Treasury Prime Gets $40M Vote of Investor Confidence in Embedded Banking’s Marketplace Model

Two years ago, banking-as-a-service (BaaS) provider Treasury Prime, then a startup, raised $20 million.

And Wednesday (Feb. 1), the company’s embedded banking marketplace model — which brings banks, FinTechs and enterprises together to boost revenues, deposits and reach new end users — got another $40 million vote of confidence.

Chris Dean, CEO of Treasury Prime, told Karen Webster that back in 2021 as the pandemic took root, banks were ready to reexamine their business models.

“What we saw back then,” Dean told Webster, “was that there was an ‘aha’ moment for many banks. They said, ‘Oh, wait. The internet’s real, and I don’t have to have branches everywhere.’”

That realization, said Dean, opened the door for banks to bring their compliance and financial service expertise to software platforms (Treasury Prime’s among them), and in doing so power innovation for FinTechs and enterprises alike.

That 2021 capital raise, it should be noted, was done entirely with existing investors. In Dean’s telling, it was done “entirely to build out the bank network, because we thought, ‘Now’s the time to strike while the iron’s hot.’”

Triple Digit Growth Rates

Through the ensuing two years, Treasury Prime’s account growth rate topped 450%, and revenue growth has neared 400%.

The iron’s still hot.

Treasury Prime said on Wednesday that it raised $40 million in Series C funding from existing — and some new — investors. The round was led by BAM Elevate with investment from Banc Funds and Invicta as well as continued participation from Series B investors Deciens, QED and SaaStr.

Dean noted to Webster that the company will be expanding its network, which currently has 16 banks, and will develop new products and services.

At a high level, the logistics and economics behind the platform model can be likened to a virtuous cycle, even amid a pandemic, and even as a recession looms.

“More banks means more FinTechs — and that means more revenue for us,” he said. The platform model, he said, helps enterprise clients offer an ever-broadening range of financial services that, as has been noted in past interviews, creates new opportunities for FinTechs and even SMBs. For Treasury Prime, the focus right now will be on adding to the roster of banks on its platform.

“In five years,” he said, “there will be a trillion dollars in deposits controlled by enterprise FinTechs in the U.S. — and right now that number is at about only $100 billion.” Those deposits, he said, are not going to be all housed at one bank, or even a handful of them; they’ll be spread out across the U.S, ranging from large banks to super-regionals all the way down to community banks.

“The best enterprises,” he said, want the best banking partners. “And we’re going to find the best banks,” he said. Through the next year or two, Treasury Prime will seek to add about a dozen more banks to its platform.

Looking into 2023 and beyond, he said that there may be a shakeout among many BaaS providers. But in the meantime, he said of Treasury Prime, “We’ve ‘productized’ how to turn on a new bank, and to ‘turn on’ a small FinTech at a bank. … The more complex players, with $800 million in deposits, well, they want to spread across several banks in order to conduct complicated flows of funds.”

The majority of FinTechs and banks connecting on the platform and through Treasury Prime’s API are focused on embedded banking. The common API, he said, enables several banks and FinTechs, of varying sizes and product specialization, to “talk” to one another and embed new features.

A software-as-a-service provider serving the construction industry, he said, knows that vertical better than a bank ever will, and can find value in delivering bank account functionality to large builders so that they can move money in and out to clients as projects are completed and certain milestones are satisfied.

“Many of these businesses are cash flow sensitive,” he said, “and they need that to have 100% visibility,” he said, as they operate their businesses and interact with vendors, suppliers and end users.

As 2023 winds on, and with the $40 million in fresh funding in hand, Dean said that the company will be adding more product specialists and engineers. Treasury Prime is seeing particular demand for its instant, multibank transfer that moves money in milliseconds.

“We’re a software company that’s running a marketplace,” he told Webster of Treasury Prime’s ambitions to scale in the months and years ahead, “and when you have these multisided networks, it’s more valuable as you get bigger.”