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At a time when venture capitalists are shying away from blockchain startups, Paystand, the payments fintech is bucking the trend.
It just closed a $20 million Series B round of funding, bringing on DNX Ventures, and Battery Ventures, among others as new investors. All told its raised $28.3 million since its inception in March of 2013. Paystand is also in growth mode. Business is up more than 60% in the past twelve months, with more than 160,000 businesses transacting across its platform.
Paystand operates a Venmo-like payments platform for enterprises that runs on the blockchain, the same technology that enables Bitcoin and other cryptocurrenices. The fintech is among a group of startups going after the $18 trillion dollars paid out in paper checks each year.
Peer-to-peer payments have taken off among consumers but companies have been slow to follow suit. Transactions are typically paid by check or commercial card, with the latter resulting in fees. It’s a big reason companies are all sizes are clinging to an “old way” of conducting business. Paystand and a slew of other fintechs are trying to change that. They are applying digital technology to the problem, eliminating fees, increasing transparency and quickening the time it takes to complete payment transactions.
“To remain competitive, businesses need to adopt digital infrastructure,” said Roman Leal, managing director at Leap Global Partner, an existing Paystand investor who participated in the Series B round of funding. “Just as cloud brought efficiency to many areas of the enterprise, Paystand’s technology helps automate today’s highly manual processes and unlocks the enterprise cash cycle. It’s the infrastructure for how money will move in the next 100 years.”
Paystand’s blockchain payment platform is fee-free. Customers are charged a subscription instead. The clients using Paystand’s platform hail from a bevy of different industries including insurance, manufacturing, transportation, and pharmaceuticals. Paystand claims it can save them more than 50% on the cost of accepting payments and processing invoices. That’s made possible because of blockchain, but you won’t hear Paystand hyping that. It’s positioning itself as a software provider, not a blockchain startup.
“Blockchain is an enabling technology for us to deliver, better, cheaper and more efficient software,” said Jeremy Almond, founder and CEO of Paystand “Blockchain is just a buzz word.”
That’s sure been the sentiment among venture capitalists in 2019. Despite the promises blockchain technology brings, investors stayed away from the market. According to CB Insights equity funding for blockchain startups plummeted more than 30% last year. In the fourth quarter alone blockchain startups raised 36% less than a year earlier. There were pockets of strength. Ripple, the enterprise payments network raised $200 million, giving it a valuation of $10 billion. Figure Technologies raised $103 million to expand its blockchain platform for home equity loans while PeerNova, the blockchain startup that helps financial firms manage data workflows, raised $31 million. CB Insights found most of the funding was geared toward blockchain startups helping enterprises streamline business processes.
“Companies focused on building significant value will continue to grow fast and are going to be resilient companies for the next decade,” said Almond. “The blockchain space is a little bit like eCommerce was in the late 90’s. You needed Amazon to prove there was a ‘there there.’”