NorthOne wants to bank “mom and pop” businesses across the U.S. and has raised $21 million in Series A funding to grow its product and customer acquisition efforts.

The company is targeting brick-and-mortar small businesses that may benefit from digitized finance and accounting capabilities. It partners with Radius Bank to offer branch-free banking, access to more than 300,000 ATMs across the country, mobile check deposits and quick money transfers between accounts.

While NorthOne isn’t the only company offering digital banking services to businesses, its pitch to customers is that its cloud-based, self-built tech stack makes it easier for brick-and-mortar small businesses to access banking services. The company offers a mobile banking experience that includes back-end services like cash-flow management

Eytan Bensoussan, co-founder and CEO of NorthOne, said the company wants to make business banking easier for small businesses to navigate by making it entirely digital, cutting down on the different steps traditional banks often require of already busy business owners.

“[NorthOne] is built with the idea that banking should be completely packaged on a phone, other banks have parts of the banking experience on phones but still rely on a folder model,” he explained. “Customers tell us that we make banking a non-intimidating experience.”

NorthOne enters the business banking sphere as a growing number of other companies are vying for market share. Small business lending company OnDeck, recently expanded its ecosystem of products and applied for a banking charter to attract “mom and pop, Main Street small businesses” with less than $5 million in revenue. NorthOne currently does not offer loans or credit but is considering adding those products in the future.

Other digital banking startups like Azlo and Oxygen also aim to solve pain points for business customers. Despite the competition, Bensoussan said that NorthOne’s self-built tech stack is a differentiator. NorthOne functions entirely on the cloud, and has integrations with Shopify, Expensify and Quickbooks. Small businesses can also set up sub-accounts to set aside money for business needs like taxes, payroll and rent.

See also: OnDeck CEO Noah Breslow on building a community business bank

The API-based bank platform was launched last year. Founded in 2016, NorthOne has raised more than $23 million to date and said it saw 128% growth in customer sign-ups since August 2019, a testament to the market need among its target customers. As of this year, NorthOne has 130,000 customers. Bensoussan attributes that growth to a focus on “Main Street,” or small businesses with staff of less than 20.

“We are built very deliberately for small businesses, we have startup and freelance customers, but our sweet spot is small businesses that are not very deep in the technology space,” Bensoussan explained. “[NorthOne is] often the first kind of step they’re taking into more tech forward and human back office for their business.”

While NorthOne serves U.S. customers, the company is headquartered in Canada due to cost considerations, and also has offices in New York and Boston. The company hopes the funding will help it market its offerings to customers across the U.S.

Battery Ventures led the funding round, with participation from Redpoint Ventures and Tom Williams. NorthOne is breaking into a nascent business area in the U.S., and its capacity to forge a path prompted Battery Ventures to take an interest in the company, according to Shiran Shalev of Battery Ventures, who is joining NorthOne’s board.

“We’ve closely followed the rise of fintech innovation and challenger banks in Europe. It’s inevitable that similar disruption would hit the U.S. — particularly in business banking,” Shalev said. “We believe NorthOne is well on its way to building a leading challenger bank for SMBs in the U.S. and are excited to partner with management to realize this vision.”

Ferst Capital Partners, an early investor in the company, said NorthOne stands out among traditional banks because of the breadth of its offerings for clients. The Canadian venture capital firm said it was impressed with NorthOne’s attention to detail in solving pain points for small businesses.

“While there have been previous attempts to target this segment, which were met with mixed results, NorthOne’s strong growth has validated their groundwork and differentiated approach to helping SMBs succeed,” Dominique Ferst, partner at Ferst Capital Partners, told Bank Innovation in an emailed statement.

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