Years of AI innovation, coupled with a laser focus on our users, allowed us to completely transform banking as you know it. Seeing Generative AI make life so much easier for our users is incredibly exciting.”

Photo by Chait Goli