Solutions by Text Secures $110 Million Growth Round Led by Edison Partners and StepStone Group

Leading platform for compliance-first messaging and payments, Solutions by Text secures $110 million in new growth financing. Growth equity investment firm Edison Partners co-led the transaction with StepStone Group, a global private markets investment firm. Stifel Venture Bank, a division of Stifel Bank, provided a lending facility.

Since Edison Partners’ initial investment in November 2021, both SBT’s bookings and revenue have grown more than 3X through compliant messaging and payment solutions built for consumer finance businesses across origination, servicing, marketing and accounts receivable use cases. In 2023, SBT’s messaging volume increased 95% from the prior year. This year, SBT is on pace to more than double messaging volume growth.

“We are so pleased that Edison Partners and StepStone share our conviction about the vast potential for an enterprise-scale compliance platform to orchestrate text messaging and payments in consumer finance,” said David Baxter, CEO of Solutions By Text. “Consumers want an alternative to endless emails, confusing web portals, and lengthy rounds with call centers when engaging their financial providers. While texting is ubiquitous with consumers, it has not matched up with the rigorous business requirements of finance regulators and carrier networks. We have bridged this divide to drive massive returns for our financial customers and put us on an accelerated upward growth trajectory.”

Text messaging proves to be one of the most effective ways to reach consumers. Ninety percent of consumers prefer text over other forms of communication, with the majority of text messages received and read in under five minutes. Despite this, and in the face of increasing regulatory complexity and carrier policies, 60% of SBT’s new customers were not using text messaging for fear of violations over the last 12 months. The difficulty of compliance has also forced some customer engagement and messaging providers to exit the financial services sector. Currently, SBT is the only end-to-end enterprise compliance platform for messaging and payments solutions to serve the consumer finance industry.

SBT’s compliant-forward platform is also enabling its customers to tap into new opportunities such as payments, where the dynamics are ripe for messaging. Nearly 17 billion bills are issued each year in the U.S. at an annual growth rate of 7%, comprising nearly $6 trillion in spend. Of this, 40% of bills focus on consumer finances. However, while 88% of Gen Z and Millennial consumers say they would make a text payment, only 9% have been given the opportunity (see: Datos report).

“When Edison first invested in SBT two and a half years ago, we saw a founder-led, capital-efficient business with a competitive moat that went deep on regulatory and carrier compliance and wide on financial industry solutions and third-party technology integrations,” said Kelly Ford, General Partner, Edison Partners. “Since then, David and his team have consistently overperformed and further cemented unparalleled trust among regulators, carriers and leading financial institutions. It’s been an incredible partnership that we’re thrilled to continue through this next phase of profitable growth.”

With this investment, SBT will continue accelerating growth with large financial institutions, expand its payments and artificial intelligence capabilities, and seek inorganic opportunities.