ZenBusiness buys Joust, challenger bank for freelancers
ZenBusiness, which helps entrepreneurs launch and run their companies, said Thursday that it has bought Joust, a challenger bank for freelancers.
The deal is part of a recent trend in financial services that some call embedded finance or invisible banking, in which banking becomes a behind-the-scenes component of another activity.
Entrepreneurs come to ZenBusiness for help in starting, running and growing a small business, including filing the paperwork for a limited liability corporation; filing taxes and annual reports; and obtaining a website, email addresses and business insurance.
“It's hard enough to make money as a business,” said Ross Buhrdorf, CEO and co-founder of ZenBusiness. “You don't need to deal with all of these other pieces that we handle for you. And even more than that, when you're a small business, you don't know what to actually do and who to use. And so we curate that all for this segment.”
ZenBusiness will now provide the banking services Joust has been offering, including a business bank account and a feature called PayArmour that lets freelancers obtain half the money a client owes them instantly, for a 6% fee. The Joust portion of the company will be called ZenBusiness Money.
“Our customers want banking as part of a bigger solution that adds more value to a holistic approach,” Buhrdorf said.
Joust CEO Lamine Zarrad, whose new title will be senior vice president of financial services at ZenBusiness, said Joust’s data supports the idea that small businesses prefer integrated services.
“They don't want to think about banking in those abstract terms, what they care about is functionality,” Zarrad said. “They want to be able to download an app or sign up for a platform they need for their business. And if it has an integrated banking component that lets them accept, store and move money, they would much rather do that than go to a separate financial institution and then jump through all the hoops and go through the know-your-customer processes that are required.”
Buhrdorf also was the founding chief technology officer of HomeAway, which was sold several years ago to Expedia for $3.9 billion. At that point, he was planning on taking a year off.
“I made it about 10 months and I ran into this segment, which was really the formation business, that business that LegalZoom created,” he said. “I just knew there was a better way to do it.”
ZenBusiness has seen 100% growth in its customer base since the pandemic started, Buhrdorf said. He declined to give specific numbers but said the company has tens of thousands of customers who pay a subscription fee for ZenBusiness’s services.
ZenBusiness was partnering with Joust as an independent company before agreeing to buy it (the price was not disclosed). “We liked them so well, we asked them if they wanted to sell, and they said yes,” Buhrdorf said.
Zarrad said his team had always planned to expand into a formation business “just because it's so important in helping these individuals in workforce 2.0 to navigate their own status as a company."
When they partnered with ZenBusiness, they realized ZenBusiness had this covered and was rapidly acquiring customers, something that's not always easy to do in the small-business market.
“If you don't know how to acquire customers, and if you're not doing it efficiently, this could be company ending,” Zarrad said. “We thought, why not just combine our forces and provide this kind of a holistic solution?”
Zarrad will head all financial services efforts at ZenBusiness, which has already partnered with Divvy for credit card products and Radius Bank for a basic bank account.
Joust will stop providing a demand deposit account. Customers will link an existing bank account or create an account at Radius Bank and link that.
ZenBusiness Money will still offer a merchant account with its bank partner, nbkc.
“This is a first phase, and we're going to continue iterating on that product, continue to ask questions and and figure out what's the best configuration — does [the demand deposit account] need to be part of ZenBusiness Money or can it be kept separate, and so forth,” Zarrad said. “But the value-add that Joust brought was a seamless way to get paid faster and access your funds faster. And that's what our customers really cared about. Everything else was secondary to that.”