Novo raises Series B funding of $90 mn at $700 mn valuation

Novo, a neo-bank focused on small businesses, has raised $90 million in a Series B round led by Stripes, at a valuation of $700 million, it said on Tuesday. Existing investors Valar Ventures, Rainfall Ventures, Crosslink Capital and BoxGroup also participated in the round. So far Novo has raised over $135 million, it added.

“After speaking with thousands of our over 150,000 customers over the last few years, one theme keeps coming up: the more you can help a small business remove red tape and friction around cash flow, the better off that business is,” said Michael Rangel, chief executive and co-founder, Novo.

“With this funding, Novo will take a huge leap forward in improving cash flow for small businesses. In the coming months and years, small business customers will be able to access funds faster than they ever thought possible.”

Novo will utilize the funds to build modern lending capabilities, integrations, and proprietary products with advanced features that will allow small businesses to send and receive money more quickly. This will help reduce cash flow friction , it said.

“For small business owners, the technology that powers their digital banking platform should fade into the background,” said Tyler McIntyre, chief technology officer and co-founder, Novo.

“After securing Series A and B funding, we are focusing on the next expansion plan—to hire 200-plus talented workforce for middle and top-level management in banking and engineering roles in India for the next six months and build an organization that’s motivated and growing to reach new milestones in India,” said Ajar Upadhyay, director, operations, India, Novo.

Novo has surpassed $5 billion in lifetime transactions worth $4 billion in 2021 alone, entering 2022 with a transaction volume of over $7 billion.

“Despite being the heart of the US economy, over 30 million small businesses in the US have struggled to access basic financial services as they are overlooked by the big banks,” said Saagar Kulkarni, partner, Stripes, who will join Novo’s board of directors.