Comun, a digital bank focused on serving immigrants in the United States, has raised $21.5 million in a Series A funding round less than nine months after announcing a $4.5 million raise, TechCrunch is the first to report.
This is a crowded space, filled with a number of startups, including Tanda, Bloom Money, Majority, Welcome Tech, Maza and Pillar. So the fact that Comun was able to raise capital in back-to-back rounds in such a short amount of time is notable. PitchBook estimated its previous valuation, after its last raise, to be $62 million. CEO and co-founder Andres Santos said PitchBook’s valuation was “inaccurate” and that the company’s current valuation “has increased by more than 50%.”
The New York-based startup’s traction is what drew investors to double down. Comun grew monthly revenue by “50x” in the first six months of 2024, according to Santos. While that growth implies that its initial revenue was low, it does show a fast rate of adoption. He also said the company has grown in users and increased revenue per user by about 4x since the start of the year after launching new products.
Santos and his co-founder Abiel Gutierrez started Comun in late 2021 after facing financial exclusion in the U.S. when they migrated from Mexico. They set out to offer digital banking services, including instant payments and cash withdrawal at numerous locations, check deposits and early paychecks, to Latino immigrants.
For instance, they provide native Spanish-speaking reps seven days a week, and allow customers to apply for an account using 100 ID types from Latin America, including foreign country passports. Most traditional banks require customers to have a U.S. Social Security card or proof of address, for example a mortgage or utility bill.
“The Latino community is underserved,” Santos told TechCrunch, adding that his research shows that many such immigrants simply choose not to use a bank. So his startup’s application process is designed to “remove many of the friction points immigrants typically face while also blocking fraudulent actors.”
Comun is winning them over, too, as their primary bank account, he said, and is particularly growing in California, Florida, Georgia, New York and Texas.
In March, the company launched a new remittance product which has been popular, according to Santos, with customers on average sending 3.1 remittances per month. Today, Comun is on track to process over $1 billion in payment volume on an annualized basis, he said.
The startup released its first product in October of 2022 using BaaS (banking-as-a-service) middleware. But the co-founders decided that it made more sense to own their own infrastructure and decided to build it out. By November 2023, Comun had launched a new program with Community Federal Savings Bank as a partner.
“We’ve been scaling very fast since then,” Santos said.
That decision may have been a wise one considering that some fintechs who relied on one of the more popular BaaS providers, Synapse, have found themselves facing closure or problems in accessing customer deposits after Synapse collapsed.
Comun doesn’t charge fees for opening an account, and has no minimum balance, monthly or membership fees. It makes money from interchange fees and remittance fees, as well as interest on deposits and fees for facilitating instant transactions. However, it’s working to reduce its dependence on interchange revenue.
“We started the year with most of our revenue coming from interchange, similar to Chime and other neobanks,” Santos said. “Today, interchange revenue is less than 50% of our revenue, and we’re seeing significant growth in other revenue streams, such as remittances.”
Presently, Comun has 20 employees as well as a team of about 50 customer support agents.
Redpoint Ventures led the startup’s Series A raise, which included participation from ANIMO Ventures, Costanoa Ventures, FJ Labs, RTP Global and South Park Commons.
Meera Clark, principal at Redpoint Ventures (which has also backed the likes of Stripe and Nubank) said that Comun’s metrics and “organic demand” are “among the best” her firm has seen across fintech “in years.”
“With more than half of the team’s technical backgrounds hailing from the likes of Brex and Nubank, we believe Comun’s early technical rigor will only become magnified as the team expands,” she said.
The company plans to use its new capital to expand locations and create new products. For instance, Comun recently hired former Nubank and Capital One employees to help it build out a credit product, Santos said.
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