Stripe, with its $ 95 billion valuation, has embraced the payments landscape with a full platform approach, bringing in dozens of adjacent services to hook a larger, deeper set of customers who use those services through APIs. . But in the world of “integrated finance”, there is still plenty of room for small players to bring a more sophisticated approach to the business of building complex financial processes that can be integrated by third parties to carry out their own businesses. , and today one of them announces funding to support his own mission.
Dwolla, which provides an API that allows businesses to create and facilitate rapid payments, particularly with a focus on ACH (Automated Clearing House, or Payments or Transfers Between Banks or Other Financial Institutions), has closed a financing $ 21 million, money that he will use to continue to develop the functionalities of his service and in particular how it integrates and offers greater responsiveness to card payments; hire more talent; and starting the process of getting its rails to more markets outside of the United States, probably looking first at Canada, the United Kingdom and Australia.
Foundry Group is leading this cycle, with participation from Park West Asset Management LLC, Union Square Ventures, Detroit Venture Partners, Firebrand Ventures and Next Level Ventures. Jeremy Andrus, the CEO of Traeger, is also in the round as an individual investor. Other investors in the company include Andreesen Horowitz, High Alpha, Thrive Capital and Ludlow Ventures, and CEO Brady Harris in an interview said Dwolla would not disclose his valuation at this time, but described him as “competitive in it. that happens with transactions and payments. globally.”
Dwolla is based in Des Moines, Iowa, and has been somewhat under the radar over the years. Since 2009, she had raised just over $ 50 million before this round, a relatively modest amount for a fintech these days. That $ 21 million is his biggest spin to date.
But it has also seen quiet growth. In 2019, Dwolla processed $ 11 billion in gross payment volume on its platform. In 2020, that figure has risen to $ 20 billion. This year it is expected to be $ 30 billion, Harris said. Customers include both larger institutions and fintechs who want to incorporate faster and more efficient ACH-based payments into their own services without going through the tedious work of building them from scratch, as well as the companies that do them. also want in their stack, with special requirements as to how they want white label and personalization.
In total, the company has some 3 million end users on its platform, which are routed through some 500 customers using its services. These customers include real estate companies, educational institutions, retailers and brands like GOAT, Ibotta and Rally. Some of these customers are bigger than you might think. Harris pointed out to me that one of his clients using the Dwolla API in a white label service is a fintech with some $ 9 trillion in gross transactions. (Dwolla is under NDA so cannot release the name.) That number of 3 million, Harris said, is currently increasing by 1.5 million each quarter, so there’s really a lot of deal traffic right now.
And $ 30 billion is, of course, only a small part of the payments pie, with transactions estimated at $ 5.4 trillion in 2020 and expected to reach $ 11.29 trillion by 2026.
As Harris describes, while there are many options on the market today for businesses that want to incorporate payments and in particular bank transfer-based payments into their stack, Dwolla’s unique approach is that it has made this particular service more efficient, and easily customizable for those who wish to add more functionality to the process. (This could include more time, incorporating a blended approach that includes card payments or other payment methods, or something else.)
“ACH products are something a consumer can pull off the shelves of a payment company like Stripe, but it’s about creating more personalization,” Harris said. “We have a lot of people who are in the process of integrating with another vendor, but they can’t do what they would like, so they come to us. We like to think of ourselves as programmatic and flexible.
This concentration and mastery of its space has helped the star of Dwolla to rise not only with clients but also with investors.
“Dwolla continues to push the needle on the innovation of modern corporate payments. By pivoting towards the B2B space, Dwolla was able to provide a much needed solution for corporate payments, ”said Chris Moody, partner, Foundry Group, in a statement. “Now, Dwolla uses that dynamism and innovation to completely transform the way today’s big brands move money. Doubling our investment was a no-brainer as we continue to see the value of business in modernizing B2B payments and the importance of fintech to keep businesses operating at their peak.