Investing in Cross River
The fintech revolution, in which every company becomes a fintech company, is one of the most significant technology trends this decade. We are big believers in this vision and expect that in the next 10+ years, the $2 trillion U.S. bank market cap will shift dramatically in favor of financial technology companies going after this opportunity. However, typical banking services like accepting deposits, processing payments, and issuing loans are too complex for most fintech startups to do on their own, and many look for a reliable and nimble partner to aid with these services – a partner able to keep up with their rapid pace of innovation.
Cross River is the full-stack infrastructure provider that empowers every company to become a fintech company. Cross River’s technology is the foundation that enables these businesses to deliver core fintech solutions at scale—from payments and cards to lending and crypto—to businesses and consumers across the globe. The company’s proprietary offerings are rooted in regulatory compliance and consumer protection, and Cross River’s real-time, API-based core product was built from the ground up to drive better decision-making for the next generation of financial services. By plugging into Cross River, fintechs can validate and originate loans, embed fiat and crypto payments, process deposits, and support card services. All of this allows fintechs to abstract away the complexities of acting like a bank, and instead focus on their core value proposition of innovating on the customer experience. Collectively, Cross River serves millions of consumers and businesses globally, including some of the fastest growing and largest fintech platforms like Affirm, Stripe, Upgrade, and Upstart. Cross River has originated nearly $85 billion in loans since inception and processes more than 438,000 daily payment transactions.
Cross River’s nimble technology platform and willingness to lean in to innovation underscore why they’re a clear leader in their space. For example, when Coinbase was just getting started and first looking for a partner bank, many traditional financial institutions had blanket policies that prevented them from participating in crypto. Cross River, on the other hand, had the foresight to lean into this new frontier and support Coinbase, and many leading crypto companies, who are still happy customers to this day. Another great example is when the Paycheck Protection Program (PPP) was getting started at the onset of COVID, Cross River leveraged its agile tech stack to quickly become the second largest PPP lender in the country.
In the coming years, we expect Cross River to continue scaling alongside its existing customer base, enabling partners to layer on additional products and services, and empowering fintech companies to grow into some of the largest financial businesses of the next decade. Additionally, Cross River plans to build more solutions for the next generation of fintech companies, including more lending offerings, deeper payments capabilities, and new crypto products. All of this works across the U.S., and moving internationally by following existing customers and supporting new clients in other regions.
Cross River has already played a major role in the fintech revolution and is doing so while sustaining an attractive business model. With primarily multi-year arrangements, Cross River has re-occurring and sticky high-margin revenue streams across a number of products, providing visibility into the years to come. The company sees strong expansion and net retention, driven by its quality of products and services offered as well as its pace of innovation. Their technology has unlocked opportunities across the entire fintech ecosystem, providing trusted and efficient integrations to their partners.
Above all else, we’re excited to partner further with Gilles Gade, the founder and CEO of Cross River. He possesses powerful expertise in both technology and the capital markets, and is oriented around helping customers find creative and flexible technology products and solutions.
When Affirm was determining how to best originate its first loans, its cofounder (and our partner) Alex Rampell experienced firsthand how welcoming Gilles was and how easy Cross River was to work with. It is no surprise that after joining a16z, Alex led our original investment in Cross River in 2016. We are thrilled to co-lead this latest financing and deepen our partnership with Gilles and the team as they continue enabling the fintech revolution.
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