Minneapolis Fintech Startup JustiFi Lands $6.6M in Seed Round
Minneapolis-based financial tech company JustiFi last week announced it has raised $6.6 million in its seed round of funding.
Rally Ventures, a Minneapolis-based venture capital firm, co-led the round with San Francisco-based VC firm Emergence Capital. Justin Kaufenberg, managing partner at Rally, says that Justifi’s products are unique to the fintech market. Justifi develops software that digital businesses can use to process payments, provide lines of credit, and even handle insurance matters.
The company is targeting a wide range of businesses that fall under the “software-as-a-service” umbrella. That could include businesses like Vagaro or MindBody, which enable customers to book hair appointments through mobile apps. “Anything that you can think of, there’s a software platform for,” said JustiFi CEO and co-founder Joe Keeley in a Wednesday interview. “There’s tens of thousands of these platforms that help these small businesses do what they do better. But the problem is that managing payments and understanding how to monetize the process is really complicated and really expensive. We come in and become the embedded fintech stack for them.”
Keeley is well-acquainted with the software-as-a-service industry, having launched his own successful software business for nannies and babysitters in 2001. The company, known as College Nannies, Sitters + Tutors, was eventually sold to child care giant Bright Horizons in 2016.
JustiFi’s offerings can be “white-labeled,” so other businesses can put their own branding and logos on the payment platform.
Kaufenberg broadly describes Justifi’s offering as an “intelligent cost optimization brain.” It’s the type of software that “could take many engineers multiple years to build.”
Like scores of other startups popping up around the world, JustiFi’s “optimization brain” leans heavily on artificial intelligence. The company’s leaders say that its AI works to help customers save money on transaction fees that would otherwise go to a third-party processor like Visa or MasterCard. JustiFi then takes a cut of the savings.
“No revenue is generated if we don’t save you money, if we don’t drive your costs down,” Kaufenberg said. “If, in fact, the JustiFi brain does drive costs down, JustiFi generates revenue by sharing in those savings. It’s pretty revolutionary.”
Keeley said he plans to use the funds from the raise to hire more software engineers and continue refining the company’s AI platform.
JustiFi is currently a Minneapolis company, but it plans to open a new headquarters in a converted warehouse in St. Paul in 2022.
Rally Ventures’ portfolio of investments includes SportsEngine, a youth and amateur sports app that Kaufenberg launched before his time at Rally. The company recently saw another investment, Braze Inc., go public. For its part, Emergence Capital was an early investor in Salesforce, the now-ubiquitous cloud software company.
Listen now: Joe Keeley shares the story of his first startup success, College Nannies, Sitters + Tutors, on By All Means podcast.
