I’m happy to take the lid off of Hatch, a digital bank for small and medium businesses. Foundation Capital led Hatch’s Series A because of the massive opportunity it represents, its team — beginning with founder and CEO, Thomson Nguyen — and the impressive progress that the company has made in a short period of time. My partners and I believe that Hatch has the potential to be one of the next great fintech companies, and we’re excited to partner with them and to help introduce them to the rest of the world.
There are over 30 million small businesses in America, representing almost half of the country’s GDP. Most of them are (poorly) served by traditional banks that are built on an old, rigid tech stack and rely on outdated distribution models. These incumbents might give their customers a free toaster for opening up a new checking account to make up for the high fees they charge, but they can’t offer customers a modern mobile-first banking experience. For startups looking to disrupt this sector, the focus has largely been on consumers. Now, Hatch is trying to do for SMBs what One, Current, and Chime are doing for individuals.
Hatch is modern banking for small businesses. The company offers a business-checking account for business owners, sole proprietors, and people who someday want to start their own business. It also provides a business line of credit to current checking-account customers, to help them grow their business. With Hatch, you can sign up and start moving money in as little as 10 minutes with instant approval. Digitally savvy Gen Xers and Millennials, who have demonstrated a greater propensity to start their own businesses than the prior generation, not only want the seamless online-banking experience and ability to make safe and secure mobile payments that Hatch provides — they expect it.
This past year was a hard one for SMBs. A third of small businesses in the U.S. were rendered non-operational by Covid-19. In the same time, Americans paid over $14 billion in bank overdraft fees last year. Thomson and team know that the penalties imposed by traditional financial products fall disproportionately on the most vulnerable in society, including small business owners. They are rethinking business banking by doing away with NSF, monthly minimum, card replacement, ACH transfer, and other unnecessary fees. Put it back into your business, Hatch says. Hatch saves its customers time and money, gives them rewards and discounts, and allows them to grow their businesses and run them more efficiently.
Hatch’s full-solution approach is at the core of Foundation Capital’s vision for the future of financial innovation. It’s our belief that one of the major themes of the next phase of fintech is confluence: the coming together of lending and banking in a mobile-first offering. In the consumer category, we’ve backed One and Current on the strength of this conviction. We believe that Hatch is the breaker wave of this movement for small businesses.
I couldn’t be more impressed with what an incredibly thoughtful, methodical, curious, and execution-oriented leader Thomson is. He’s assembled a fantastic team that was able to stand up a full-suite mobile-first banking service during a full-blown global pandemic. The passion, dedication, and focus it takes to pull that off is a testament to what they can and will accomplish. This next year is going to be an explosively promising one for SMBs, including startups. Hatch is poised to both help enable and be elevated by the greatest economic comeback story in a century. I and my fellow partners at Foundation Capital are thrilled to be a part of what they’re building. There couldn’t be a better time than now and there isn’t a better product on the market. The word “hatch” means an opening: Thomson and team saw theirs and they’re taking it.