Clearing start-up Embedded Financial attracts $20m in seed funding
Former Square executive Michael Giles aims to build a “modern clearing and custody business from the ground up” after raising pre-launch funding of $20 million.
Embedded Financial Technologies Inc is due to launch in Q3 2021. Wholly owned subsidiary, Embedded Clearing LLC, has received FINRA approval to act as a correspondent clearing and custody broker-dealer for US listed equities and options.
In a statement, the company’s CEO Michael Giles says that investors include Propel Venture Partners, Y Combinator, Bain Capital Ventures, Homebrew, Acrew Capital, SWS Ventures, Lachy Groom, Josh Buckley and founders of fintechs such as Plaid and Marqeta.
Clearing firms came under scrutiny earlier this year, when a stock frenzy over GameStop caused clearing companies to direct some trading apps, such as Robinhood Markets, to suspend trading.
“Embedded is building a modern clearing and custody business from the ground up because we believe that as of today, there is no great solution for businesses to embed access to the US financial markets,” states Giles, who previously ran Square subsidiary Cash App Investing.
“We’re looking to partner with broker-dealers, RIAs, banks, trust companies and licensed fintech start-ups, domestically and internationally, who want to build innovative product experiences for their customers.”
The Wall Street Journal reports that Embedded Financial’s future customers will be able to integrate stock trading features into their mobile apps via the start-up’s APIs, or through code that enables apps to communicate.
According to the paper, it has taken the firm – which was valued at $80 million in February – almost a year to clear regulatory hurdles.
The CEO has also announced that Embedded Financial will be participating in Y Combinator’s S20 cohort.