ImpactAlpha, August 14 – Austin-based fintech startup Joust is on a mission to modernize financial services for the 87 million freelancers and small businesses in the U.S. The two-year-old startup has secured $2.6 million in a funding round backed by PBT Ventures, Accion Venture Lab, Financial Venture Studio, and Techstars.
Joust, which is part bank, part insurance company, part business management platform, says it is filling a void in the mainstream financial services sector by pulling all of these services together in one place for gig workers.
“Freelancers don’t have access to business banking in the traditional sense,” Joust’s founder Lamine Zarrad told ImpactAlpha. “Sure they can open a bank account, but they often don’t meet the [business] credit profile, have a hard time acquiring merchant account services, and they deal with regular nonpayment from clients.”
The company’s app offers an FDIC-insured bank account, a merchant account for accepting payments and invoice insurance.
Joust sits between two evolving financial services trends: the rise of challenger, mostly online banks, dubbed “neo-banks” and the rise of fintech companies that are trying to boost small businesses’ financial security, like the U.K.’s Fluidly, Brazil’s Weel, and U.S.-based Crowdz.
“The institution of banking–I wouldn’t say it’s broken, but it can use improvement,” Zarrad said. “In the U.S., it is stifled by its interpretation of regulation and lack of technology, so the rift between banks and consumers continues to grow.”
Joust’s model for services and risk underwriting borrows from Western Europe’s banking system, which Zarrad describes as “at least a decade ahead of the U.S. in terms of innovation” and a risk assessment model he helped develop at another startup for largely unbanked business sectors, like the emerging legal cannabis sector.
Joust is in beta mode with 2,600 users and is planning to launch publicly this fall. (Freelance journalists and writers get special discounts because of their particularly high need. “They experience non-payment at unprecedented rates,” Zarrad said.) It is also the new banking partner of New York City’s Freelancers Union and its 450,000 members.