A new round of funding will allow Branch — a Minneapolis-based business that allows companies to accelerate payments to their workers — to expand into more industries, double its head count and expand its new business expense management system, the company said Wednesday.
The company has raised another $75 million in a Series C round of funding from private investors. The capital raise is the company’s second in six months. In August 2021, Branch announced a $48 million Series B round of funding.
New York City-based investment firm Addition, which led Branch’s funding round in 2021, also led the recent round of funding. Matchstick Ventures, which is operated from Boulder, Colo., and Minneapolis, increased its investment in Branch by participating in the round as well.
Branch has now raised $133 million from investors since launching in 2017.
While the company has not disclosed its revenue figures, Branch CEO Atif Siddiqi said the company’s revenue grew 300% in 2020, and another 700% in 2021 when compared with the previous year. The company currently employs more than 120 people, with half located in Minnesota.
Siddiqi attributed his company’s growth to expanding services to independent contractors and non-payroll workers, while also expanding in the trucking, logistics and last-mile delivery sectors.
Branch isn’t headed toward a public offering, a merger or making itself attractive to be acquired by a larger company — at least for now, Siddiqi said.
“For us, our ambition right now is to keep growing Branch independently,” he said. “Some of the things that excite us in terms of growth, besides from new products, is also entering new market segments we think are very large.”
At the time of the company’s Series B announcement, Branch boasted a client list of over 300. Now, the company works with more than 400 employers, including Uber Freight and Walmart Spark, Walmart’s delivery platform.
In 2021, venture capital-backed Minnesota companies raised $1.34 billion, down slightly from 2020’s $1.54 billion, but above 2019’s $1.2 billion, marking the third consecutive year Minnesota startups collectively raised over $1 billion, according to a recent report from Seattle-based investment data firm PitchBook and the National Venture Capital Association.
“I definitely think there’s plenty of capital out there for entrepreneurs, regardless of where they work,” Siddiqi said. “Great ideas can be born anywhere.”
Branch plans on adding more employers by moving into fitness, hospitality and construction, Siddiqi said. The construction industry has $2 trillion in payments flowing through a system “with a lot of inefficiency that we think accelerated payments can provide a lot of value”, he said.
In the fitness industry, he said, Branch’s system can help independent workers like personal trainers and massage workers collect paychecks faster, including collecting their tips.
Branch pioneered its digital tip payout system with pizza delivery drivers, but has now expanded to restaurants and businesses in health and beauty, where tips play a large role in workers’ income, Siddiqi said.