Slash has raised $41 million in a Series B funding round at a $370 million valuation on Tuesday, led by Goodwater capital. The startup, founded by Victor Cardenas and Kevin Bai, started out to provide banking services for sneaker resellers, but eventually pivoted to create bespoke banking lines for other industries instead.
The founders came up with the idea for Slash while considering many different business ideas. They eventually came across the vibrant community of sneaker resellers and found that many of these resellers were generating substantial revenue but were unable to access key bank products like virtual credit cards, because of their age or unincorporated status. While most startups with similar offerings like Mercury, Brex, and Ramp—take a horizontal approach by selling to companies across different industries, Slash operated with a vertical approach by creating banking services tailored for sneaker resellers, with the idea of expanding to other sectors.
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This strategy paid off for a long time, and Slash managed to raise seed and Series A funding from leading investors, with both funding rounds led by NBA. However, it began facing problems when Adidas ended its partnership with Yeezy, rapper Kanye West’s sneaker line. This happened following the rapper’s notorious antisemitic tirades. Yeezy had offered Slash one of its most lucrative lines of business, and so this development gutted the startup’s revenue by as much as 80% overnight.
“We had raised $19 million and hired all these people, but the market that was the bedrock of our company evaporated,” Cardenas told Fortune. For the past six months, Slash reworked its infrastructure to target other sectors, including performance marketing agencies, crypto firms, and HVAC operators, and this pivot turned out to be largely successful.
Slash plans to use the latest funding to expand its business providing specialized financial services as a neo-bank. The neo-bank model means offering a limited array of banking services without the overhead of physical branches or a full-blown bank license.
Backed by Y Combinator, NEA, Stanford University, Menlo Ventures, and the founders of Tinder and Plaid, Slash is the banking platform of choice for over 2,000 of America’s most innovative businesses, according to the company.