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SoftBank-backed TabaPay is acquired a16z-backed Synapse’s assets following its bankruptcy.

Following a challenging year, Synapse, a BaaS startup, has recently filed for Chapter 11 bankruptcy.

Both companies have confirmed that TabaPay will be acquiring Synapse’s assets as a result.The deal is awaiting approval from the bankruptcy court.

Established in 2017, TabaPay is a platform for instant money movement based in Mountain View. The company received backing from SoftBank in a round of funding in 2022, the details of which were not disclosed. The amount of venture capital raised is unclear.

Based in San Francisco Synapse, a platform that empowers banks and fintech companies to create financial services, was established in 2014 by Bryan Keltner and Sankaet Pathak, the CEO originally from India.

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Andreessen Horowitz led the company’s successful $33 million Series B funding round in 2019. This came after the company underwent a rebranding from SynapseFi. That was the most recent funding round for the company. It generated a little over $50 million in venture capital. Additional supporters include Trinity Ventures and Core Innovation Capital.

TabaPay highlighted the fact that Synapse achieved impressive growth of over 650% in a span of five years, earning them a spot on Deloitte’s 2023 Fast list. Nevertheless, the company experienced two significant layoffs in the previous year, attributing them to a decline in growth.

In October of last year, Synapse made the difficult decision to reduce its workforce by 86 employees, which accounted for approximately 40% of the company. This occurred following the startup’s decision to lay off 18% of its employees in June of last year. During that period, Synapse acknowledged that the prevailing economic conditions had started to affect its clients and platforms, thereby impacting its projected growth.

In addition to having to downsize their workforce, Synapse faced challenges last year when they acted as a middleman between banking partner Evolve Bank & Trust and business banking startup Mercury. During the conclusion of their partnership, there were reported tensions between Evolve and Synapse as they navigated the transition after Evolve and Mercury decided to work together independently.

According to reports, the entities were pointing fingers at each other for a deficit of over $13 million in customer funds at Evolve, along with various other issues that have been ongoing for at least three years. Both companies failed to acknowledge the allegations.

In a Medium post, Pathak expressed his enthusiasm for the acquisition, stating that customers will have the opportunity to be a part of a successful ecosystem that includes 15 bank partners, 16 network connections, over 2,500 existing clients, and a team with extensive domain expertise.

Rodney Robinson, the co-founder and CEO of TabaPay, expressed in a written statement that the assets of Synapse would seamlessly complement our current range of services. To expand its offerings while ensuring continuity for Synapse clients and banks.

Challenges with banking-as-a-service


The banking-as-a-service industry has experienced significant challenges in recent times. Numerous companies in the industry have made the difficult decision to downsize their workforce over the past year. Recently, Synctera made the difficult decision to reduce its workforce by approximately 15%. Treasury Prime made the difficult decision to reduce its staff by 50% in February, following its successful $40 million Series C raise announced a year prior. Last July, Figure Technologies, including Figure Pay, made the difficult decision to lay off 90 employees, which accounted for approximately 20% of its workforce.

Meanwhile, Piermont Bank recently ended its partnership with startup Unit, as reported by Fintech Business Weekly.

BaaS covers a variety of business models that involve offering other market participants services resembling those that banks provide. This can include offering banking services without underwriting, providing banking components, or acting as a fintech that offers bank-like services without being a bank itself.

Entrepreneurs in the BaaS industry have encountered various obstacles, particularly the increased scrutiny from regulators in 2023. As reported by S&P Global Market Intelligence, last year, a significant portion of severe enforcement actions from federal bank regulators were attributed to providers of BaaS to fintech partners.

Rohit Mittal, co-founder and CEO of Stilt, has extensive experience in this area. His company was acquired by JG Wentworth in late 2022.

In a post on X, Mittal pointed out that even though banking-as-software has been around for a decade, it remains an industry without any major billion-dollar businesses. Mittal expressed his concern, stating that investors have spent over $1 billion without generating equivalent value. The entire vertical remains relatively small in terms of the value generated through exits.

He mentioned examples such as the lawsuits involving Synapse and Solid, which became public knowledge in October. In these cases, FTV Capital demanded the return of their investment.

According to an email statement from Arjun Thyagarajan, co-founder and CEO of Solid, the case has been resolved and FTV is no longer associated with the company.

There have been other instances of M&A activity as well. In June of last year, FIS, a major player in the fintech industry offering various payment, banking, and investment services, made an announcement about its acquisition of Bond, a startup that focused on embedded finance.

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