Alexa von Tobel’s Inspired Capital bets on business neobank Rho

via Bank Innovation

Venture capital firm Inspired Capital, which is led by LearnVest founder Alexa von Tobel, is making a bet on business banking startup Rho.

Rho, a business banking startup established in 2018, seeks to simplify money management for business owners. The company this week rolled out team accounts, or a series of sub-accounts that link to a business owner’s bank account.

“We’re excited about opportunity for new technologies and new business models to disrupt legacy institutions,” said Mark Batsiyan, a partner at Inspired Capital. “We were super impressed [with Rho], including the approach that they are taking by not just putting on a new digital layer on processes but actually rethinking how banking is provided to their customers.”

Through this product, business owners can manage and segment their financial commitments and access forecasting and analysis tools to take the friction out of personal finance management.

In October, the company raised a $4.9 million seed investment led by Inspired Capital. Rho is the venture capital firm’s first business-to-business play, with a focus on small entrepreneurs whose annual revenues are between $1 million and $10 million, and medium-sized business clients with $20 to $50 million in annual revenue. Rho does not offer lending products at this time, and its current focus is banking services and cash flow management.

Inspired Capital’s other portfolio companies include savings and retirement platform Kindur; job marketplace for senior citizens Umbrella; and networking platform for executive women Chief.

In June, von Tobel said Inspired Capital invests in tech solutions that are solving financial pain points for consumers, including efforts to modernize legacy workflow mechanisms.

“We look at where we think consumers really have an unmet need,” she said. “We like full-stack technologies [because] companies that have full-stack technologies can move a lot faster and, I think, provide true value to the incumbents.”

Batsiyan said the venture capital firm focuses on fintech companies that help simplify legacy processes. While Rho is a young company, its leadership team offers a range of experience from financial services and tech sectors. Co-founder and CEO Everett Cook used to work at Deutsche Bank and Point72. In addition, Co-founder Alex Wheldon is a serial entrepreneur and its engineering team brings big tech experiences to the table.

“We are made up of a combination of ex-financial [services] and technology professionals,” said Wheldon. “I’m from the tech space, our vice president of engineering is from Snapchat, and the rest of our team comes from diverse backgrounds — we hope to bring that to the table for clients as well.”

From Inspired Capital’s perspective, Rho’s focus on automation is of critical importance.

“[Rho is] building features that actually help small business owners or their finance teams automate more of those processes, and save time in their day to day [operations],” Bastiyan said. “We think it’s a fundamental service offering that’s attractive.”

In November, Inspired Capital closed a debut fund valued at $200 million.