YC-Backed Seed Wants To Reinvent Business Banking

Seed thinks that business banking is opaque, expensive, and behind the times. The company, which is part of the Winter 2015 Y Combinator class, wants to shake up banking, bring it into the API era, and rip out unnecessary fees to make it, according to its CEO Brian Merritt, as “easy as possible to start and manage a business.”

Merritt and his co-founder Ryan Hildebrand are both former Simple denizens, a consumer-facing banking tech firm that sold in 2014 for more than $100 million.

The company has operated in stealth for some time, but is walking out of the shadows today to launch a banking API that will allow its early beta customers — its service is currently only available in the United States — to integrate Seed’s financial services into their own set of apps and tools.

What the hell is a banking API? It’s the set of programming tools that Seed will use to build its own set of first-party clients. In short, Seed is releasing the digital structure that it will employ when it builds Seed apps for the browser, and smartphones.

Seed expects to ship its own clients in the next three to six months, according to its CEO.

I caught up with Merritt at the TechCrunch office to kick over the company’s launch, and raison d’être:

Seed is not a bank, a technical term that comes with heavy regulatory structure. Instead, it’s a banking service that sits on top of an extant bank. That doesn’t mean that Seed doesn’t offer normal bank bits, like deposit insurance. In fact, instead of offering the normal $250,000 in FDIC insurance, Seed will insure up to $50 million.

The company, noting its initial launch in a post today, promises “free domestic wire transfers, free ACH transactions, free check sending, and low-cost international payments.” Seed will charge on a recurring basis, like many other business-facing startups.

Oddly enough, while Silicon Valley is the place where much of the digital world is invented, the core guts of finance and capital in the area are often neolithic. While there might be some romance to opening an account with Silicon Valley Bank, I doubt the magic lasts too long.

Seed is a young company, hoping like dozens of other startups to make a splash at the coming Y Combinator demo day. Currently accepting new business users on a case-by-case basis, Seed has an artificially constrained growth rate. Presuming that its core premise that business banking needs to jolt several decades into the present, however, Seed shouldn’t want for initial customers.

And given that it wants to cater to growing companies, the firm has a perfect backyard of companies to get onto its platform while young — Y Combinator is not known for incubating aging corporate incumbents, after all.

It will be interesting to see whether Seed poaches en masse from Simple’s current and former ranks, and how quickly it raises additional capital. If it can pull off both, the company might be on a decent path to hope for another nine-figure exit.