Embedded banking has been on a growth tear in the last several years as companies turned to APIs to embed financial services like credit, payments and deposits to grow their revenues. Now, with the tech funding landscape in significant turmoil, a company in the embedded finance market has raised a growth round that underscores the pressure being felt in that particular area of fintech.

Railsr, the London startup that rebranded from Railsbank earlier this year, has raised $46 million, a Series C that is coming in the form of $26 million in equity and $20 million in debt. The equity portion is an inside round, meaning all repeat investors, with Anthos Capital leading and Ventura, Outrun Ventures, CreditEase and Moneta also participating. Mars Capital provided the debt, which CEO and co-founder Nigel Verdon said will be used for the same purposes as the equity but is coming in at a lower cost. “Equity is expensive at the moment,” he said.

The company is not disclosing its exact valuation: Verdon called it “fair value” for the current market, and indirectly confirmed it was a down round compared to its Series B a year ago, when it raised $70 million (also led by Anthos), and Verdon said its valuation was approaching $1 billion, describing it as a “near unicorn.”

“It’s definitely not last year’s valuation,” he said of today’s Series C. “Prices have come down dramatically.”

The company is not yet profitable, Verdon noted in a statement today, describing this round as a “significant step on our route to profitability.”

The state of the market, it seems, is not far from the state of Railsr itself. Its home market currency, the pound, has been reeling against the dollar and many believe the world is on the way to a wider recession. Buying activity slowing down on a macro level, even when there remain opportunities to serve customers even in a more bearish climate.

That is all playing out for Railsr in both positive and more negative ways.

Verdon said that Railsr has been through a round of layoffs, reducing headcount earlier this year by some 14%, or 70 people. It’s also downsized its operations in Southeast Asia and Australia, where it now has a “skeleton crew” and is instead focusing on business in the U.K. and Europe. “The playbook is focus on our strengths,” he said.

On the other hand, the company’s appointed a new chairman, Rick Haythornthwaite, the ex-chair of Mastercard, and revenues grew 50% in the first half of the year, with growth, albeit less, projected for H2, numbers Verdon said were below previous projections but still going in the right direction.

Its customer numbers, meanwhile, today stand at 300, versus 220 a year ago, which use APIs from Railsr to power credit, credit cards, loyalty, and more classic banking services.

Verticals it targets include companies in the retail, venue, sporting and events sectors; as well as other fintechs. It may seem odd that a fintech might not build its own fintech services, but typically, this is because the company might be more focused on other areas like insurance or payroll and use embedded financial services to quickly expand into adjacent areas that are not their core competency. In cases of more direct banking providers, such as neobanks, the focus of the business may be around personalization and customer service. Banking thus becomes a basic (nearly commoditized) product that is easier and faster to integrate with an API rather than build from the ground up.

Railsr cites Wagestream, Aviva and racing car brand McLaren (via QtmPay) among the case studies on its site, and also notes that HelloCash, Sodexo and Payine are customers. Partners to provide services and integrations include AWS, Salesforce, Visa, MasterCard and Plaid.

Embedded finance has typically been one of the more bullish areas of the financial services market, so much so that even current research that factors in the state of the market seems to be positive on its growth. Railsr cites data from Bain & Company from earlier this month that embedded finance was powering some $2.6 trillion of financial transactions in the U.S. in 2021, and that this figure is expected to continue growing, to pass $7 trillion by 2026.

That’s one reason why existing investors are willing to back Railsr again.

“It has been a pleasure to see Railsr go from strength-to-strength as a challenger to old finance and a creator of the embedded finance economy,” said Meirav Harnoy, co-founder and managing partner of Moneta VC. “Railsr’s customers, technology and people have impressed me since I led the Series A investment round. I’m excited to see what comes next.”