LILI

Lilac Bar David spent years in traditional banking in Israel before spotting a gap. The number of freelancers in America was exploding, and none of the banks were built for them.

A freelancer is a business and a person at the same time, and old banks force them to keep two messy sets of books. In 2018 she teamed up with engineer Liran Zelkha and launched Lili in New York.

The idea was one account that handles both sides of a freelancer's money life, spending and taxes, without the paperwork nightmare.

Lili is a neobank, a bank that lives on your phone with no branches. It works with a partner bank to hold deposits, so the money is FDIC-insured.

Lili makes money mostly from the fee merchants pay when you swipe the Lili debit card, plus paid subscription tiers with extra tools. There are no monthly fees on the basic account.

The real product is the tax and bookkeeping help baked in. Freelancers pay, in swipes or subscriptions, for the peace of mind of not drowning in receipts.

The core is a fee-free business checking account with a Lili Visa debit card. On top sits the good stuff.

Built-in expense tracking sorts business spending automatically. The Tax Bucket sets money aside for taxes as you earn.

There are invoicing tools so freelancers can bill clients, plus simple accounting and reporting to make tax season less painful. Paid tiers add more advanced tax and software features.

Lili grew by owning a niche the giants did not want. Instead of fighting Chase for everyone, it went straight for freelancers, gig workers, and solo founders.

The killer feature was the tax tool. Lili automatically sets aside a chunk of every payment into a Tax Bucket, so freelancers are not blindsided in April.

It doubled its account base in under six months during the COVID-19 pandemic, when millions of newly out-of-work Americans started freelancing. Solve one specific pain really well, and word spreads on its own.

Neobanks have a nasty economics problem. Most of their money comes from tiny swipe fees, so they need huge numbers of active users to make real profit.

Lili also does not hold a bank charter itself, so it leans on partner banks and the rules that govern them. And the niche is getting crowded.

Everyone from Chime to the big banks now eyes freelancers and small businesses. Lili's edge is the tax and accounting tools, but features can be copied.

Staying ahead means constantly out-building bigger, richer rivals.

Lili raised $80 million in total. The $55 million Series B in 2021 was led by California fintech firm Group 11, which had also led an earlier round.

Other backers include Foundation Capital, AltaIR Capital, Torch Capital, and Zeev Ventures. The money funded a hard push to grab freelancers during the pandemic freelance boom, when the US gig economy was worth an estimated $1.2 trillion.