As ever more transactions move onto digital platforms, a startup that is building a Swiss army knife of financial services — from payments to currency transfers, ID verifications and card issuing for companies to use by way of a single API — is announcing funding. Rapyd, a “fintech as a service” startup akin to AWS for financial services, according to its CEO, has raised $40 million. The company plans to use the funds to continue to add more functions to its platform, more staff to build them and to expand its customer base.
This Series B is notable because it is being co-led by Stripe, the payments giant that is now valued at $22 billion, as well as General Catalyst, one of Stripe’s biggest backers, which has for years also co-invested with it in strategic startups. Others in this round include Target Global (a previous investor) IGNIA and other strategic payments and fintech companies that Rapyd is not disclosing.
It’s not clear if Stripe is investing as a customer, or if it is simply backing Rapyd as an interested party (as it has in other startups it has backed): Arik Shtilman, the co-founder and CEO of Rapyd, said in an interview that he couldn’t say how and if his company and Stripe were working together. Stripe, as you might know, has made a big move to expand the kinds of services it provides to its customers beyond basic payments, and it has also continued to expand its coverage to more of the world, so there is potential for Rapyd to be involved in a number of areas.
This takes the total raised by Rapyd — based out of Silicon Valley but with R&D offices in Tel Aviv — to $60 million. Shtilman would not comment on the startup’s valuation.
(Notably, his previous company — an Israeli-based cloud services startup called ITNavigator — was sold to Avaya several years ago, reportedly for less than $100 million.)
Rapyd opened for business at the end of 2017 and Shtilman says it is on track to make “tens of millions” in revenues this year.
While it will not disclose any specific names, it currently has around 50 customers in areas like e-commerce and “gig economy”-based businesses (i.e. Uber-style transport services), as well as other types of companies where financial transactions may not be a company’s core competency, but are central to how it operates.
Like other fintech startups such as Adyen (as well as Stripe, PayPal and others), which aim to simplify complex problems behind easy-to-integrate APIs, Rapyd has built a suite of services — currently numbering five: funds collection, funds payouts, currency transfers, ID verification and card issuing, with the idea that more will be added soon — that knit together several steps behind the scenes to make the process of offering that service easy for the company, and ultimately easy for the customer to use.
For example, in payments, it works with some 100 banks around the world to enable fund collection and disbursement across a wider geography, and it’s working on extending that to 150. It can handle payments and transfers in 65 currencies and can pay out funds in more than 170 countries. Its commissions on payments are straightforward — 3.5 percent plus 30 cents for funds in; $1.50 plus one percent in cases of currency exchange for funds out — although you have to contact the company for pricing on other services.
But Rapyd’s rapid rise also runs counter to a strong trend that we’ve seen up to now in the growth of fintech. Over the last several years, there have been a plethora of startups that have launched, and thrived, by offering very streamlined products, serving a single or a small handful of related purposes. Rapyd, however, believes that ultimately that isn’t how businesses want to work.
“Simplicity is the name of the game,” Shtilman said. “It doesn’t make sense to connect five to seven different providers into your backend when you can connect just one.”
Indeed, that need will likely also lead to more consolidation in the wider, fragmented fintech market, which will also create more competition for Rapyd. But for now, it’s a compelling enough and fast-enough moving market that there is an opportunity for a startup building this in a clever way to pick up speed — and maybe even a strategic buyer who also needs this exact functionality — quickly.
“Rapyd’s product offering helps merchants, banks, telcos and fintech companies expand the scope of the products they offer, increase the number of customers they reach, and improve the overall customer experience, said Adam Valkin, partner of General Catalyst, in a statement. “Rapyd does this by helping drive the ubiquity of payment and payout options beyond debit and credit cards, towards cash, bank transfers, instant payments, e-wallets, and mobile money.”