Rize raises $11.4M to scale its embedded fintech service

Rize, a fintech-as-a-service company that provides services to other firms, announced an $11.4 million Series A this morning. The funding event was led by Alpha Edison and Morpheus Ventures. A number of the startup’s prior backers also participated in the round.

Rize is an interesting company in a competitive space; the market for building financial technology products for use by customers enjoys a great number of players. Rize hopes to compete by allowing its customers to leverage a single API for more than one account type, unifying its offering to a single developer hook.

More importantly, Rize has built something that it calls “synthetic accounts.” For those of us who last heard the word “synthetic” in a financial context attached to the phrase “CDO,” this may sound concerning. It’s not. Instead, synthetic accounts allow Rize to provide customers of its banking services a way to create a unified account for end users not tied to a single custodial account type. In practice, synthetic accounts allow Rize to offer end users (the customers of its customers) the ability to combine different custodial accounts (checking, brokerage) into a single experience.

Per a white paper from Rize, by offering a single “synthetic account core,” its customers can create a more cohesive and programmable financial experience for end users. And the synthetic account system will allow Rize customers to add more services to their financial technology offerings as Rize itself expands its feature set.

Morpheus Ventures’ Howard Ko brought up the company’s synthetic account work in a statement to TechCrunch, saying that it was that feature of its service that “attracted” his firm to the startup, as it “essentially abstracts all the plumbing required to develop a broad spectrum of fintech products and services that developers are looking to build into a simplified singular API connection.”

In an interview with senior leadership, Rize told TechCrunch that it has built a compliance management system into its product, likening compliance work to logistics in the e-commerce world — something critical that is both complicated and not a task that folks relish taking on. Rize wants to alleviate a chunk of that burden, potentially smoothing the path for businesses to select its offering over those of rival banking-as-a-service players.

Rize has completed the core banking pieces of its product — the startup we see today is the result of a B2B pivot from B2C roots — with brokerage support coming next. New capital should help the company expand its product mix.

Notably, Rize’s leadership told TechCrunch that it wound up raising its Series A earlier than it anticipated. The startup had expected slower market traction, it said, but greater-than-anticipated demand meant that Rize had larger human capital needs. So, external funds were the obvious choice.

Rize executed its B2B pivot with a team of around 15, expanding to just over 30 today. The company expects to have nearly 50 staff by the end of the year.

Eventually, there will be consolidation in the banking-as-a-service, or BaaS, space. But we likely won’t see that wave crest until there’s less white space for startups to eat into. And by the time that that occurs, startups like Rize will hope to be on the acquiring side of the equation. Let’s see how quickly Rize can scale both customer and revenue volume with this Series A.