Comun, a digital bank focused on serving US immigrants, has raised $21.5 million in a Series A funding round, less than nine months after announcing a $4.5 million raise, as first reported by TechCrunch.
It's a crowded field, with a host of startups including Tanda, Bloom Money, Majority, Welcome Tech, Maza and Pillar. That's why it's notable that Comun was able to raise consecutive rounds of funding in such a short space of time. PitchBook put its valuation at $62 million after its last round of funding. CEO and co-founder Andres Santos said PitchBook's valuation was “inaccurate” and that the company's current valuation is “more than 50% higher.”
It's the New York-based startup's traction that prompted investors to double down. Santos said Comun has grown its monthly revenue by “50x” in the first six months of 2024. While this growth suggests revenue was low initially, it points to a fast adoption rate. He also said the company has seen an increase in users since launching its new product, with revenue per user growing roughly fourfold since the start of the year.
Santos and co-founder Abiel Gutierrez founded Comun in late 2021 after facing financial exclusion when they immigrated to the U.S. from Mexico. They aimed to provide digital banking services to Latino immigrants, including instant payments, cash withdrawals at multiple locations, check deposits and early payroll.
For example, native Spanish-speaking representatives are on hand seven days a week to help customers apply for accounts using 100 types of Latin American ID, including foreign passports. Most traditional banks require customers to show a U.S. Social Security card or proof of address (such as a mortgage or utility bill).
“The Latino community is underserved,” Santos told TechCrunch, adding that his research has found that many of these immigrants choose not to use banks, so his startup's application process is designed to “remove a lot of the friction points that immigrants typically face while simultaneously deterring fraudsters.”
He said Comun is also gaining customer acceptance as a primary bank account, with particular growth in California, Florida, Georgia, New York and Texas.
Image credit: Comun
Santos said the company launched a new remittance product in March that has been well-received, with customers sending money 3.1 times a month on average. Now, Comun expects to process more than $1 billion in payments on an annualized basis, he said.
The startup released its first product using BaaS (banking as a service) middleware in October 2022. But the co-founders decided it made more sense to own their own infrastructure and decided to build it. By November 2023, Comun had launched a new program with Community Federal Savings Bank as a partner.
“Since then, we've scaled up very quickly,” Santos said.
The decision may have been a wise one, given that some fintech companies that relied on one popular BaaS provider, Synapse, have faced shutdowns or problems accessing customer deposits since Synapse collapsed.
Comun does not charge an account opening fee, and has no minimum balance, monthly fees or membership fees. The company earns revenue from interchange and transfer fees, interest on deposits and fees for facilitating instant transactions. However, the company is working to reduce its reliance on interchange revenue.
“Like Chime and other neobanks, we derived the majority of our revenue from interchange this year,” Santos said. “Interchange revenue now represents less than 50% of our revenue, and we have seen significant growth in other revenue sources, such as remittances.”
Currently, Comun has a team of 20 employees and around 50 customer support agents.
The startup's Series A funding was led by Redpoint Ventures, with participation from ANIMO Ventures, Costanoa Ventures, FJ Labs, RTP Global and South Park Commons.
Meera Clark, principal at Redpoint Ventures (which also has investments in Stripe and Nubank), said Comun's metrics and “organic demand” are “among the best we've seen in years” in the fintech space.
“More than half the team comes from technical backgrounds such as Brex and Nubank, and we are confident that Comun's early technical rigor will only increase as the team expands,” she said.
The company plans to use the new funding to expand its footprint and develop new products. For example, Komun recently hired former Nubank and Capital One employees to help develop credit products, Santos said.
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