Solutions by Text, a company that gives people a way to pay their bills and apply for loans via text messages, has secured $110 million in new growth funding.
Edison Partners and StepStone Group led the equity portion of the raise, while Stifel Venture Bank provided a debt facility, which accounted for less than 15% of the total. The funding was a mix of primary and secondary equity, according to CEO David Baxter.
Solutions by text (SBT) is not your typical startup fundraiser. The company was founded in 2008 by brothers Danny and Mike Cantrell, who ran it until 2021, when Edison Partners wrote its first check to the company as part of a $35 million growth round.
Baxter took over as CEO in 2021, and the brothers stepped down and are no longer involved in day-to-day operations. Since its raise late that year, Baxter said, SBT has seen its revenue grow “more than 3 times,” although he declined to say what the underlying revenue was.
The company is currently EBITDA positive and “working toward profitability” this year, according to Baxter. Over time, it has moved from a consumption model to a subscription business, with pure SaaS making up about 90% of the business by the end of the year.
“We really transformed the business from a more founder-led, lifestyle business, from doing about 20 million messages a month to about 150 to 200 million messages a month,” he told TechCrunch in an interview. In 2023 alone, SBT’s message volume increased by 95% from the previous year, according to Baxter.
He did not disclose the company’s current valuation, saying only that it was 5 times what it was at the time of the last raise.
As the company’s name suggests, Solutions by Text provides conversational messaging tools to businesses that engage in real-time with customers via text. His clients use it for everything from marketing to late collections.
According a research report from Solutions by Text and Datos Insights, many consumers — especially Gen Zers and millennials — said they would be willing to pay a bill via text message.
“About 98% of text messages are opened and read in less than five minutes. I’m looking at my phone right now, I have four unanswered text messages — and this is what I do for a living — but I have thousands of unread emails,” Baxter said, noting that SBT sees itself as “an ally of the telecommunications industry.”
Compliance concerns have kept many companies from going the text messaging route. Baxter claims that 60% of the company’s new customers did not use text messages for fear of breaches in the last 12 months. The difficulty of compliance has also forced some customer engagement and messaging providers out of the financial services sector, he said.
Solutions by Text, it claims, has the compliance piece down with features like supplied shortcodes and longcodes/10 DLC. Clients include Best Egg, eBay, US Bank, regional banks from the Southeast and Midwest, a top 15 auto loan provider and a digital marketplace lender.
“Everyone is finding new ways to really communicate in real time with their customers,” Baxter said.
Last October, SBT they officially entered the integrated payment space, in collaboration with Nuvei. SBT says its ‘FinText’ product, among other things, allows consumers to make payments via text-based responses such as ‘Pay Now’. It also offers what the company describes as a “pre-tested, carrier-approved, messaging standard to ensure compliance with strict industry regulations.”
The company plans to use its new funds for product development, accelerating its product roadmap, some R&D, pursuing acquisitions and rounding out and advancing its artificial intelligence offerings, according to Baxter.
“We believe that artificial intelligence will provide a rich experience. Imagine a place where you could negotiate your debt yourself through AI,” he said. “Delivery levels are on the rise and we can help create a much better way for people to self-treat their debt or promise to pay in a series of payments, based on AI-driven business rules.”
Edison Partners general partner and managing director Kelly Ford told TechCrunch that when she first invested in SBT two and a half years ago, she saw “a founder-led, capital-efficient business with a competitive compliance moat with regulations and companies regarding financial industry solutions and third-party technology integrations.”
He added: “We have doubled the investment because the team has outperformed across the board and we want to move faster, particularly with payments.”
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