Business is booming.

Atomic lands $40M in funding, just five months after its Series A, to connect banks and fintechs to consumers’ paychecks – TechCrunch

Atomic, a provider of payroll APIs, has raised $40 million in a Series B funding just five months after announcing its series A financing.

Mercato Partners and Greylock co-led Atomic’s latest round, which the company described as “preemptive,” meaning that it was not technically seeking to raise but rather was approached by investors. It has now raised just under $80 million in total equity.

The Salt Lake City, Utah-based company’s API-delivered product, which focuses on payroll data, powers 70 banks, credit unions and fintech companies such as Coinbase, Dave and Propel. Atomic says it now serves more than 120 million Americans, or 75% of the country.

Put simply, the startup’s APIs provide the infrastructure to connect consumers to their financial data for verification of income and employment, automating setup and updating of direct deposits, repaying financial obligations from their paycheck, optimizing tax withholdings and accessing earned but unpaid wages. Its technology allows people to “securely” access their payroll data with passwordless authentication, the company says.

While it declined to reveal hard revenue figures, the company says its revenue grew 19.5x in 2021, up twentyfold from the fourth quarter of 2020, roughly when its first solution started generating revenue. December 2021 saw monthly revenue increase 342% compared to December 2020, roughly when Atomic’s first cohort of customers went live.

The company’s head of markets, Lindsay Davis, told TechCrunch in an interview that Atomic operates under the premise that digitizing payroll connectivity “turns an inefficient cumbersome process” like applying for a mortgage “into a friction-free everyday experience.” 

When it comes to direct deposit acquisition, Davis believes Atomic was among the first in the market to provide that for large neobanks. 

“And now others of course have built that functionality as well but because that was our primary focus, we delivered a best in category experience with higher conversion rates when benchmarked to other solutions,” she explained. “And that is appealing because from there we build other use cases with our customers.”

For example, a company building in the rent space asked about the possibility of allowing people to repay obligations out of their paycheck.

“As they went to market and raised, we could tell them that was absolutely possible instead of the founder spinning his wheels,” Davis said. “We want to work really collaboratively with all our customers.”

Atomic must be doing something right. Davis said it so far has “100% customer retention.”

She believes the company’s success thus far lies largely in what she describes as its “white-glove service.”

“We spend a lot of time as a team thinking through what the customer journey is, and then sharpening our own ability to ship a product that is commensurate with what a user would expect,” Davis said.

While direct deposit is mostly a fixed experience, Atomic is also building out a SaaS platform to address things like being able to authenticate into a system.

“With permission to have access to a linked account, you’re going to have persistent access to the data,” Davis said. For example, in a scenario where a consumer is getting a mortgage, that consumer has historically had to log back in frequently to get access to an employment indicator. 

“But with Atomic, you’d be able to have that persistent access so you don’t have to keep bothering the consumer since they have already permissioned it,” she said.

Davis says the company is also selective about who it works with.

“We want our product to be used in a positive way. So if someone is trying to charge an offensive interest rate and wants to use our auto pay product, we won’t work with them,” she said. “We had somebody brag about charging 2,000% interest rates -– which you can do in this country — and our CRO straight up hung up on him.”

When the startup last raised, the company told my colleague, Alex Wilhelm, that Atomic does not currently compete with Plaid, perhaps the best-known provider of financial APIs, according to Davis.

At the time, Alex wrote: “Plaid’s products are used for linking consumer banking accounts to financial services and products. In contrast, Atomic focuses on income streams, allowing them to be partially or completely diverted to new financial buckets, or simply made observable to other parties with user permission for verification purposes.”

The company plans to use its new capital to keep hiring and continue to build out its offerings.

Meanwhile, Atomic’s investors are naturally bullish on the company’s future.

Ryan Sanders, managing director at Mercato Partners’ Traverse Growth Fund, said he loves Atomic’s vision “to build more on-ramps to financial services and become the dominant infrastructure layer that connects fintech companies and banks to consumers and their paychecks.”

Greylock Partner Josh McFarland, whose firm first invested in Atomic in 2020, believes that by homing in on the data “trapped” in people’s paychecks, Atomic “has created the future of financial services.”

Core Innovation Capital, Portage and ATX Venture Partners also participated in the Series B financing.

My weekly fintech newsletter is launching soon! Sign up here to get it in your inbox.

Source link

Comments are closed, but trackbacks and pingbacks are open.