There is a small business owner in one of every 3 US households. They have more complicated finances, spend far more money on financial services, and are often less satisfied. It’s a market ripe for newcomers, but until 10 years ago, there were no pure-play small-business financial challengers. But that has changed dramatically, especially since 2016.
One of the major players is Rho, which is competing both on the banking side and with its newer corporate charge card. The company is targeting the medium side of the SMB market, especially companies with 30 to 500 employees. (Initially, Rho had more narrowly targeted VC-backed startups with $1M to $30M in revenues (Source: Tearsheet podcast with Everett Cook, 6 Jan 2020).
These mid-market companies have substantial banking costs but aren’t big enough yet to get much attention at traditional large banks. For example, Fabric is an e-commerce company touted on the Rho site which was spending $5k per month on ACH, wire and account fees. Those costs dropped to zero at RHO, saving the company $60,000 per year.
There are thousands of business banking options for small businesses. But what makes Rho standout are its:
- Focus on larger startups and mid-sized businesses
- Dedicated account manager for each client
- Embedded commercial-grade accounts payable (i.e., can replace Bill.com)
- Unlimited card accounts (virtual and plastic)
- $75M in deposit insurance
- Fee-free (including wires and ACH)
Product Features
Commercial Banking
Checking & treasury
- Dedicated account manager
- Free wires domestically and to 161 SWIFT countries
- Free ACH
- Free checks
- 0.5% FX fee across 67 currencies (o.75% for Asia-Pacific currencies)
- Up to 10 checking accounts per entity (EIN number)
- Treasury account option with $75M insurance
- No monthly fees
- Minimum deposit of $50k for U.S. companies, $100k for internationals
- APY of 0.01%
- Remote deposits of up to $250k allowed (higher limits possible)
- Flexible access controls across various employees and outside accountants
- Capital markets access via third-party referrals
Accounts payable (billpay)
- Invoices sent to dedicated RHO inbox and auto-populated into the AP dashboard
- Payments due are automatically coded to match the clients accounting system
- Rho automatically assigns approvers for every invoice
- Records are automatically synced in real-time to QuickBooks
- Fee-free payment via ACH, wire or check
Corporate charge card
- Up to 1.75% cashback depending on repayment grace period chosen (can alter terms 4x annually)
– 1.75% with no grace period
– 1.5% with 30-day grace period
– 0.75% with 45-day grace period
– 0% with 60-day grace period - Fixed credit line (does not vary with bank balance ala Brex)
- No card fees (including no late, overlimit or foreign transaction fees)
- No personal guarantee or collateral required
- Unlimited virtual or physical cards
- Spending controls for each card
- Card lock/unlock
- Auto-synced accounting
- Digital receipt uploads
- Category mapping
- No monthly fees, though a minimum spend of $5,000 monthly is expected
Company Vitals
Rho
FAB Score = 112 (as of 2 Feb 2022)
Ranks:
Third largest on our list of Digital Challenger SMB banks (USA)
Fifth largest on our list of Digital Charge Cards for Small Businesses (USA)
HQ: NYC (SOHO)
Founded: 2018
Raised $205M: $105M equity ($100M in 2021), $100M debt (all in 2021) (Note: Crunchbase says $195M raised, whereas 8 Dec 2021 TechCrunch piece says $205M)
Employees: 80 (Pitchbook)
Social:
– Twitter: 810 followers
– Linkedin: 2,700 followers (92 employees)
– Trustpilot: No reviews
Fintech stack:
– Banking services from Evolve Bank & Trust (dba Synapse)
Traction:
– Transaction value YTD (Jan 1 through Nov): $3B (TechCrunch)
– Current transaction run rate (based on Nov): $6B
– Website visits: 32,000 (SimilarWeb, Dec 2021); 36,000 (SEMrush, Jan 2022)
– Unique visitors: 12,000 (SEMRush)
– Articles: 20 (Crunchbase)
Founders:
– Everett Cook, CEO
– Alex Wheldon, Products (CPO)
– Damian Kimmelman, Advisor
Quality articles:
– TechCrunch, 13 Jan 2021
– Bank Automation News (fka Bank Innovations), 13 Jan 2021 (paywall)
– Tearsheet (podcast), 6 Jan 2020
Product Videos
Watch the 3-min review below from Kruze Consulting, an established accounting resource for startups. While the video is a bit dated (Dec 2020), its central points are still valid.
- How the FAB Score is calculated: As nerds do, we are developing a proprietary score measuring the adoption of private digital financial services companies. Since most do not release traditional metrics (# customers, deposits, AUM, etc) we rely on third-party estimates of website traffic, app downloads, as well as publically reported funding (equity + debt). We call it the FAB score, standing for Fintech Attention Barometer. It’s a work in progress, so expect changes in the formula.
- Disclaimer: We personally write and stand by everything published here. We receive referral revenues from certain companies which can impact their positioning on the site. However, the FAB score itself is cannot be altered by referrals or a sponsor relationship.
