Over the past year, significant events within the banking sector, such as the collapse of Silicon Valley Bank, have prompted companies like ModernFi to offer alternative solutions. Founded in 2022 by Paolo Bertolotti and Adam DeVita, ModernFi caters to community and regional banks, furnishing them with comprehensive deposit management capabilities. This includes a deposit network empowering bank customers to enhance, retain, and oversee their deposit base through deposit sourcing, fund sweeping, and enhanced depositor security.
In response to the challenges posed by recent events, ModernFi has garnered notable support. Following the collapse of Silicon Valley Bank, several financial institutions recognized the need for improved solutions. Bertolotti explained, “We need a better solution here. We don’t think regulators are going to make changes, and we don’t think that the current solutions or the current incumbents have moved fast enough to support this.” Consequently, ModernFi secured $4.5 million in seed funding a month prior to the SVB news, with continued backing leading to a subsequent $18.7 million Series A funding round.
Leading the Series A round is Canapi Ventures, accompanied by investors like Andreessen Horowitz and Remarkable Ventures, along with notable banks such as Huntington National Bank, First Horizon, and Regions. Including previous investments, ModernFi has now raised over $23 million in venture capital. Bertolotti emphasized the significance of recent years, describing them as “unique and pretty substantial” due to factors like escalating interest rates and the collapse of major institutions like SVB.
The aftermath of these events disproportionately affected small and mid-sized banks, elevating deposit growth and retention management to top priorities. ModernFi, fortunately positioned to assist, saw significant growth during this period. Revenue is generated through basis points on deposits within the network, with Bertolotti noting a successful 2023, although specific figures were not disclosed. Since its seed round, the company has doubled its workforce and substantially increased the number of supported institutions.
The newly acquired capital will fuel further expansion, particularly in team and organizational structure. ModernFi intends to bolster its engineering capabilities, embark on new product development ventures, enhance compliance and regulatory adherence, and invest in business development. This includes expanding integrations and API development, alongside improvements in analytics and asset liability management.
Bertolotti outlined the broader vision, stating, “The larger goal is to support the entire life cycle and workflow for bank CFOs. It’s a huge undertaking, but it’s a path that we’re very excited about.” With a focus on innovation and addressing the evolving needs of the banking sector, ModernFi aims to solidify its position as a key player in deposit management solutions.
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