Stripe, with its $95 billion valuation, is tackling the payments landscape with a whole-platform approach, bringing dozens of adjacent services to hold a broader and deeper set of customers who use it via APIs. use these services. But the world of so-called “embedded finance” still has plenty of room for smaller players to bring a more sophisticated approach to business by building complex financial processes that can be integrated by third parties to conduct their own businesses. , and today one of them is announcing some funding to support its own mission.
Dwolla, which provides an API that allows companies to rapidly create and facilitate payments, with a particular focus on ACH (automated clearing houses, or payments or transfers between banks or other financial institutions) Also, has closed $21 million in funding, using that money to continue to build out the functionality of its service and specifically how it integrates and provides greater accountability of card payments; hiring more talent; and begin the process of taking its rails to more markets outside the US, most likely looking at Canada, the UK and Australia first.
Foundry Group is leading the round, with Park West Asset Management LLC, Union Square Ventures, Detroit Venture Partners, Firebrand Ventures and Next Level Ventures also participating. Trezor CEO Jeremy Andrus is also in the round as an individual investor. Other investors in the company include Andreessen Horowitz, High Alpha, Thrive Capital and Ludlow Ventures, and CEO Brady Harris said in an interview that Dwolla would not disclose its valuation at the moment, but would consider it “what is happening with transactions and payments”. described as “competitive”. in totality.”
Dwolla is based out of Des Moines, Iowa, and has been under the radar for a few years now. It had raised just over $50 million since 2009 before this round, which is a relatively modest amount for a fintech these days. It is the largest single round of $21 million ever.
But it is also quietly seeing a lot of growth. In 2019, Dwolla processed $11 billion in gross payment volume on its platform. This increased to $ 20 billion in 2020. This year it is estimated to be $30 billion, Harris said. Clients include both large institutions and fintechs who want to incorporate faster and more efficient ACH-based payments into their services, without the serious work of building them from the ground up, as well as businesses that want these in their stacks. With special requirements about how they want to be white-labeled and customized.
Altogether the company has approximately 3 million end users on its platform, which are channeled through the approximately 500 customers who use its services. Those customers include real estate companies, educational institutions and retailers, and brands like GOAT, Ibotta, and Rally. Some of those customers are bigger than you think. Harris told me that one of its clients using the Dwolla API in the white-label service is a fintech that sees about $9 trillion in gross transactions. (Dwoula is under an NDA so can’t disclose the name.) The 30 million number is currently increasing by 1.5 million each quarter, so it’s actually seeing a lot of transaction traffic right now, Harris said.
And $30 billion is, of course, a small part of the payments pie, with transactions estimated at $5.4 trillion in 2020 and projected to grow to $11.29 trillion by 2026.
As Harris describes it, while there are plenty of options in the market today for companies that want to incorporate payments, and especially bank transfer-based payments, into their stack, Dwarola’s unique approach is that it has created this special feature. Made the service more efficient, and easily customizable for those who want to add more features to the process. (This may involve more time, which may involve a mixed approach, including card payments or other payment methods, or something else entirely.)
“The ACH product is something that the consumer could pull off the shelf at a payments company like Stripe, but it’s about creating more customization,” Harris said. “We find a lot of people who are doing mid-integration with another provider but it can’t do what they want, and that’s why they come to us. We like to think of ourselves as programmatic and flexible.”
This focus and the mastery of its location have helped Dwarola’s star grow not only with customers but also with investors.
“Dwolla continues to push the needle on innovating modern business payments. Moving towards the B2B space, Dwolla was positioned to provide a much-needed solution for business payments,” said Foundry Group partner Chris Moody said in a statement. “Now, Dwolla Is using that drive and innovation to completely change the way today’s leading brands transfer money. Doubling our investment was a no brainer as we continue to see the value of the company in modernizing B2B payments and the importance of fintech for companies operating at their peak. “