Why We Invested in InstaSwitch
Chicago Ventures5 min read·Just now--
We came to InstaSwitch the way we come to a lot of our best companies: through the network we’ve spent the last decade+ building. Lucas Ward, the former CTO and co-founder of CV portfolio company Kin, has known and worked alongside David Roberts, the Head of Engineering of InstaSwitch, for years. When Lucas told us a Chicago engineer he had mentored was teaming up with a sharp commercial fintech founder out of Unit, Daniel West, to fix one of the most expensive unsolved problems in business banking, we listened. We are excited to lead InstaSwitch’s $4.7M Seed round, with participation from 8-Bit Capital and continued support from existing investors Better Tomorrow Ventures, Panache Ventures, and operators from Unit, Square, PayPal, and Plaid.
The Problem Hiding in Plain Sight
Roughly 5.4 million U.S. small businesses try to switch their primary bank every year and ~40% of newly opened business accounts never fund at all. This leaves $72B in uncaptured revenue every year, lost not on acquisition but on activation. The reason is mundane and unglamorous, which is exactly why it has gone unsolved. Switching a business’s bank account is no longer a banking task, it’s a software task. The average small business has to log into 30 to 40 separate tools like Stripe, Gusto, ADP, QuickBooks, Square, Shopify, etc., and update routing and account numbers one platform at a time, each with its own login and MFA. The UK ran the cleanest possible experiment on this to date with their Current Account Switching Service (“CASS”). They spent ~£750M building a government-guaranteed switching rail to promote competition. Twelve years later business switching rates still sit around half a percent. The conventional read from the CASS is that businesses don’t want to switch. The real lesson is the opposite: even with smooth banking plumbing, switching rates didn’t move because the bottleneck was never the bank. It was the 30+ pieces of software sitting on top of it and continuing to drive momentum through the bank switch. These are the underlying pains InstaSwitch is solving.
What InstaSwitch Does
InstaSwitch is an embedded activation layer that banks and fintechs drop into their onboarding flow. From inside the customer’s UX, it identifies every income source, payroll provider, recurring spend, and vendor relationship attached to the business’s old account, and helps move them to the new one. Most updates complete in under thirty seconds through directly maintained agentic workflows, alongside step-by-step walkthroughs for over 300 other providers. What used to take a business owner weeks now takes a single session that can be completed async by the customer. The early data is exactly what you want to see at this stage. At Arc, accounts activated through InstaSwitch are carrying 13.1x higher operating balances than the bank-wide average. Lettuce is seeing 80%+ completion rates, with thousands of users through the flow. And when income moves to new accounts via InstaSwitch inside the first seven days, lifetime value jumps 95%.
The Technical Insight Most People Miss
This hasn’t been built before because the “write” side of open banking is meaningfully harder than the “read” side. Aggregators like Aeropay and Plaid have largely solved reading transaction data out of bank accounts. Pushing a new account number into a payroll provider’s locked-down settings screen, behind MFA, on a UI that changes every quarter, is a different problem entirely. Something that agentic AI can help with where traditional RPA once failed. InstaSwitch is one of the few places we’ve seen agentic AI executing sensitive, authenticated writes inside third-party portals in production rather than in a demo. The architecture is the part we find genuinely novel: agents handle navigation and the messy, dynamic surface area of each portal, while deterministic code handles the actual write of bank account and routing numbers. No LLM ever touches a customer’s banking credentials. That separation is what makes the system safe enough to put inside a regulated bank’s onboarding flow and remove hallucinations. The workflow library compounds with every switch processed.
Why Now, and Why This Team
Three things had to be true for this company to be possible, and all three only became true recently. Deposit competition is now a top-three priority for every bank in the country. Business switching intent has climbed from roughly 5% in 2021 to 15% annually as bank & fintech competition has continued to heighten, and agentic execution has crossed the threshold from research demo to production-grade. Daniel found this problem the right way from inside the fintech trenches as an operator. As the second sales hire at Unit, he sat across from banks and fintechs who told him, over and over, that they were bleeding deposits at the activation step and could not figure out how to stop it. He paired with David, a Chicago engineer who spent nearly four years at Braintree, maintaining the systems that paid out billions of dollars in transactions to their customers. That is the kind of pedigree that shows up everywhere in how this product is architected. Together they have already sold into a large regional bank, Arc, Lettuce and a pipeline of multi-billion-dollar institutions. There is also something special about Daniel’s hustle as a founder. Whether 2am on a Thursday or 8pm on a Sunday, Daniel is always available to pick up the phone. His pure drive and obsession with his craft are palpable.
Bank switching is the wedge, but the platform underneath it that Daniel, David and the team are building is something much larger. The same infrastructure that moves a business from one bank to another can move it between payroll providers, between payment processors, and eventually onboard them into new B2B software in a single click. InstaSwitch is, at its core, switching infrastructure for the business software stack. Banking is just the beachhead.
If activation is showing up in your numbers and InstaSwitch is not on your radar, please don’t hesitate to reach out to anyone at Chicago Ventures to get introduced to the team.
We are thrilled to be partnered with Daniel, David, and the rest of the InstaSwitch team. Welcome to the portfolio.
CV Team
