Jiko started his life as a mobile bank for consumers. But over time, the fintech startup has evolved its model — fueled primarily by demand — and is now making a push toward corporate cash storage.
in 2020, jiko made headlines by being the first fintech acquire a nationally regulated US bank. The company was also unique in another way: Instead of holding customer deposits, it used the funds to buy short-term Treasury bills (T-bills).
Then last November, Jiko revealed it was turning from that consumer-centric model and “accelerating its business-to-business strategy,” as reported by Banking Dive. At the time, the publication reported that the startup had received “a lot of inquiries from other fintechs interested in leveraging its technology.”
As a result, it shifted to what? CEO and co-founder Stephane Lintner describes as a: “B2B2C” model.
This year, Jiko found that everyone was “suddenly paying attention to T-bills,” Lintner told londonbusinessblog.com. For the unknowns, T-bills — according to Investopedia – is “a short-term U.S. government debt obligation secured by the Treasury Department with a maturity of one year or less.”
That attention prompted the startup to rethink its strategy again to meet that sudden increased demand. Today, former Goldman Sachs trader Jiko describes as a “financial network we build full-stack designed to store and move money on a large scale.”
“We were focused on API access to retail, but we’re seeing such an influx for our business product, that we’ve really accelerated and made our cash storage product our main offering now,” Lintner told londonbusinessblog.com, “and that’s what we’re doing.” are solely focused on distribution.”
And now the startup has announced it has raised $40 million in a Series B funding round to meet demand.
Jiko’s plans for the product, referred to as Jiko Money Storage for short, is to provide companies – from startups to multinationals across a variety of industries – with “low-cost access” to T-bills. The advantage for companies, particularly for startups that have raised or have large sums of money, is that T-bills are an asset class that offers “highly competitive” potential returns, Lintner said.
In addition, the fact that Jiko has a banking charter – unlike most other fintech companies – and is a broker-dealer, the company claims that it can help its clients conduct banking and financial activities “more safely and securely” than other offers.
For example, he describes a money market fund “as a security wrapped around repo markets and maybe some T-bills.”
Jiko’s claims are lofty, but it’s clear that a number of investors are willing to bet on it.
Red River West led Jiko’s Series B funding, which also included participation from Trousdale Ventures, Owen Van Natta, Temaris & Associates, La Maison Partners, BPI France, Airbus Ventures, Anthem Ventures, Upfront Ventures and Radicle Impact. The new round brings Jiko’s total amount raised to $87.7 million since its inception in 2016. It declined to disclose the valuation.
Soon, the company plans to allow companies to not only store money and put it directly into T-bills with “instant liquidity”, but also be able to move them 24/7 on its network.
This option has proven to be even more attractive, given the challenging macro environment, Lintner said.
“Any place that has a chunk of cash right now needs to be concerned about all the risks that are going on. When you decide where to put it, you need returns and T-bills are paying a lot right now,” he told londonbusinessblog.com.
Alfred Véricel, founding partner at RRW, said his company was drawn to Jiko’s vision of “an infinitely scalable infrastructure that can unlock a new category of cash storage — and access to cheap, disposable T-bills — thanks to a secure, liquid and competitive B2B.” product.”
“The launch of Jiko Money Storage is also taking place in a macroeconomic environment where companies are looking to make cash work harder to fight inflation and volatility,” he added.
My weekly fintech newsletter, The Interchange, launched May 1st! Sign Up here to get it in your inbox.