InstaSwitch, a company that has created an account activation infrastructure to help small businesses migrate to a new bank and fintech platforms easily, launched today with an announcement it has raised $4.7 million in seed funding. Chicago Ventures led the round, which included backing from fintech executives from Unit, Square, PayPal and Plaid.

Many small businesses that become dissatisfied with their banks don’t actually move to a new bank because of the hassle factor of moving their records.

InstaSwitch’s goal is to help banks and fintechs capture this business by making it easier to migrate payroll, income platforms, vendor payments and client direct deposits using an agentic AI-empowered platform, according to Daniel West, founder and CEO of InstaSwitch, which is based in New York City and has an office in Chicago.

“Every bank and fintech I spoke with said this is a top one or two priority problem for us, and that’s why I decided to start it,” said West. “It felt like a real problem and a really exciting opportunity to build off of.”

Previous bot-based approaches to address this challenge had a very low success rate because the technology would get blocked by anti-bot authentication, but agentic AI and other technological advances have made it possible, West said. The company has addressed previous obstacle via user permissioning, using AI agents to navigate certain aspects of the process and deploying code that updates without handing account and routing information or personally identifiable information to an agent.

Stuart Larkins, general partner at Chicago Ventures, said the fund backed InstaSwitch because of its confidence in the founder. “Daniel's got great founder-market fit,” he said. “Usually, we're underwriting some kind of vision. In this case we're not — Daniel found a problem; he had actual data. It was a perfect fit for us. We got excited.”

InstaSwitch acts as a white-labeled, embedded software development kit that deploys within 3-5 days or as a hosted flow. Income, spend and payroll update within 30 seconds, the company says.

InstaSwitch has lined up early customers including Arc, Lettuce Financial, Relay Financial, as well as regional and community banks and fintechs. Arc has reported that its activated accounts have operating balances that are 13.1 percent higher than its overall average, according to InstaSwitch.

Lettuce has seen thousands of accounts migrated to its platform from competitors since it began using InstaSwitch, according to Ran Harpaz, founder and CEO of Lettuce.

“We have moved thousands of accounts and millions of dollars from our old bank account to a new bank account provider with Instant Switch, that otherwise would be very hard to do,” said Harpaz. “We are planning to expand this and make this the default for every new customer that comes to Lettuce, saying if you don't have a business bank account because you're running on personal funds, we have a new one for you, but if you have something in place, let's switch you to the new solution. So, this would be part of every new customer experience.”