A lot has happened in banking over the past year, including the collapse of Silicon Valley Bank, which opened the door for companies like ModernFi to provide innovative solutions.
ModernFi aims to revolutionize community and regional banking by offering end-to-end deposit management capabilities. This includes a deposit network that allows bank customers to grow, retain and manage their deposits. With features like deposit sourcing, fund sweeping, and enhanced security, ModernFi is paving the way for a new era of banking.
Founded in 2022 by Paolo Bertolotti and Adam DeVita, ModernFi secured an impressive $4.5 million in a seed round just a month before the SVB collapse. According to Bertolotti, this event sparked a need for change among financial institutions. In an interview with TechCrunch, he stated, “We don’t think regulators will make changes and the current solutions aren’t moving fast enough to support us.” Fortunately, Canapi Ventures, who were involved in the discussions, were already familiar with ModernFi and a partnership was formed.
Thanks to this continued relationship, ModernFi recently announced a successful Series A funding round of $18.7 million. Canapi Ventures led the round, joined by Andreessen Horowitz, Remarkable Ventures, and a group of banks including Huntington National Bank, First Horizon, and Regions. In total, the company has raised over $23 million in venture capital.
Bertolotti described 2022 and 2023 as “unique and substantial”, citing factors such as rising interest rates and the collapse of institutions like SVB as significant challenges for small and mid-sized banks. He stated, “Deposit growth and retention management have become top priorities for many institutions and we are fortunate to be in a position to support deposit networks and help these institutions continue their growth and success.”
ModernFi generates revenue through basis points based on deposits in the network. Bertolotti revealed that 2023 has been “a very good year” for the company, but declined to provide further details. However, he did mention that the company has doubled its headcount since the seed round and expanded its reach to support a significant number of institutions.
The newly acquired capital will be invested in growth – particularly in terms of expanding the team and organizational structure. Bertolotti plans to increase its team in engineering, new product development, and regulatory compliance. This includes focusing on API development and integrations, as well as enhancing their analytics suite to support bank CFOs. Additionally, ModernFi is working on asset liability management and account level deposit analytics, with a long-term goal of providing a comprehensive workflow for bank CFOs.
Bertolotti concluded, “It’s a huge undertaking, but we are very excited about the path ahead and we will continue to expand and double down on these initiatives.”