SaaS fintech ScaleFactor has secured $60 million to move towards becoming a one-stop shop for financial services

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US-based Software-as-a-Service (SaaS) fintech ScaleFactor has raised a $60 million Series C funding round led by Coatue, according to Crunchbase. Other investors include existing funds like Bessemer Venture Partners, Canaan Broadhaven Ventures, and new ones include Vulcan and Stripes Group.

ScaleFactor provides financial software for small- and medium-sized businesses (SMBs), and its offerings include bookkeeping, bill pay and invoicing, and tax returns. It has three different plans, starting at $399 per month. The latest funding round comes seven months after a $30 million Series B round, bringing the fintech to a total of $103 million, to date

ScaleFactor will use the new funding to try and position itself as a one-stop-shop for the back-end needs of its SMB clients.

• With the help of the funding, ScaleFactor wants to add depth to its existing features and launch new products entirely. For instance, it's eyeing the lending space for product expansion. The fintech also wants to use data to produce predictive insights for SMBs, like being short on cash flow before payroll day, for example. Over time, the fintech aims to not only alert users when something within their business needs attention, but to proffer solutions as well.
• Demand for back-end and accounting software from SMBs is high, giving ScaleFactor a large addressable market. Fifty-eight percent of SMBs currently use accounting or back-end software platforms, and report time savings and fewer mistakes as a result, according to research from ScaleFactor. Additionally, 76% of SMBs don't plan to hire a CFO in the future, per the same research. In other words, the need for a software-based solution to managing finances isn't going anywhere.

Becoming a hub for all finance-related matters is a strategy many fintechs are employing in the fintech space, and going this route should help ScaleFactor add to its user base. SMBs have long been underserved by incumbent banks and software providers, and a number of fintechs are looking to fill that gap with innovative digital solutions that help SMBs get on top of their finances.

Access to capital is another major pain point for these businesses, and by launching a lending option, ScaleFactor will likely be able to increase user satisfaction and retention. This will enable ScaleFactor to provide its users with a more rounded offering, as it moves toward being a hub for all financial matters.

Moving toward offering users a wider range of services is something that we have seen in other areas of the fintech sector as well, with commission-free stock trading app Robinhood applying for a banking license, for example. Over time, we will likely see more fintechs moving into new lines of business to differentiate their offering and better serve customers.

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