Today we’re launching Finch and announcing our $3.5M seed financing led by General Catalyst with participation from Menlo Ventures, YCombinator, BoxGroup, Homebrew, Clocktower Ventures, and many incredible angels including the founders of Brex, Ramp, Mercury, Vouch, Digits, Human Interest, and executives from Plaid.
APIs are changing many industries and taking advantage of the paradigm shift from closed systems to open data access. My co-founder, Ansel, and I have witnessed this first-hand while working at our previous companies: I was an early engineer and led Product at Smartcar (a16z and NEA), an API for connected vehicles; Ansel was previously an investor at Bond and Kleiner, making investments in API companies like Plaid.
Ansel and I initially teamed up to build an embedded lending infrastructure platform, Extend, and allow vendors to easily offer lending products to their customers. This process involved everything from pulling data from multiple sources to creating A/B tests for credit models. We had several funding sources and partners lined up until COVID hit. Suddenly, customers dropped left and right. I guess no one wanted to launch a lending product during a global pandemic? 🤷
As luck would have it, during that time one of our partners approached us to talk about offering PPP (Paycheck Protection Program) loans to the SMBs on their platform. We started reaching out to legacy and tech-enabled payroll and HR providers to discuss integrations and support the businesses that were in need. Most did not reply and those that did wanted us to present a PowerPoint proposal to different teams within the org. As a developer, we were looking for a Segment, Plaid, or Stripe-like developer experience, but we woefully discovered that such an API infrastructure did not exist.
The big picture
Payroll and HR systems are one of the last business systems without modern API infrastructure, yet they are critical to the operations of every business. These systems serve as the source of truth for employee records, organizational structure, and crucial fund flows. Many industries depend on accurate employee and organization data — from accounting to retirement planning to benefits administration.
Due to the importance and extensibility of these systems, developers expect a simple developer experience, but there are no self-serve APIs in the industry. Many developers have been forced to resort to CSV uploads, FTP, or be added as Third-Party Admins. Other companies have instead opted to spend millions in development costs, alongside years of business development efforts, to build one-off integrations. For example, the co-founder and CTO of Human Interest, a prominent 401(k) provider, said that building payroll and HR integration was one of the most time-consuming parts of their engineering effort, but it was essential to their success. This lack of connectivity in the industry is responsible for high administrative costs for employers, increased lock-in by legacy providers, and prohibitively high barriers for innovators.
We built Finch to change that.
Finch does the hard work of integrating with payroll and HR systems to expose a clean, unified API interface to developers. We build the infrastructure for many systems that touch employee records and facilitate data from employers to applications.
We are supporting a growing set of compelling use cases in both FinTech and HRTech, including — 401(k) providers, headcount planning, SMB lending, FP&A software, R&D tax credits, security compliance (SOC-II, etc.), employment verification, health benefits, and many more.
Finch powers innovations for employers and employees
An example of an application built on Finch is Mainstreet, which automates business tax credits for startups. At the beginning of the onboarding flow, Mainstreet prompts an employer to connect their payroll and HR system through Finch’s front-end module. They use Finch to pull past payroll runs, employee locations, employee titles, and more to provide the highest amount of tax savings to an employer. Finch has been the infrastructure powering over $65M in credits back to startups and SMBs.
Building the future of employment
This fundraising round is only the beginning of the journey and new use cases are yet to be discovered. As the nature of employment shifts over the coming years, Finch will empower innovators to build better products and experiences for a changing workforce, whether that is supporting the next wave of PPP loans or building a new employee benefit.