OneCore Financial Network Inc., a provider of on-line financial services to small businesses, received strong votes of confidence - and cash - from two large brokerage firms.
The Bedford, Mass.-based company is announcing today that Merrill Lynch & Co. and PaineWebber Inc. are among the investors in its third round of financing, which totaled $30 million. The brokerages said they want more than just financial returns; they seek to offer OneCore's services to their own customers.
"OneCore.com has successfully developed and deployed services that enable entrepreneurs to take advantage of the Internet and to better manage their finances," said Frank Zammataro, first vice president and senior director of strategic technologies for Merrill Lynch's private client group. "We look forward to leveraging this relationship to create joint service offerings that complement our own e-business services."
Jack Littman-Quinn, president and chief executive officer of OneCore, said his company and the two brokerages are examining what services they could offer each other's customers. "It's a very exciting time for all of the companies," he said.
OneCore said it would use the $30 million to expand service offerings, marketing efforts, and infrastructure.
Besides Merrill Lynch and PaineWebber, new investors in the third round include Century Capital Management, Onex Ventures, and a family trust run by Chuck Burtzloff, the chief executive officer of Cardservice International Inc. First round contributor CMGI Inc. also participated.
Terms of the financing were not disclosed, but Mr. Littman-Quinn said the investors put in "fairly equal" amounts.
OneCore offers on-line cash management accounts to small businesses, along with electronic bill payment services, payroll processing, retirement plan management, and merchant account processing. It offers the accounts through OneCore Securities Inc., a licensed broker-dealer subsidiary.
OneCore is among a handful of companies and services that have sprouted up to provide financial services over the Web to small businesses. Atlanta-based Ebank.com targets that market through the Internet and plans to open low-cost branch offices that would enable loan officers to make house calls to Ebank customers.
Intuit Inc. recently began selling a new version of its popular QuickBooks accounting software for small businesses; it features Internet links to services such as merchant account processing and Web site design and hosting.
These initiatives are using the Internet to address an underserved segment of the market, industry experts say.
"Small businesses have been what we call the Rodney Dangerfields of retail banking," said Les Dinkin, managing principal of NBW Consulting Group in Westport, Conn. "They don't get enough respect."