Relay raises $32.2 million to help smaller businesses manage their cash flow

Owners of small- and medium-sized businesses check their bank balances daily to make financial decisions. But it's entrepreneur Yoseph West's assertion that there's typically information and functions missing from bank accounts that owners could really use.

"SMBs make up 44% of U.S. GDP, underpin the economy and have a deep impact on all of us," West said in an interview with TechCrunch. "And yet most SMBs only have enough cash on hand to last 27 days. They need greater cash-flow clarity and control in their banking."

West, who studied equity and debt finance in college, co-founded Vuru, a stock market research app, in 2012. After fintech firm Wave Accounting acquired Vuru later that year, West stayed on, eventually graduating to the role of director of product engagement.

While at Wave, West had the idea for his next company: Relay, a business banking and money management service for SMBs. West teamed up with Paul Klicnik, an ex-IBM engineer who previously developed the core technical infrastructure at coupon app Flipp, to launch Relay in October 2018.

"Relay is an online business banking and money management platform designed to help small businesses take control of their cash flow," West explained. "The platform is focused on delivering true cash-flow clarity to SMBs."

Relay's platform lets SMBs organize their income, expenses and reserves across up to 20 checking accounts. (Relay isn't a bank itself; the company relies on its partner Thread Bank for the banking services it provides, which West says are FDIC-insured.) Through Relay, a company can automatically set aside cash into savings accounts with 1%-3% APY and issue up to 50 physical or virtual Visa debit cards to employees.

Relay users can send and receive ACH transfers, wires and check payments like they would with traditional banks. And they can capture and store receipts, allowing people in their employ access through role-based accounts.

The company makes money through interest on customer deposits, card interchange fees and a $30 per month premium service (Relay Pro) that adds features like same-day payments, and competes with neobanks such as Bluevine and Mercury. But West argues that Relay is one of the few of its kind not focused on tech startup or individual business owner customers.

"Relay is built for the 33-million-plus SMBs in the U.S. and their in-house or outsourced finance functions," he said. "We primarily serve 'heart of America' small businesses that have two-plus employees -- full-time, part-time or contracted -- and make $20,00 to $200,000 in monthly revenue."

Relay financial
Relay financial

This has proven to be a winning strategy.

West predicts Relay will reach $100 million in annualized revenue by the second half of 2025. Revenues rose 3x in 2022 -- and close to 6x in 2023 -- thanks to a robust client base that now stands at ~100,000 businesses.

That's all the more impressive considering the state of the fintech industry.

Last year, venture investment in financial services and fintech fell to $43 billion, its lowest level in six years and down more than 50% year-over-year from the $89.5 billion invested in 2022, according to CrunchBase. The austere funding environment contributed to the collapse of fintechs such as Synapse, the banking-as-a-service startup whose bankruptcy has impacted the finances of millions of customers.

To help lay the groundwork for expansion into new spaces, including spend management, crediting and financial APIs, Relay this week closed a $32.2 million Series B round led by Bain Capital Ventures with participation from BTV, Garage, Industry Ventures and Tapestry. The new cash brings the startup's total raised to $51.6 million.

"We chose to raise because of our growth rate," West said. "To truly get predictive cash-flow analytics, SMBs need a unified view of the inflows and outflows of cash across their back office. Relay is building towards that vision ... In the future, the platform will make smart recommendations to small businesses based on what is happening in their entire back office."

Relay, which is based in Toronto, plans to grow its workforce from 140 people to 200 by the end of the year.