The next generation of small business owners, freelancers and gig workers have grown up using platforms like Venmo and other instant payments, giving them some expectations when it comes to the payments experience.
“This new generation of workforce talent has grown accustomed to instant payment transfers in their personal lives, and now they want those same fee-free, fast services for their businesses,” Reed Switzer, CEO and co-founder of Hopscotch, told PYMNTS.
Hopscotch is a startup that aims to meet that need by facilitating instant, fee-free business-to-business (B2B) payments for small businesses and startups. On Tuesday (March 8), the company announced the launch of its private beta in tandem with a $6.1 million seed extension that brings its total funding to $9.95 million.
Reducing Friction in B2B Payments
Switzer said the need for services like Hopscotch has been increased by the pandemic, which has led to a lot of businesses being cash-strapped while also forcing them to move from traditional payment methods to ones that are more suited to the digital world.
“The reason Hopscotch, I think, is needed is twofold,” Switzer said. “The first is that businesses should be able to operate without having to wait or pay to access money that they’ve earned. And then, No. 2, a lot of small business owners just want to go in, and they want to get paid and pay with as little friction as possible.”
Aiming to Serve Tech-Savvy SMBs
Hopscotch aims to serve small- to medium-sized businesses (SMBs) with one to 15 employees in the business services space — marketing, advertising, public relations agencies and other small entities that are primarily serving other businesses.
Switzer said these entities tend to be tech-savvy and aren’t interested in complex payment platforms that larger enterprises use.
“Our users come on our platform, they manage their accounts receivable and payable through us on a day-to-day basis, and they can integrate with QuickBooks and other [business software] providers to that everything is automatically reconciled for them without them having to lift a single finger,” Switzer said.
Building Upon Learnings From Small Businesses, Startups
The company announced its initial funding in October and invited its first group of pilot users on board in February. It’s been working with them to fine-tune its platform ahead of its full beta launch, which is expected in April.
Switzer’s own experiences in small businesses and startups led him to see this need in the market, which he set out to provide with Hopscotch.
While working on building his own brand in the apparel space, Switzer spent two years learning logistics, supply chain management and other skills. He then joined a startup that was building a music streaming service and spent three and a half years involved in all the daily activities of that company.
“So, from the learnings in the apparel space and the startup, that’s what seeded the idea for Hopscotch,” Switzer said.