Grand Ventures Invests in Preczn to Empower Vertical SaaS Platforms Operationalizing Fintech

Grand Ventures is excited to announce our investment in Preczn’s Seed round, alongside Flyover Ventures, Blank Ventures, SaaS Ventures, and others. We want to share a little bit more about our investment rationale and excitement about the market opportunity.

If you have been tracking my content, I’ve been really excited about embedded finance for the last year or so. As a refresher, here’s a great explanation from Tom Sullivan at Plaid: “Embedded finance is non-financial companies offering financial products and services. It could be an e-commerce merchant providing insurance, a coffee shop app that offers 1-click payments, or a department store’s branded credit card. Effective embedded finance solutions meet the customer where they are with a financial option they need, whether that be a loan, payment program, insurance plan, or something else.”

With regard to best practices for product, I made the comment:

“Following the PLG playbook, top embedded finance companies listen to their customers and continue to add products, features, and services that add value, generate additional revenue, and increase customer usage and retention…..In this way, embedded finance companies might ultimately start to look like vertical SaaS companies, focused on a particular industry and providing the next solution to their core customer and industry.”

The takeaway is that for some companies, the lines may be blurred: “are they vertical SaaS offering a software solution for their industry? Or are they an embedded finance company if they are facilitating transactions and monetizing payments?”

This actually led to some great dialogue amongst the team, which should come first, vertical SaaS or a fintech offering?

Having looked at hundreds of businesses now, I tend to lean toward vertical SaaS as being the strongest foundation because they uniquely understand their customers, and create 10x better solutions or offer a product that was never dreamt possible. Fintech companies that offer too narrow of a solution can become commoditized, and it’s harder to differentiate and to create unique value. Consumer loans, business loans, or trade finance, for instance, on their own, have existed for thousands for years before “tech” ever arrived so capital alone can be a shaky foundation if it’s not complemented with other functionality.*

The “perfect solution”, in my opinion, is to have a category king type of vertical SaaS solution, that invents a whole new way people think about the business. Then that company starts to integrate embedded finance solutions that create additional value, network effects, and make the solution indispensable.

One of the primary challenges, however, for vertical SaaS companies is that if you’ve been deeply engaged solving a vertical problem in a industry (insurance, events, services, etc), your primary focus in the early days was on solving the needs of the customer. And those customers spend 90% of their time focused on their tactical activities and strategic planning:

• Insurance: underwriting, documentation, and risk management.
• Event planning: sales, logistics, scheduling, and marketing.
• Landscapers or other service providers: sales, communications, recruiting, scheduling, procurement, maintenance, invoicing.

For vertical SaaS companies, digitizing invoicing, payments, collections, payroll, and other tasks is probably secondary, tertiary, or may not even have been a consideration for several years. Additionally, SaaS engineering and design teams are probably not particular experts in fintech integrations. And as you add personas and use cases, the fintech considerations may start to exceed, or at least interfere with, the product development needs of your core SaaS offering = Opportunity cost.

Not only is it difficult to integrate or build fintech solutions, they are incredibly complex to manage. If lending money were easy, everyone would do it. Lending, banking, payments, and treasury are in fact, incredibly complicated and there are a million ways to lose money. For all of us who lived through the SVB collapse that nearly crippled the global banking industry, let’s acknowledge that we’re all grateful the FDIC exists to oversee, regulate, and stabilize the economy.

When SaaS companies and banks each play to their strengths, the companies that can bridge the two industries, can create incredible value for all parties.

(🧑‍🚀SaaS * 🚀Fintech Ops) ^ 💰Finance/Banking = Magic🎉

Meet Preczn, the leading financial services Command Center specializing in vertical SaaS platforms. Preczn enables SaaS companies to accelerate the deployment of embedded payments, lending, banking, and other financial services, transforming vertical SaaS product suites into fully operationalized fintech offerings.

Having worked in financial services and fintech for nearly 25 years, I can tell you this is incredibly difficult. Back in the early days, circa 2000, there were thousands of people dedicated to supporting infrastructure for the world’s leading banks. So it takes a very unique, deep, and fluid skillset to “climb Everest”.

If there was ever a team built to do this, it’s the Preczn team. Hailing from Payrix, Stax, Spreedly, Worldpay, PayPal, and more, Malik Velani, Jason Key, Conor Stokes, and Blaine Dawson lead one of the most knowledgable, capable, high energy, and exciting teams we’ve ever backed.

Welcome to the @Grandvcp portfolio Preczn! We can’t wait to see what’s in store and feel honored to join you on the journey!