Sacramento-based online banking technology company One Finance Inc. has raised a $40 million round of funding to expand its banking service across the country.
The funding was led by Progressive Investment Co. Inc., the corporate investment arm of Mayfield Village, Ohio-based The Progressive Corp. (NYSE: PGR), which is best known for its Progressive Insurance lines of business.
The money will be used to hire new employees, including software engineers, and to continue developing the banking platform, which can be accessed by smartphones and personal computers, CEO Brian Hamilton told the Business Journal.
This latest round of funding brings One to a total of $66 million raised, and it should carry the company through 2022, Hamilton said. One is focused on building the business and creating a profitable business, and this money can bring it to that goal, he said.
Hamilton declined to disclose the company's financials but he said One has acquired hundreds of millions of dollars in deposits since it launched its product at the end of last year, and it has a client base of hundreds of thousands of customers.
He added that revenue is growing quickly, which made it attractive to the new investors.
“Progressive is an active and sophisticated investor in financial services technology,” he said. “It means a lot that they were interested.”
Started in 2019 and funded initially by the founders, the company got a $17 million Series A round of venture capital early in 2020 from Foundation Capital, Core Innovation Capital and Obvious Ventures. They all participated in the new funding round, according to the company.
"We are thrilled to join One on their mission and help the expansion of a world-class team of fintech and banking innovators focused on designing a suite of unique tools that will transform how people manage their money," said Andrew Quigg, Progressive's chief strategy officer, in a news release. “Progressive understands consumers' needs are constantly changing and One provides convenient ways to keep finances in one place."
One’s focus is on filling financial services needs of middle-class American families without charging a lot of fees.
The company built innovative products, such as “pockets,” that allow users to automatically save money that earns interest in a separate pocket, borrow money and access a credit line and overdraft protection that is free if paid down every month. The account is accessed online, and it has a single card that can be used for debit or credit for purchases. It also has pockets that can pay friends or share payments, which are not functions available on traditional banking platforms, Hamilton said.
One’s banking services are provided by Coastal Community Bank, a subsidiary of Coastal Financial Corp. in Everett, Washington. Through that relationship, the savings are insured by the Federal Deposit Insurance Corp.
One is looking for software engineers, product designers and customer experience employees, Hamilton said. The company is hiring people all over the country, but it would like to have a critical mass of employees in the Sacramento region so they can work together — when that becomes possible again. The company is currently working remotely, with employees observing masking when they are in the company’s Midtown Sacramento headquarters. The software engineers the company is seeking work on React JavaScript open source software for the front end on One's service and on Node.js JavaScript software on the back end.
In addition to having fewer fees than banks for basic financial transactions, One offers customers a cheaper way to borrow, either to consolidate debt or for expensive items.
“Credit cards are a spend vehicle, but they are not a good borrowing vehicle,” Hamilton said.
One charges 12% for customers who carry a balance, compared to 20% or more on traditional credit cards, he said.
The company had 45 employees at the end of last year. Hamilton declined to provide the current number of employees, but he said it is under 100. He said the company will surpass 100 employees with this new funding.
In February this year, One added two national financial industry veterans to its board of directors. Hamilton, a co-founder of the company, is the former CEO of digital bank Azlo and a former Capital One executive. The company's other co-founder is former Intuit and PayPal CEO Bill Harris.
