Former Square execs Ben Pfisterer and Dominic Yap have raised $6.3 million for their pre-launch, pre-product fintech Zeller, setting out to redefine financial services for SMEs.
The seed round is led by Square Peg Capital, with the VC firm’s co-founder and partner Paul Bassat joining the board of the startup. Apex Capital also invested.
Speaking to SmartCompany, Pfisterer says Zeller is setting out to create more up-to-date banking solutions for underserved small businesses.
“We’re seeing a huge amount of change on the consumer banking and retail banking side of things, but on the business side, just nothing has changed,” he says.
Once business owners have “gone through the craft” of building their business and their product or service, business owners need three fundamental things, he says.
They need to take a payment, they need somewhere to put their money, and they need to deploy the capital they’ve made, “to make sure that disconnect between earning money and spending money is minimised”.
Zeller is designed to combine those capabilities into a single solution that can be up and running within a matter of minutes, rather than a matter of months, Pfisterer says.
Of course, both Pfisterer and Yap were formerly execs at payments fintech Square, founded by Twitter chief Jack Dorsey, and which launched in Australia back in 2016.
Pfisterer was previously head of the Asia Pacific region and country manager for Australia at Square, while Yap was strategy and growth lead.
Square typically caters to very small and micro businesses, which are “really well served these days”, Pfisterer says.
At the other end of the scale, large enterprises are well served by traditional banking.
But, Pfisterer estimates there are between 1.5 million and 2 million businesses that sit in between.
Payments solutions for this group tend to involve, “clunky, big terminals with big buttons and small screens, that are just processing a payment and not doing anything else” he says.
“We thought we would build something that fulfills the promise that payments should be more than that.”
A bank or not a bank?
The co-founders will spend the next six months or so working on building out Zeller’s products and infrastructure, and building awareness of the brand, with a view to launching in early Q1 2021, or “hopefully sooner”, Pfisterer says.
But the founders have their work cut out.
“What we’re building is not small by any stretch of the imagination,” he adds.
Zeller is also entering a crowded innovative banking space. In Australia, independent neobanks like Xinja are Volt are striving to revolutionise and democratise retail banking, while Judo is also focused on reimagining business banking.
But, at least for the time being, Zeller is not claiming to be a bank, challenger or otherwise.
“We don’t really see ourselves as a bank, but I dare say we will be caught up in the whole neobank space,” he says.
“We’re looking to offer financial services to business,” he adds.
“We’re not claiming to be a bank. We want to see if we can define a set of solutions which are better than what the banks are offering.”
It’s impossible to talk about product launches and funding rounds without talking about the unusual current environment, and the disruption caused by COVID-19.
Zeller was founded at the start of 2020, just as we were starting to hear about the first cases of the coronavirus in China.
Pfisterer and Yap then embarked on a funding round as the crisis was worsening.
But, Pfisterer says the round went remarkably well, with just ten days passing between first conversations and term sheets being issued.
“It was exceptionally quick, and a really exciting process,” he says.
That was mostly due to the sophistication of the investors, he explains.
“They really understand financial services,” he says.
“They see the opportunity that we see, and they saw it really quickly.”
Now, on the one hand, the businesses that will be Zeller’s end customers are being devastated by the economic impact of the pandemic.
“It kills us to see that happening,” he says.
On the other, however, the crisis has bought Zeller’s mission into focus.
“We’re now seeing this unexpected acceleration away from cash, and now digital payments are more important than ever,” Pfisterer says.
“But on top of payments, what you can do with them and how you can innovate with them is more important than ever.”
At the same time, like his new board member Paul Bassat, he’s anticipating a surge in entrepreneurialism as we start to emerge from the crisis.
“Not just in tech, but across every sector,” he says.
“The reason for us being … is to help businesses get back on their feet with new cost-effective solutions, but also to help those new businesses start up.”
Growth of an ecosystem
With both co-founders having come from Square, the very existence of Zeller plays into the narrative of a maturing Aussie ecosystem.
Just as we have seen startups founded by employees of Aussie success stories, multinational tech companies launching in Australia can also cause a ripple effect of innovation.
Talented techies are now able to access opportunities locally that historically they haven’t been able to, Pfisterer says. And that experience just can’t be replicated.
“It’s a different mindset, it’s a different growth mindset, it’s a different approach to technology,” he says.
Those people, like Pfisterer and Yap, then branch out and embark on their own projects, further growing the tech sector here in Australia.
While admitting he may be a tad biased on this, “that’s the most exciting thing you could watch happen”, Pfisterer says.
At the same time, while international products bring great products and services into the Aussie market, “it’s always been in the back of my mind, ‘why can’t we do it’?” he adds.
“To be able now to branch off and create an Australia-based business that we hope to take to the world is extremely, extremely exciting.”