Consumer applications like Venmo, Cash, and Zelle have revolutionized person-to-person instant payments. Businesses have not had the same functionality and the business-to-business payment space has long been reliant on charging significant transaction fees and tying up cash flow with long waits until funds are available. This is especially onerous for small businesses, freelancers, and startups that operate on tight margins. Hopscotch is a B2B payments platform that offers instant payments without any fees. Similar to the consumer apps, users can collect and receive payments from clients and vendors, whether they have Hopscotch accounts or not. The company just launched its payment product this week in private beta and plans to expand its offering to holistically service the needs of small businesses.
AlleyWatch caught up with Hopscotch CEO and Cofounder Reed Switzer to learn more about how the business is catering to the needs of a digitally savvy generation, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Hopscotch, a community-oriented B2B payments platform that facilitates instant, fee-free payments for small businesses and startups, today announced the launch of its private beta in tandem with a $6.1M Seed extension, bringing the company’s total funding to $9.95M. The round was led by Shine Capital and Stellation Capital with participation from additional investors, including NOEMIS Ventures, 3KVC, Valar Ventures, and Red & Blue Ventures.
Tell us about the product or service that Hopscotch offers.
Hopscotch is a purpose-led brand that helps businesses process their accounts payable and receivable without charging them fees. The platform enables its users to transact with their clients and vendors, even if their clients and vendors don’t have a Hopscotch account. For Hopscotch users, when their client issues a payment, the funds are instantly transferred and accessible, a distinction from traditional payment methods with standard processing periods of 2-8 days. The entire process is also completely fee-free.
Hopscotch’s stored value accounts and consumer-grade profiles enable us to create an unmatched business payments experience. An experience that more closely resembles the consumer world than the business world. But our vision extends beyond a payments platform. We’re building a destination for small businesses to connect, transact, and grow together. A simple, easy-to-use interface. A community of businesses thriving. Together. As one. Today, we look like a payments platform. Tomorrow, we’re defining a new category.
What inspired the start of Hopscotch?
Hopscotch is personal for me. I got my start in the apparel space and built a brand alongside a couple of peers. It was during these years that I had my first interactions with vendors and manufacturers and experienced the intricacies of business-to-business payments. At the time, I didn’t equate these inefficiencies to an opportunity. Fast forward a couple of years later, I was working in Operations at a music streaming startup. Here, it became clear that business payments lagged behind the consumer world. Current business payment platforms are ubiquitous with complexity and inefficiency: feature overload, limited connectivity between users, lengthy waits to receive funds, and high transaction fees.
As a member of Gen-Z and a fan of Venmo, I don’t see any reason why businesses should have to either wait or pay to access money that they’ve already earned. And I certainly don’t see a reason why business payment platforms need to be more complicated than the systems we use in our personal lives. I’m humbled to work alongside a group of scrappy, career builders who share the same passion for moving small businesses forward.
How is Hopscotch different?
Today, too many business payment platforms are ubiquitous with complexity and inefficiency: feature overload, limited connectivity between users, lengthy waits to receive funds, and high transaction fees. The result is a B2B payment ecosystem that hinders growth and prevents businesses from being adaptable in highly competitive markets.
Layer in a global pandemic, remote work, and the rise of tech-native Millenials and Gen-Zers in the workforce, and you have a category-defining opportunity to rewrite the way businesses transact. A new generation of workforce talent has grown accustomed to instant payment transfers in their personal lives, and now they want that same fee-free, fast services for their businesses.
Fee-free B2B payments is just one part of the Hopscotch vision. Hopscotch’s stored value accounts and consumer-like business profiles also create an unmatched payments experience. Small businesses such as branding agencies or consultants can leverage Hopscotch to seamlessly manage their accounts payable and receivable. The platform integrates with their existing accounting systems, such as Quickbooks, so that every action on Hopscotch is automatically reconciled.
What market does Hopscotch target and how big is it?
Hopscotch resonates most with freelancers and small businesses in the business services space. The vendor-decision makers at this level and in this industry skew younger and are more comfortable with using the latest technology to give their business an edge. Hopscotch’s stored value accounts and consumer-grade business profiles enable us to offer an unmatched payments experience that is intuitive for all age groups. Business payments are a trillion-dollar opportunity.
What’s your business model?
Hopscotch is still in beta and does not generate revenue; we do not sell our user’s data. Soon, we will launch opt-in services that users can leverage to further improve their business’s cash flow. These services will be offered for a small fee, generating revenue.
What are your post-COVID office plans??
At the early stage, culture is everything. Since the jump, our team has been in the office, which helps drive collaboration and spark real connections. We’re not naive, though. Working from home is important, too. We operate with a hybrid model, so team members get the best of both worlds.
At the early stage, culture is everything. Since the jump, our team has been in the office, which helps drive collaboration and spark real connections. We’re not naive, though. Working from home is important, too. We operate with a hybrid model, so team members get the best of both worlds.
What was the funding process like?
The whole process was a very low lift. The round was preempted and our investors were cognizant of the fact that our focus was and is on the product, not fundraising. All said and done, it took roughly one month to close.
What are the milestones you plan to achieve in the next six months?
Our Northstar: create a truly magical business experience, starting with payments.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Focus on the product, not fundraising. Great products attract great investors.
Where do you see the company going now over the near term?
With the launch of its private beta, Hopscotch has opened its virtual doors to waitlist customers. Beginning in Q2, businesses that have been invoiced or paid by existing Hopscotch users can join by registering with the email their vendor or client used.
Hopscotch has grown quickly since the assembly of its founding team in August 2021. The seed extension will enable Hopscotch to double the team across all departments, expedite the launch of revenue-generating features, and continue to scale their growing community of Hopscotchers.
What’s your favorite outdoor dining restaurant in NYC?
Bar Italia on the UES is solid.
