There are a couple common cliches in startups. One of them is that timing is everything — you want your product to hit when people need it. Another is that many of the best ideas come from personal experiences in the professional world — solve the problem you're having and you might solve the same thing for many others.
Austin financial-technology startup Inbanx Inc. seems to have both dynamics working for it. On May 2, it announced it raised a $3.6 million seed round led by The Castle Creek Launchpad Fund, a joint fund backed by 34 community banks, with additional money from Social Leverage and other earlier investors.
The Inbanx platform helps other businesses manage their employees' expense reporting to better control company spending in real time instead of waiting for the bills to add up at the end of the month. As companies around the world look to shrink their spending as they manage a year of uncertainty, Inbanx executives says their timing is solid.
"Everybody's trying to get visibility and a grasp on their spending and it's very difficult with the current financial tools," co-founder and CEO Rob Kaczmarek said. "And so we're coming in with a unified, single point solution that does a whole bunch of different things. But ultimately, it gives the business the ability to control and prevent overspend. That's huge now."
The company's founders built the relatively new startup because they had their own headaches dealing with expenses during prior ventures.
Kaczmarek said his previous company, Convergent Science, grew to about 200 employees and around $100 million in annual revenue.
"I pretty much realized that this middle market business client is really underserved," he said. "There's not a whole lot in terms of the financial tech stack. There's Concur. A lot use NetSuite. And there's Amex. That's about it, right? And those systems don't talk to each other. And then we ran the entirety of that business off of Excel spreadsheets. We were never in control of the spend — we were always behind the ball."
After exiting that business, Kaczmarek said he wanted to build the thing he needed. That put him and co-founders Steve Burt and Aaron Upshaw on a path to issuing credit cards that company employees could use in conjunction with an expense reporting backbone. Inbanx exclusively issues Visa cards and its sponsor bank is Lewis & Clark Bank out of Portland.
"Nobody wants another corporate credit card," Kaczmarek said. "What people want is an ability to control spend at a budget level and really getting visibility into spend at a budget level. So we started at the budget level and and worked our way into cards."
The company's first client, or at least first that it can discuss, is Richard Childress Racing, an American racing team that competes in NASCAR.
Kaczmarek said clients come from a variety of industries. He said Inbanx, which has five full-time employees and eight contractors, is working with several other racing and motorsports teams, tech companies, manufacturers and a few vineyards and wine distribution companies.
"Especially now, with a looming recession, it's on the front of everybody's mind, whether they're going to cut travel or cut hotels or limit some some form of spending," he said. "We allow those policies to take place, but you can imagine that changes the way people spend when they know that there's there's a data feed that everybody can kind of see."
While Inbanx's timing looks good today, venture capitalists weren't so hot on the idea months ago, when the economy was humming along and the startup began its fundraising campaign.
Kaczmarek said the company pitched 94 VCs.
"They all told us we were crazy," he said, recounting the themes of rejection he got from VCs: "'Banks are slow. Nobody cares about spending. Budgets? What's that?'"
Last year, the company secured about $3 million in funding commitments, but that deal fell apart. Then as 2022 was winding down, Kaczmarek went to New York and met with leaders at The Fund and Altara Ventures. The catch was he had to raise an additional $450,000 to lock in those commitments, and it was the week before Christmas.
"Nobody was answering," he said. "Then on Wednesday, in two hours we closed $450,000."
The company went on to lock in additional funding to bring the round to $3.6 million.
Inbanx, which was a client of Silicon Valley Bank, was originally set to close the round on March 10, the day that news of the bank's collapse became public. But Kaczmarek just so happened to be out to dinner that night with a banker from Lewis & Clark.
Kaczmarek went to pay for the barbecue, and his commercial card for Inbanx was shut down. He pulled out his personal card, also via SVB, and it wouldn't go through either.
"So he handed his Lewis & Clark Bank card over and said 'Let's see if this one works,'" Kaczmarek recounted.
In the end, Kaczmarek said SVB's collapse may help drive interest in Inbanx. That's because it differs from competitors like Ramp, Divy and Brex, which traditionally backstop credit based on what's in a company's operating account and then underwrites credit in proportion to the balance.
Now that many companies are diversifying their banking and might only keep the FDIC-insured $250,000 in each account, Inbanx's approach may be more attractive.
"It added a little bit of wind in our sails," Kaczmarek said.
