Dive Brief:
- New York City-based Grasshopper Bank completed a $30.4 million capital raise, bringing the bank’s total funding to date to $160 million, the digital commercial bank announced Monday.
- The majority of the bank’s recent raise included fund from existing investors Patriot Financial Partners, Endeavour Capital Advisors, FJ Capital Management and Carpenter & Company. The bank’s latest funding round also attracted new investment from GCP Capital Partners.
- The fresh capital comes as the bank reported 192% year-over-year growth in core deposits amid an effort to broaden its focus to serve small businesses and offer banking-as-a-service (BaaS) in addition to targeting the startup market.
Dive Insight:
“We are very pleased with the support of this experienced group of investors,” said Grasshopper CEO Mike Butler, who took the helm of the bank last year, replacing Judith Erwin, who founded the digital bank in 2016.
Since joining the bank, Butler, the former Radius Bank CEO, has revamped Grasshopper’s tech stack to enable it to offer BaaS, and has expanded the bank’s focus to serve small-business clients.
Under Butler, the financial institution has also expanded into commercial real estate lending, Small Business Administration lending and yacht financing — areas the bank said are aimed at supporting the small- and medium-sized business market.
“Our strategic direction is set,” Butler said in a statement. “Therefore, the new capital will further support our growth and solidify our ability to provide clients with leading-edge technology and personalized digital banking solutions across the business and innovation economies.”
The capital raise comes on the heels of Grasshopper’s first BaaS partnership. The bank announced last week it signed a deal to extend its BaaS offering to cash-management fintech Treasure Financial, a partnership Butler described as “the first of many” for the digital bank.
The bank Monday revealed growth in several areas.
Grasshopper’s total employee headcount grew 82% in the 12 months after June 30, 2021, while total assets grew 84% to $500 million during the same period.
The bank reported a 358% uptick in loans and a 192% increase in core deposits as of June 30, compared with the same period in 2021.
