Crowded, a free banking app targeting member-based nonprofits, such as fraternities, sororities and booster clubs, closed on $6 million to continue developing its suite of banking and member management tools.
Organizations often open banking accounts at nearby institutions, while some groups, such as fraternities, sororities and clubs on campus, are required to pay money through their student activities, but without many modern banking features.
Many co-founder and CEO Daniel Grunstein told TechCrunch that the company designed its mobile app for the specific needs of club treasurers so they can perform tasks, for example, requesting and collecting member dues and tax reporting, digitally as opposed to physically sending payment notices every moon.
The company entered the “crowded space” for organizational management. For example, Heylo raised $1.5 million in seed funding this year for its member-matching app, while OurHouse and OmegaFi are specifically targeting fraternities and sororities.
Crowded offers both physical and virtual debit cards for its members, but organizations can also link their own existing bank accounts. One of the ways Grunstein says his company is different is that instead of charging a subscription fee, Crowded collects an interchange fee from merchants when the debit card is used to make a purchase. It also charges a processing fee for member payments of around 3% or $5 per payment, which Grunstein says is lower than the industry average of 8%.
Grunstein started the company with Dvir Hanum, Darryl Gecelter and Dor Kleinmann in June 2021. The previous founders were either in financial technology or from alumni network technology. Grunstein himself has a background in fintech and enterprise software, previously working with JP Morgan Chase.
Meanwhile, after launching a year ago with five clients, Crowded has grown to 300 chapter clients using the platform, with letters of intent signed with another 1,200 chapters.
The company’s seed round was led by Garage and included Deel co-founder Philippe Bouaziz, Innoventure Partners’ Michael Marks and a group of former bank executives.
The new funding will be used to build the platform, marketing and compliance as it relates to nonprofit finance. The platform was previously in closed beta, but Grunstein wants to open it up and continue to build features, including automation from the client side. He also said the company is on track to reach $1 million in annual recurring revenue.
“We are working on completing the feature build so that what our customers do at a regular bank they can do with us,” he added. “We also want to add a self-service component, enter new markets, continue to grow in the college and diversify our customer base. We will plan to do a Series A next year if we can achieve that.”