From Crypto To T-Bills: Inside Meow’s Hard Pivot

With just 15 employees, these 29-year-old founders are creating a financial supermarket for startups and small businesses.

By Emily Mason and Jeff Kauflin

In June 2022, five months before cryptocurrency exchange FTX collapsed, Brandon Arvanaghi and Bryce Crawford began returning funds to the customers of Meow, the neobank they had launched to help startups and small businesses earn a return on idle corporate cash through crypto.

It was both a prudent and gutsy decision. Prudent, because after the collapse of stablecoin TerraUSD in mid-May of 2022, they began hearing rumors that crypto hedge fund Three Arrows Capital would go bankrupt — which it soon did, eventually bringing a bundle of connected firms down. Gutsy, because just weeks before, they had closed a $22 million series A fundraising round from investors including Tiger Global, QED and yes, FTX itself. That money had been raised to support a platform Arvanaghi and Crawford had built allowing startups and small businesses to use their spare cash to earn yield by lending money to institutional crypto operations that themselves did lending and trading.

Now the founders had the VCs’ money, but no plan for what to do with it. “We were right (about crypto), but then we’re sitting there and we have no business model,” Arvanaghi, the 29-year CEO, recalls. “We had basically no assets on the platform and were starting from scratch. We just said, ‘Look, we’re going to figure it out.’” Arvanaghi and CTO Crawford, also 29, did figure it out, earning them spots on the Forbes 2024 30 Under 30 list for finance.

The second act they devised is as far from crypto as you can get, yet still exploited the fintech platform they’d built to collect and deploy small businesses’ cash. In March 2022, the Federal Reserve had begun raising interest rates to quash inflation. Now, the young founders realized, boring old Treasury bills were becoming a newly attractive place for businesses to park their idle cash. By August 2022, when Meow launched its first T-bill dashboard, the 3-month rate stood at 2.63%, up from 0.05% a year before. Today, it’s above 5.25%. That’s a lot of safe yield to miss out on if you’re too small, as a business, to have your own corporate treasurer to move around your free cash.

Arvanaghi and Crawford had made two smart decisions. Then they got lucky. In March 2023, Silicon Valley Bank collapsed and Meow, like other digital banks, became a winner, picking up $500 million in deposits in less than a month. “That was a digital version of the Titanic,” Arvanaghi recalls. “People ask me, ‘What was the sales process like when SVB went down?’ Was there a sales process for lifeboats on the Titanic? There was no sales process. It was the only time in our history that being lean hurt us because if we had double the people, we would’ve been on triple or quadruple the calls.”

Today, Meow has $1 billion-plus in assets on its platform, and offers its more than 500 customers a choice of high-interest, FDIC-insured checking accounts as well as T-bills—all by partnering with traditional banks, those institutions crypto was supposed to make obsolete.

Meow was born in early 2021 in a Miami apartment where Arvanaghi and Crawford were holed up writing code and cold-calling investors. The duo had become friends at Vanderbilt University while both were studying computer science. They overlapped briefly at cryptocurrency exchange Gemini where they were both engineers before Arvanaghi left for a stint at a bitcoin mining company. When he decided to start his own company, he called up his buddy Crawford, who by then held a well paid gig as a senior software engineer at Facebook (now Meta) in New York. Crawford gamely quit his job and moved to Miami.

“We just committed to getting in a closed room and coding and hoping, having the blind confidence something would work out,” Arvanaghi recalls.

The friends decided they wanted to break into the fast-growing fintech segment serving businesses and figured they needed a standout “wedge” product to do so, says Arvanaghi. At that point, interest rates were near zero. But coming from a crypto background, they had seen investors earn fat yields from lending in the crypto segment. Given the difficulty of investing in crypto, they thought they had their in: a platform enabling smaller businesses to play the yield game, too. At the end of 2021, as crypto peaked, their platform got up and running.

They were equally opportunistic when it came to choosing a name for their startup; the whimsical Meow was picked for its ability to grab attention on social media. Indeed, as SVB teetered, one VC with a healthy following posted on LinkedIn: “We are living in such a stupid timeline. Silicon Valley Bank, one of the top 20 banks in the US, is seemingly in trouble. And some folks on twitter are recommending moving cash to a fintech named Meow.”

“As long as it’s evoking some kind of reaction,” a satisfied Arvanaghi says now. It’s worth noting that the name was more of a strategic decision than a troll; from the start, the duo aimed to become a low-cost competitor by keeping marketing spending low and automating everything they could.

“What we’re doing differently is we’re treating financial services as a low-margin product,” Arvanaghi says. “We can actually become a profitable company by doing that, but that might not be the case for a company that has a thousand people or another fintech that hired 500 people.”

Talk about lean. Today, Meow still has only 15 employees (including the founders) to service the $1 billion-plus in assets on its platform. That’s more than $67 million in assets per worker, about six times the average assets per employee in traditional FDIC-insured banks.

Arvanaghi and Crawford’s timely decision to exit crypto and enter T-bills spared them from getting burned in the crypto meltdown of 2022. But it placed Meow squarely in the middle of the highly competitive niche of banking services for startups and small businesses.

They knew they couldn’t succeed over the long term with just one product–busy business owners demand convenience. So this past January, five months after opening their T-bill platform, Meow introduced FDIC-insured business checking accounts promising a 4.8% annual yield. Like most fintechs, Meow lacks a banking charter and so it partners with banks, which in turn network with other banks. For example, Meow partners FirstBank and Grasshopper Bank both offer up to $125 million in FDIC-insurance through IntraFi’s sweep program which boasts a network of nearly 3,000 banks. Another Meow partner, Third Coast, offers FDIC-insurance up to $50 million through its own network. Arvanaghi says Meow is able to secure higher yields from the banks than a small business could get on its own, since it’s bringing in a large roster of sticky customers and its own interface.

But two products aren’t enough when it comes to luring–and keeping–their target customers. Recently, Meow began offering mortgages for founders and launched a venture debt platform where startups can apply to receive financing from private credit funds and banks who bid on the deals. All of this requires a smoothly functioning platform on the front end and partners on the back end. The T-bills? They’re actually being purchased at banking giant BNY Mellon/Pershing through a partnership with fellow fintech Atomic Invest. The mortgage offering is really a marketplace–founders enter their data once, and banks and mortgage brokers make offers.

“Meow, when you think about them as kind of a general store for all of these financial products, they’re going to have to have their hooks into lots of different things,” says Frank Rotman, cofounder of QED and a lead investor in Meow’s 2022 fundraising. “Meow is really meant to be the curation and then the steering through technology of being able to move money between options,’’ he adds.

Not all of the products will make money for Meow right away—for example, it doesn’t currently get anything from the mortgage marketplace. Right now, it’s bringing in about $1 million in revenue a month through tiny fees and spreads. It charges an average annual 0.12% fee for money parked on its T-bill platform, though that varies by customer, Arvanaghi says. Similarly, it collects a small interest rate spread on the checking accounts through its bank partners.

Meow’s early clients have been other startups such as venture deal platform Sydecar and investing focused social media site Stocktwits. But it plans to go after other types of small-to-medium sized businesses, including professional service firms like dental and law offices.

Expansion isn’t just a pipe dream. That $22 million Meow raised in 2022? “We haven’t spent a penny of it,” Arvanaghi says.

But there are some formidable competitors in fintech’s business banking sector, including Mercury and Brex, which both offer high-yield checking accounts touting annual returns of 5.5% and 4.9%, respectively. Mercury also has a venture debt platform where startups can apply to receive funding from venture capitalists and saw large inflows during the fall of SVB. Arvanaghi is uncowed. “This pie is enormous and we’re just getting started,” he says.

What about when interest rates stabilize and fall? After all, high rates are the reason small businesses have been looking for new places to put their idle cash–a key selling point for Meow.

“It’s funny because the question I got most when we started the company was, ‘Oh, what happens when rates rise? Meow’s going to fail.’ And now the question is, ‘What happens when rates go down? Meow’s going to fail,’” muses Arvanaghi. But having survived one near-death experience in crypto, he’s ready to run whatever plays are needed. “I’m going to play football and we’re going to win.”