In Africa, chartering vessels and processing ocean freight can be challenging. The sector is largely inefficient and fragmented. Merchants also struggle to access finance to perform cross-border trade in the continent. A couple of digital freight companies are tackling this problem, like Nigerian-based MVX. The company today is announcing its $1.3 million seed round to bolster its efforts.

Tonye Membere-Otaji thought about the idea for MVX in 2016. Having worked in the maritime industry (running his family business and in a professional capacity building apps and websites for companies), Membere-Otaji was intrigued by how no online marketplace for vessels existed. 

“I decided to figure out how to solve that problem of finding vessels because there were too many intermediaries, which made processes difficult,” he told TechCrunch. However, a few issues relating to not having the right team to build out the product stalled the company’s progress. In 2019, Membere-Otaji finally launched the company with CTO Tobi Amusan after securing a $100,000 pre-seed investment from Oui Capital, a pan-African VC firm.

The company was called MVXchange at first. Its business model revolved around providing a support vessel booking platform that matched vessel chartering requests made by operators with available Offshore Support Vessels (OSVs). 

But in March 2020, the company made a sharp pivot and tweaked its model. CEO Membere-Otaji cites uncertainty of oil prices and the pandemic as reasons behind the decision. 

“We couldn’t see ourselves doing vessel chartering for the long term because the demand for fossil fuels will definitely reduce over the next few decades. We wanted to do something scalable, something that was impactful, and something that we could be proud of in the next 20 years,” he added.

What followed was the launch of MVXtransit, a digital freight booking platform, helping cargo owners find deals on moving containers across Nigeria. This April, the company launched MVXpay, a finance and payment solution to provide trade finance for freight operators. However, both offerings are now rolled into one: MVX.

According to the CEO, MVX wants to make freight shipping and trade finance easier for African businesses by bringing booking and deployment processes online. The startup has expanded beyond Nigeria and claims that merchants from the West African country, as well as Kenya, South Africa, Ghana and Rwanda, can use its platform to move freight in and out of their countries.

MVX charges a commission for the services provided, including trucking, warehousing, shipping, and cargo stuffing.

“We make it easy and convenient for businesses. Instead of trying to do everything themselves, which can be chaotic and cause distraction from their core businesses, we handle everything because we have all these service providers in one platform. So as shippers work with us, MVX works with like seven to 10 other service providers,” said Membere-Otaji.

The market for cross-border logistics services is said to hit revenues of $32 billion by 2025. Multiple companies are needed for the market to reach its full potential. That has been the case, and investors are noticing too. For instance, Ghana’s Jetstream offers a similar service and raised $3 million two months ago. SEND is another example; YC backs the startup.

However, what stands out for MVX, according to Membere-Otaji, is that the company also sees itself as a trade finance company.

The concept brings together the best of both worlds of fintech and trade. So the way it works is that with merchants looking to move shipments from Africa to the U.S. or China, some lack adequate capital to pay for freight or supply. With MVX, they can proceed to request credit. MVX passes it over to its financial partners, who lend to the consumers if they meet the minimum requirement. Next, MVX takes care of the shipment and delivers it abroad. Once the transaction is done, the merchant pays back, with all partners taking commissions.

“Our job really is to empower trade in Africa, and freight is a means to that. From every step involved in that process, from providing trade and finance to warehousing to payments processing, we want to play in all that space. There aren’t a lot of companies with that trading finance element doing that like us. And also, we see a huge potential in the offline market. Right now, the reason why we have this problem is that transactions are offline. Our strategy in capturing offline markets is also key.”

The pan-African freight company has already recorded more than 300 shipments this year but plans to end with 1,500. Per revenue and traction, the CEO claims the company has surpassed its 2020 numbers.

MVX raised money for its seed round from Africa-focused firms Kepple Africa, The Continent Venture Partners, Founders Factory, Launch Africa, and Capital Oak. Some angel investors in the U.S., Japan, Nigeria, and South Africa also participated. The two-year-old startup will use the investment to scale its operations, hire staff and improve its technology. MVX is also talking to investors to raise more money, most likely debt, for its trade financing product.

In a statement, Satoshi Shinada, general partner at Kepple Africa, said, “The trade sector in Africa is one that we believe is ripe for disruption. MVX is building a game-changing technology and platform to revolutionize how businesses in Africa move shipment and trade around the world.”

Data science platform Dataiku announced today it has raised a $400 million Series E, bringing its valuation to $4.6 billion. The round was led by Tiger Global, with participation from returning investors like ICONIQ Growth, CapitalG, FirstMark Capital, Battery Ventures, Snowflake Ventures and Dawn Capital.

New investors included Insight Partners, Eurazeo, Lightrock and Olivier Pomel, the chief executive of Datadog.

Dataiku’s last round of funding was a $100 million Series D in 2020.

Founded in 2013, Dataiku is used by data scientists, but also designed for business analysts and other people with less technical backgrounds. The platform lets companies design and deploy AI and analytics apps, turn raw data into advanced analytics and design machine learning models. It’s been used for a wide array of use cases, including fraud detection, customer churn prevention and supply chain optimization.

The company now has about 450 enterprise clients, including Unilever, Merck, GE, Ubisoft and NXP.

In June, Dataiku launched a fully managed version of the platform called Dataiku Online, which means the company takes care of setup and infrastructure. Co-founder and CEO Florian Douetteau told TechCrunch at the time Dataiku Online is focused on getting more startups and SMBs onto the platform.

In a statement about the investment, Tiger Global partner John Curtius said, “We’ve seen that executing an AI strategy in which data is part of day-to-day operations can have large-scale impact for organizations across sectors and sizes, and Dataiku is well-positioned to continue to help the enterprise realize this potential value given both the strength of their technology and the team.”

Though 2021 is far from over, it’s already witnessed a record level of venture capital activity in the technology sector. With larger round sizes announced daily, founders may have their pick of term sheets — but they need to think critically and strategically about which firms to add to their cap table.

So far this year, we’ve seen $292.4 billion in venture financing across the globe, of which $138.9 billion was raised in the United States. Specific to tech companies, the capital is only accelerating: In Q2, founders raised 157% more capital compared to the same period last year, according to the latest data from CB Insights.

It’s not just that more companies are raising money — they are doing so at a higher valuation. Median seed and Series A stage valuations today stand at $12 million and $42 million, respectively, up 20% to 30% from 2020. This can be partly attributed to growing exits/M&A activity in the technology sector, a record number of IPOs and a general bullishness around technology, as well as low interest rates and liquidity in the market.

At a time when we are witnessing record VC activity, founders would be well served to go back to the basics and focus on the principles of fundraising when determining who sits on their cap table. Here are a few pointers for founders in that direction:

1. Value > valuation

Good VCs who are aligned with a startup’s vision create more value than the dollars they bring to the table. Typically, such value is created across a few distinct functions — product, sales, domain expertise, business development and recruiting, to name a few — based on the background of the partners of the fund and the composition of their limited partners (investors in the venture fund).

Further, the right VC can serve as an authentic, objective sounding board for CEOs, which can be an asset to have as a startup navigates uncertainty and the typical challenges that come with scaling a young company. As founders assess multiple term sheets, it’s worth thinking through whether they should optimize for VCs who offer the highest valuation, or for ones who bring the most value to the table.

2. A two-way street

Running an efficient fundraising process, in part, entails holding VCs accountable to their own diligence requests. While it is unfortunately common for VCs to request a lot of data upfront, startups should share information after assessing intent and appetite on the investors’ part.

For every additional data request, founders are well within their rights (and should) check with their potential investors on where the process stands and get indicative timelines for moving forward with next steps. Mark Suster said it best: “Data rooms are where fundraising processes go to die.”

What’s the board’s role in an early-stage startup?

Startup founders frequently ask me about the role of a board of directors. A board can be a crucial asset in an early-stage startup.

Here’s a framework for how it can help drive success at your company: Strategy, People, Image, Finance and Systems for compliance, or “SPIFS.”

What is a board of directors, anyway?

The board of directors helps with governance of the company. U.S. law requires that any company have one, though does not require how big it should be. By generic definition, the board of directors consists of elected individuals that represent shareholders. It is the governing body that provides company oversight and helps set business policy and strategy.

On a more practical level and in a startup environment, the board can aid in creating a successful business strategy, putting together the right management team, developing branding, building good financial habits, and avoiding legal and compliance issues. The needs and composition of the board will change depending on the startup’s stage, management and financing history (e.g., if there are preferred shareholders, investors that require a board seat and more).

Investors often ask founders about their board for two reasons. First, it says a lot about their character, their judgment and their willingness to be challenged. The founder can typically choose who is on their board (through careful selection of investors and advisers) and negotiate a board structure they prefer.

Typically, a healthy board will have a good balance between common shareholders, preferred shareholders and independents. It also helps investors and analysts understand who will ask critical questions and give important advice to the company’s executive management, especially when the going gets tough (it inevitably does!).

What exactly can a board help you do?

After 20 years as a venture capitalist and board member, I boiled down the value of a board into five main pieces under the acronym SPIFS: Strategy, People, Image, Finance and Systems for compliance.

Strategy

Setting business strategy is one of the main ways that the board helps founders, especially if it’s their first time running a business. It is a valuable sounding board for validating that you have taken a sober account of the market and have the right plan to develop your product and acquire customers.

The board should ask these questions when guiding founders through setting strategy:

The future of technology is determined by a handful of venture capitalists. The world’s 10 leading venture capital firms have, together, invested over $150 billion in technology startups. The venture capitalists who run these firms decide which startups today will develop the new platforms and technologies that will shape our lives tomorrow.

There is a startling lack of diversity within the venture capital sector. This means that a small group of men — mostly white men — make decisions that affect all of us. Unsurprisingly, they all too often ignore the broader societal and human rights implications of these investment decisions.

We all live in a world shaped by venture capital. As of 2019, 81% of all venture capital funds worldwide are clustered in just a handful of countries, primarily in the U.S., Europe and China, which in turn are shaping the future of technology. If you spend time on Facebook or Twitter, use Google, travel in an Uber or stay in an Airbnb, then you’ve experienced firsthand the impact of venture capital funding.

Venture capital firms, which provide equity financing for early- and growth-stage startups, play a critical gatekeeper role, deciding which new technologies and technology companies will receive funding.

All businesses — including venture capital — have a responsibility to respect human rights. In order to ensure that their investments are not undermining our human rights, it is therefore critical for venture capital firms to conduct due diligence processes before making investments.

Amnesty International recently surveyed the world’s largest venture capital firms and startup accelerators. Of the world’s 10 largest venture capital firms, not a single one had an adequate human rights due diligence process that met the standards set forth in the UN Guiding Principles on Business and Human Rights.

Unfortunately, this is true of the broader venture capital sector as well. Overall, of the 50 VC firms and three startup accelerators analyzed by Amnesty International, we found that almost all of them lacked adequate human rights due diligence policies and processes.

This failure to carry out adequate due diligence means that a vast majority of VC firms are failing in their responsibility to respect human rights.

This almost complete lack of respect for human rights among the world’s largest venture capital firms has three key impacts. First, and most immediately, it means that venture capital firms invest in companies whose products and services have been implicated in ongoing human rights abuses, such as companies that provide support to the Chinese government’s repression of the Uyghur population in Xinjiang and across China.

Second, it means that venture capital firms continue to fund companies whose business models have a significant negative impact on human rights, including our privacy and labor rights. For instance, leading venture capital firms continue to support companies that rely on app-based or “gig” workers, who often face exploitative or otherwise abusive work conditions, as well as companies whose “surveillance capitalism” business model undermines our right to privacy.

Third, the lack of human rights due diligence by venture capital firms dramatically increases the risk that they fund new and “frontier” technologies without ensuring that adequate human rights safeguards are in place.

For instance, the application of increasingly powerful artificial intelligence/machine learning (AI/ML) tools across a wide variety of sectors risks amplifying existing societal biases and discrimination. Seemingly objective algorithms can be biased by reliance on incomplete or unrepresentative training data, and/or by replicating the unconscious bias of those who developed the algorithms.

This is a critical blind spot, especially as VC-funded startups seek to disrupt such fundamental parts of our lives as education, finance and health.

The negative impacts of the VC firms’ lack of human rights due diligence — especially regarding issues like algorithmic bias — are magnified by these firms’ own lack of gender and racial diversity. For instance, women comprise only 23% of venture capital investment professionals (i.e., those involved in deciding which startups to fund).

The numbers are even worse when it comes to racial diversity — just 4% of investment professionals at VC firms in the U.S. are Latinx, and only 4% are Black. Groups like Blck VC, Diversity VC and digitalundivided have been calling attention to this issue for years, but venture capitalists have been slow to respond so far.

This lack of diversity is mirrored in the gender and racial composition of founders who receive VC funding. In 2018, all-female founding teams received just 2.2% of all U.S.-based venture funding. At the same time, Black and Latinx founders received less than 2.3% of all U.S.-based venture capital funding in 2019.

With power comes responsibility. Venture capital firms need to institute human rights due diligence processes that meet the standards set forth in the UN Guiding Principles on Business and Human Rights.

Further, they should provide support to their portfolio companies to ensure that they comply with human rights standards. Venture capital firms should also publicly commit to hiring more diverse teams, especially in investment-related positions. Finally, they should publicly commit to funding more diverse startup founders as part of their flagship funds.

VC firms have a responsibility to ensure that their investments are not causing harm. A responsibility that they have, to date, largely ignored.

Japanese startup ispace has raised $46 million in a fresh round of Series C funding as it looks to complete three lunar lander missions in three years.

The funding will go toward the second and third of the planned missions, scheduled for 2023 and 2024. The first mission, which ispace aims to conduct in the latter half of 2022, is being furnished by earlier financing.

The Series C was led by Japanese VC firm Incubate Fund, with additional investment from partnerships managed by Innovation Engine, funds managed by SBI Investment Co., Katsunori Sago, Aizawa Investments and funds managed by HiJoJo Partners and Aizawa Asset Management. Incubate Fund’s investments in ispace stretch back to the company’s seed round in 2014.

Ispace’s total funding now stands at $195.5 million.

The company said last month it had started building the lunar landing flight module for the 2022 mission at a facility owned by space launch company ArianeGroup, in Lampoldshausen, Germany. The lander for that first mission, the Hakuto-R, will take three months to reach the moon, largely to save costs and additional weight from propellant. It will deliver a 22-pound rover for Saudi Arabia’s Mohammed bin Rashid Space Center, a lunar robot for the Japan Aerospace Exploration Agency and payload from three Canadian companies. The lander will reach the moon aboard a SpaceX Falcon 9 rocket.

The 7.5 foot-tall Hakuto-R will also be used in the second mission in 2023, to deposit a small ispace rover that will collect data to support the company’s subsequent missions to the moon. For the final mission, the Toyko-based startup is developing a larger lander in the United States.

Ispace describes its long-term goal as being a “gateway for private sector companies to bring their business to the Moon.” The company has particular interest in helping spur a space-based economy, noting on its website that the moon’s water resources represent “untapped potential.”

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

I’ve been working on an H-1B in the U.S. for nearly two years.

While I’m immensely appreciative of my company’s sponsorship and that I made it through the H-1B lottery and am working, I’m stuck in a rut. I really want to start something of my own and work on my own terms in the United States.

Are there any immigration options that would allow me to do that?

— Seeking Satisfaction near Stanford

Dear Seeking,

A couple of exciting immigration news updates to get us started today! In breaking startup founder news, U.S. Rep. Zoe Lofgren (D-CA) introduced the LIKE Act for startup founders in the House of Representatives last week. Below, we’ll share what this could mean for your startup aspirations. Also, U.S. Citizenship and Immigration Services (USCIS) conducted a second H-1B lottery because it didn’t receive enough H-1B petitions to meet the annual cap. So, if you or your employer were selected, be sure to file an H-1B petition by November 3.

Although job dissatisfaction and frustration on an H-1B can be normal, according to Edward Gorbis, there’s a lot you can do to take control of your U.S. immigration situation and go out on your own. I interviewed Gorbis for my podcast; he’s the founder of Career Meets World and a performance coach who works with immigrants and first-generation professionals to help them find fulfillment and thrive in their careers and life. Gorbis said that “once immigrants reach stability, they start to think, ‘Who am I, what do I value, what’s my core identity?’” It’s possible for any of us to retrain our brain for success.

Gorbis said that imagining overcoming the hurdles that stand in the way of doing the work that will fulfill you is the first step. So, here are some options that can help you imagine how to build the life of your dreams.

Become a founding CEO and raise $250,000

A great new option for aspiring entrepreneurs is International Entrepreneur Parole (IEP), a new immigration program in the United States that allows CEOs, CTOs and others to live in the U.S. and run their company for 2.5 years with an option for a 2.5-year extension. Your spouse can obtain a work permit.

How to qualify? You need to own at least 10% of a U.S. company, such as a Delaware C corporation registered in California. Ideally, you’ll want to show that your company bank account has at least $250,000 raised from qualified U.S. investors, but you can use other evidence to demonstrate that your company has the potential to grow rapidly and create jobs in the U.S.

A startup visa and path to a green card may be soon on the way for entrepreneurs and their crucial employees: Last week, Lofgren introduced the Let Immigrants Kickstart Employment (LIKE) Act. The requirements for the proposed startup visa are the same as for IEP but would allow a longer stay — up to eight years total if the startup creates jobs and generates substantial revenue.

I’m very proud to have aided in drafting the LIKE Act. It’s a thrill to see how my suggestions were included, such as making Startup Green Cards not subject to the visa bulletin, clarifying that you can seek consecutive Startup Visas from different companies, how to allocate employee visas to startups, ensuring the Startup Visa is a dual intent status, and adding premium processing. It was such a joy to be able to contribute ideas to this amazing process. I look forward to supporting this bill to become a law; please reach out to me if you want to support this worthy cause.

See yourself at another company

There is technically no limit to how many H-1B employers you can have or how many — or few — hours you work in an H-1B position. So, think about other companies.

One option would be to have concurrent H-1Bs: Keep your current H-1B job for stability and start your own company, preferably with another individual or two, and have your startup sponsor you for an H-1B. Take a look at this Dear Sophie column for what to do before embarking on this path.

Another option would be to transfer your H-1B to another employer, or your own startup if you are going to work there. Since you already went through the H-1B lottery with your current employer, you will not have to go through the lottery process again for a second H-1B whether you choose the concurrent or transfer option.

Setting up a startup that can sponsor you for an H-1B is complicated, so I suggest you work with both a corporate attorney and an immigration attorney. Keep in mind that you will not be able to do any work for your startup until an H-1B with your startup has been approved, which is why having co-founders is helpful. Another reason is H-1Bs require an employer-employee relationship between a startup and the H-1B candidate. That means a co-founder — or the startup’s board — must supervise you and have the ability to fire you. Moreover, we often advise founders that it may be best to own less than a 50% stake in the startup when applying for an H-1B.

Consider a green card

If you end up pursuing concurrent H-1Bs, consider asking your employer whether it is willing to sponsor you for a green card. If that’s not the case, your startup can sponsor you for one, or you can self-petition for a green card:

All EB-2 green cards — except the EB-2 NIW — and the EB-3 green card require labor certification approval (PERM) from the U.S. Department of Labor. The two green cards that allow an individual to self-sponsor are the EB-1A and EB-2 NIW.

Imagine yourself doing gigs in your field

Many startup founders qualify for an O-1A extraordinary ability visa. However, you cannot have both an H-1B and an O-1A at the same time, so if your startup sponsors you for an O-1A, you will be required to leave your current H-1B job once an O-1A is approved.

An O-1A offers more flexibility than an H-1B. You can work for a single petitioning company or on multiple gigs through an agent. However, qualifying for an O-1A is more difficult than an H-1B. Resources, such as through my firm, support people with getting qualified. The one similarity with the H-1B is that you must show your startup and you have an employer-employee relationship.

Invest in your own company

The E-2 visa for treaty investors and employees is ideal for startup founders whose home country has a treaty of commerce and navigation with the U.S. Here is a list of treaty countries. For more details on E-2 visas for founders and employees, check out this previous Dear Sophie column and podcast episode.

Although there is no minimum dollar amount that a founder must invest in a startup to qualify for an E-2, we often advise founders to invest at least $100,000 to have a strong case. You cannot have both an H-1B and an E-2, so you will need to leave your current H-1B job if your E-2 is approved.

An immigration attorney can offer additional options based on your personal circumstances and legal advice tailored to you.

Enjoy the journey of building your dreams!

Sophie

Have a question for Sophie? Ask it here. We reserve the right to edit your submission for clarity and/or space.

The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!

Less than six months after raising $55 million in a Series C round of funding, SMB 401(k) provider Human Interest today announced it has raised $200 million in a round that propels it to unicorn status.

The Rise Fund, TPG’s global impact investing platform, led the round and was joined by SoftBank Vision Fund 2. The financing included participation from new investor Crosslink Capital and existing backers NewView Capital, Glynn Capital, U.S. Venture Partners, Wing Venture Capital, Uncork Capital, Slow Capital, Susa Ventures and others. 

Over the past year, the San Francisco-based company has raised $305 million. With the latest financing, it has now raised a total of $336.7 million since its 2015 inception.

The company admittedly has an IPO in its sights, as evidenced by the appointment of former Yodlee CFO Mike Armsby to the role of CFO at Human Interest. It’s targeting a traditional IPO sometime in 2023, with execs saying the target is to have “$200 million+ in run-rate revenue before going public.” Currently, it’s at “tens of millions of run-rate revenue” now, and adding millions of new revenue each month.

Human Interest’s digital retirement benefits platform allows users “to launch a retirement plan in minutes and put it on autopilot,” according to the company.  It also touts that it has eliminated all 401(k) transaction fees.

Demand for 401(k)s by SMBs appears to be at an all-time high, with Human Interest reporting that its sales tripled over the last year. The company has also more than doubled its headcount over the last 12 months to 350 employees.

The startup said it is seeing strong adoption in verticals that have not previously had retirement benefits, including construction, retail, manufacturing, restaurants, nonprofits and hospitality. For example, over the past three quarters, Human Interest has seen 4.5x customer growth in the restaurant sector. Since the start of the pandemic, Human Interest has experienced 2x higher enrollment growth among hourly workers than salaried workers, and hourly worker assets have tripled.

“Promoting financial health is a core investment pillar for The Rise Fund. Human Interest delivers one of the most compelling solutions to the persistent problem that roughly half of Americans will not have enough savings when they reach retirement age,” said Maya Chorengel, co-managing partner at The Rise Fund, in a written statement. “Despite recent legislation, primarily at the state level, legacy programs have not, to date, produced the same participant outcomes as Human Interest.”

The company said it will be using its new capital to expand its network of integrations and partnerships with financial advisers, benefits brokers and payroll companies. It also expects to, naturally, do some hiring –– another 200 employees by year’s end, primarily in its product, engineering and revenue teams.

The 401(k) for SMB space is heating up as of late. In June, competitor Guideline also raised $200 million in a round led by General Atlantic. 

Additional details around the IPO and revenue were added post-publication.

The global venture capital bet on neobanks is massive. London-based Starling Bank has raised more than $900 million, per Crunchbase. The same data source indicates that Chime has raised $1.5 billion. Monzo has raised nearly $650 million. And the list goes on: E-commerce-focused neobank Juni raised $21.5 million last month. Novo, an SMB-focused neobank, raised $41 million in June. Nubank has raised $2.3 billion. And FairMoney has locked down more than $50 million.

On and on and on.

The Exchange explores startups, markets and money.

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.

But despite our general inclination to lump banking-focused fintech providers that serve consumers, business customers or both into a single bucket, there’s wide divergence in how the various neobank players are performing in the market.

Back in August 2020, The Exchange noted that many neobanks were racking up steep losses. Our read at the time was that the capital being poured into the fintech category was being invested aggressively in the name of growth. Based on recent results, that view is holding up.

But not all neobanks are the unprofitable enterprises that they once were. Chime indicated in September 2020 that it generates positive, unadjusted EBITDA. That’s a stricter profit metric than the one that Lyft used recently to claim its ascendance into the realm of profitable companies; Lyft posted positive adjusted EBITDA in its most recent quarter, but burned cash to fund its operations and posted a wide net loss in the period.

And Starling Bank reached what it describes as profitable territory in October 2020. Things have changed since our first look into neobank results.

The trend of positive neobank news continued this June, when Revolut reported its recent financial performance. The company did post rather negative aggregate results for the 2020 period. But when we drilled down into its quarterly results, we saw the picture of a fintech company scaling its gross margins and revenues while nearly reaching adjusted net income neutrality by Q4 2020. We were impressed.

This morning, let’s add to our running dig into neobank results by parsing recently released data from Starling Bank and Monzo. As we’ll see, although some neobanks are managing to clean up their ledgers and work toward profits — or reach profitability — not all are in the black.

Reserve Trust, a Denver-based financial services provider, has raised $30.5 million in a Series A round led by QED Investors.

FinTech Collective, Ardent Venture Partners, Flywire CEO Mike Massaro and Quovo founder and CEO Lowell Putnam also participated in the financing, which included $17.9 million in secondary shares. It brings the startup’s total raised since its 2016 inception to $35.5 million.

Reserve Trust describes itself as “the first fintech trust company with a Federal Reserve master account.” What does that mean exactly? Basically, a federal reserve master account allows Reserve Trust to move dollars on behalf of its customers directly, via wire and ACH payment rails, without an intermediate or partner bank. 

Historically, only banks were able to access these payment rails directly, which left both domestic and international fintechs “with limited partner options, poor technology and slow implementations when it came to embedding high-value B2B payments,” says COO Dave Cahill. Reserve Trust touts that its technology and services give companies all over the world the ability to “seamlessly move money via the first cloud-based payment system connected directly to the Federal Reserve” since it is not limited by legacy banking systems.

In conjunction with the fundraise, Reserve Trust is also announcing that Dave Wright has been named CEO and Cahill joined as COO. The pair worked together previously at SolidFire, a flash storage startup that Wright founded and sold to NetApp for $870 million in 2016.

Reserve Trust works with businesses that seek to embed domestic and cross-border B2B payment by offering them the ability to store funds in custody accounts that are backed by its Federal Reserve master account.

The history of the company relates back to the global financial crisis. After the crisis, banks in the U.S. went through a process called derisking, which meant they shed businesses that on a risk return basis weren’t as strong as other businesses. One of those included the handling of U.S. dollar payments, particularly in emerging countries. 

“One of the consequences of this is that it became significantly more difficult and expensive for businesses and smaller economies to trade and move U.S. dollars around the world,” Wright told TechCrunch. “And the founders of Reserve Trust saw this opportunity to build a new type of financial institution that was focused on helping to provide U.S. dollar payment services, especially to emerging fintechs in markets around the world, and helping to reconnect those economies to global trade.”

But rather than start a bank, the founders (Dennis Gingold, Justin Guilder) navigated a previously unexplored part of regulatory waters to create a state-chartered trust company with a Federal Reserve master account.

“That’s something that had never really been done before,” Wright added. “Pretty much every other trust company has to work through banks for all their payment services. Reserve Trust is the first that has actually managed to get a Federal Reserve master account and can process payments directly with the Federal Reserve.”

The complex process took about three years, and in 2018, the company got a Federal Reserve master account and started providing U.S. dollar custody and payment services for fintechs all over the world. Reserve Trust began to see strong demand from payment and fintech companies that were struggling to develop strong partner bank relationships, even though fundamentally there wasn’t any reason the banks couldn’t work with them. 

“They found working with banks to be a slow process, one that didn’t involve a lot of technology expertise on the side of the banks, and it was really inhibiting their ability to develop their technology,” Wright said. And that was even here in the U.S. Today, more than half of its business is from domestic fintechs, although Reserve Trust still has a strong international presence as well.

The new funds will mainly go toward helping the company scale to handle what Wright describes as “a fairly overwhelming amount of demand” and toward building out the team, the technology and the services it needs to address the payment needs of larger, faster growing fintechs around the world. 

“Most of our customers today are small and midsize fintechs, but now we’re seeing demand for much larger fintechs that have much higher payment volumes and are involved in embedded banking and B2B payments,” Wright said. “They are looking for a stronger banking partner than what they’ve been able to find among the role of traditional banks.” Customers include Unlimint and VertoFX, among others.

QED Investors partner Amias Gerety and FinTech Collective principal Matt Levinson are bullish both on Reserve Trust’s history and its potential.

The pair point to payments giant Stripe as an example of how far Reserve Trust can go.

“Stripe has significant market share doing merchant acquiring and processing e-commerce payments for the consumer,” Levinson said. “B2B payments is significantly bigger in terms of volume, so we’re talking about well over $20 trillion of addressable payment flow. But there’s no real technology company that’s brought the modern payments platform to market without being beholden to legacy banks. And that’s why we’re so excited about this business.”

Reserve Trust, he added, is giving businesses a way to facilitate B2B payments that “are smarter, faster and cheaper.”

Gerety agrees.

“Despite all the excitement around digital payments and infrastructure, there is still no fintech that can offer direct integration with the U.S. payment system,” he said. “With Reserve Trust, we are creating foundational infrastructure to hold and move payments globally and at scale.”

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