How ZenBusiness is helping SMBs grow with embedded finance offerings

ZenBusiness is working to accelerate small businesses to the next level with its payments and banking offerings. The company, an Austin-based Public Benefit Corporation, has products to serve entrepreneurs through their journey of launching, running, and growing their businesses. It tries to be a one-stop guided platform.

In 2020, ZenBusiness completed the acquisition of Joust, a fintech for small businesses and entrepreneurs. With that, the firm brought all of Joust’s business banking features under their wing, launching it under its money-management and invoicing application, ZenBusiness Money. While not the newest idea, it extends the ways in which the company’s existing clients can receive payments.

With ZenBusiness Money, businesses can create custom invoices, set their own payment schedules, process and track payments, send invoice reminders, and review transaction history. Customers can receive payments via credit card and bank transfers, which are directly deposited in their bank accounts. ZenBusiness Money’s tax filing service enables businesses to automatically track and tag income and expenses, helping to maximize deductions and reimbursements when filing taxes.

However, while Joust’s payment mechanism was integrated into ZenBusiness’ offerings, a key element that was left out was its invoice financing service, which it plans to eventually relaunch.

Payment and business solutions for small businesses is a competitive market as well, with players like Square, Xero, and Intuit holding a considerable share of the market. Besides them, there are also more niche companies, like Honeybook and Lili, that cater to freelancers and small businesses. And while companies like Square offer business loans to their clients, ZenBusiness, on that front, is lacking.

“We wanted to take a measured approach and build a platform around the user experience that would provide us with deep insight into their business first. This method allows us to underwrite in real-time and charge less. The goal is to release credit products along with invoice financing in the near future,” Ross Buhrdorf, founder and CEO of ZenBusiness told Tearsheet.

ZenBusiness helps users open a business bank account at LendingClub Bank. Its partnership with LendingClub discounts fees at the bank.

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ZenBusiness’ real value appears to be for young entrepreneurs, for businesses just getting on their feet. The company provides a well-rounded suite of services that helps businesses get started, taking care of necessary legal and organizational hassles, and then as the business grows, the platform’s step-by-step guide and embedded fintech capabilities enable the enterprise to stay on the trajectory. 

“It's true that payments, invoicing, and accounting tools are all commodities these days. However, the true value that ZenBusiness brings to our users is the elimination of the back office paperwork in connecting all of these commodities to the legal entity. It's typically an expensive and tedious process that intimidates entrepreneurs and business owners,” said ZenBusiness’ Burdhof.

“Right now, entrepreneurs are forced to stitch together different fintech products, racking up fees along the way. No fintech solution makes it easy for entrepreneurs to manage their finances all in one place, making it more difficult to focus on growing their business.”

ZenBusiness says 2021 was a big year, as it introduced new embedded financial solutions to its platform, which included tools for invoicing, accepting card and ACH payments, and managing income. The firm claims over 400% customer growth since March 2020, securing over 200,000 customers in the US.

ZenBusiness recently closed its latest round of funding, announcing a Series C investment of $200 million, valuing the business at $1.7 billion. The round is the biggest SaaS financing in Austin this year, making ZenBusiness the latest unicorn in the state. 

The firm plans to use the Series C funding to continue investing in its platform. In addition, ZenBusiness is building out its embedded finance lineup by introducing new product features that help users manage their finances, including a customized, guided pathway to revenue generation. The ZenBusiness platform will connect directly with customers’ bank accounts, using smart automation to categorize their expenses. In addition, clients will be able to collect payments via invoices or through e-commerce transactions and file their taxes using either software or a CPA.

“As Shopify did for e-commerce, ZenBusiness is creating the category-defining solution for the service sector, providing an easy-to-use platform with embedded fintech solutions so entrepreneurs can turn their ideas into money-making realities. We handle the ‘business stuff’ so our customers can focus on their passion and build the life they want, stress-free and without sacrificing their well-being,” Buhrdof said. 

In addition to the funding, ZenBusiness also announced that billionaire investor and serial entrepreneur Mark Cuban will be joining their ranks. He will serve as an advocate and spokesperson, helping the firm with branding and awareness. A shark from ABC’s “Shark Tank”, Cuban is also the owner of the Dallas Mavericks NBA team and chairman of AXS TV. 

ZenBusiness’ Series C funding round was led by Oak HC/FT, with backing from SoftBank Vision Fund 2 and existing investors Cathay Innovation and Greycroft. 

ZenBusiness was born in 2015, receiving seed funding worth $4.5 million in 2018, with the mission to help start a million small businesses by 2023. It was Buhrdorf’s brainchild, who had spent a decade at the vacation home rental marketplace HomeAway as founding CTO, up until their $3.9 billion acquisition by Expedia in 2015. ZenBusiness completed a $15 million Series A round in 2019 and a $55 million Series B in 2020.