Fundbox raises $176 million Series C to build ‘Visa’ for B2B payments

Credit cards have become all but ubiquitous for consumer transactions, and it isn’t hard to see why. By intermediating payments, networks like Visa allow buyers and sellers to exchange money for goods and services without knowing the financial risk profile of the counter-party. Rather than applying for credit at every merchant you shop at, you apply once at your issuing institution, and then can transact with every merchant on the network. It’s the simple formula: reducing friction means more sales, and therefore more profits.

Yet for all the innovation in the consumer side of the economy, there has been an astonishingly limited amount of innovation in the B2B world. Payments between businesses are still conducted through invoices, with net payment terms that can exceed 90 days and with little knowledge of the financial risk of the counter-parties. There is no FICO score for business as there is with consumers, nor is there a system that can intermediate those transactions and reduce their friction.

That’s where Fundbox comes in. The SF-headquartered startup wants to ultimately transform B2B payments by creating a Visa-like payments network that allows businesses to transact with each other without having to know counter-party risk while also getting everyone paid faster.

It’s a vision that has pulled in the attention of even more venture capital. The company, which was founded in 2013, announced today that it has raised $176 million in a series C equity financing led by a consortium of funders, including Allianz X, Healthcare of Ontario Pension Plan, HarbourVest and a litany of others. Existing backers Khosla, General Catalyst, and Spark Capital Growth also participated. With this new round of capital, the company’s total equity funding reaches upwards of $300 million.

In addition to the equity capital, the company also announced that it has raised a $150 million credit facility to underwrite its product.

Fundbox CEO Eyal Shinar said that a priority in this fundraise was to select backers who not only could invest in equity, but also had large balance sheets who could expand the company’s underwriting capability as it scales.

Today, Fundbox’s core product is a revolving line of credit for small businesses. Cash flow is a huge concern for many companies, since they often have to wait for a payment from an invoice to arrive before investing in their next projects or hiring more employees. A revolving line of credit allows companies to flexibly draw down and pay back a loan, while only paying fees on what a company uses.

To apply for the loan, companies connect Fundbox to their financial data store (for example, QuickBooks), and Fundbox slurps in the data and offers a credit decision in as fast as minutes. Companies can then tap their line of credit almost immediately and use it as working capital. As invoices are paid, companies can then pay off their line of credit and stop paying fees.

From that product base, Shinar ultimately sees Fundbox as a GDP-scale startup, given the value it could potentially unlock for companies and the economy at large. “There are more than $3 trillion locked in those invoices,” he explained to me, “$3.4 trillion flows through consumer credit cards, but $23 trillion are in invoices … and even if you focus on [just] small and medium business, it’s $9 trillion.”

As the company collects data from all the players in the market, it wants to build upon those data network effects to ultimately operate the payment rails for B2B transactions. So instead of offering a line of credit to the seller, it could facilitate both sides of the transaction and get rid of the root complexity in the first place.

It’s a bold vision, and certainly one that has attracted a variety of players. In the startup world, Kabbage (whose co-founder and president Kathryn Petralia I will be interviewing at TechCrunch Disrupt SF next week) has built a business around line of credit lending and has similarly raised large amounts of venture capital.

Larger companies like Square, PayPay, and Intuit (which owns the popular accounting software QuickBooks) have introduced various lending products to B2B customers. And in terms of payments, Stripe through its new credit card and Brex offer the means for companies to empower their employees to make purchases on behalf of the company.

Shinar said that a huge priority for Fundbox has been to make underwriting more efficient. He said that a large percentage of the current employee base at the company is data scientists, and the company has built upon the wave of digitalization that has taken place among small and medium businesses. “Every company has at least one set of APIs … and it is accessible, and it is granular,” Shinar said. By just tapping into those existing data feeds, Fundbox is able to avoid the human underwriting common with much of business lending today.

One initiative the company has undertaken is a tool dubbed “X-Ray” to better describe how the company’s machine learning models are really underwriting its loan products. Shinar noted that payments is a highly-regulated space, and that the company has to be able to explain its decisions and how they are unbiased to any regulator that might start asking questions.

The company today has 240 employees spread across SF, Tel Aviv, and a recently launched office in Dallas. Shinar says that he wants to use the new funds to “go on the offensive” and “double and triple down on what is working.”


By Danny Crichton

Payments giant Stripe debuts a credit card in its latest step into the financing fray

Last week, when the popular payments startup Stripe made some waves with its first move into money lending through the launch of Stripe Capital, we reported that the company was also soon going to be launching a credit card. Now, that news is official. Today, the company is doubling down on financing with the launch of corporate cards for business customers.

Announced officially today to coincide with the company’s developer event Stripe Sessions, the Stripe Corporate Card — as the product is officially called — is a Visa that will be open to businesses that are incorporated in the US, although they can operate elsewhere.

Notably, users are expected to pay their balance in full each month, so for now there is no interest rate, or fee, to use the card, with Stripe making its money by way of the interchange fee that comes with every transaction using the card.

“We’re not freezing cards based on late or no payments,” Cristina Cordova, the business lead overseeing the launch, said in an interview. “A pretty common reason for non-payment is that a person switched bank accounts and forgot to update the information. But we think we’ll have fewer problems because we have banking information for accepting revenue, by way of our payments business.”

The move is another major step ahead for Stripe as it continues to diversify its business and bring on more financial products to become a one-stop shop for e-commerce and other companies for all the transactions they might need to make in the course of their lives. It is a little ironic that it’s taken years for credit cards to get added into the mix, considering Stripe’s earliest homepages and marketing efforts were built around the design of a credit card (a reference to taking payments online, not issuing credit, of course).

In any case, the list of products now offered by Stripe is long — longer, you might say, than it takes to incorporate a Stripe service into a developer workflow. In addition to its API-based flagship payments product — which is available as a direct service or, via Stripe Connect, for third parties via marketplaces and other platforms — it offers billing and invoicing, in-person payment services (via Terminal), business analytics, fraud prevention on transactions (Radar), company incorporation (Atlas), and a range of content around business strategy.

Some of these Stripe products are free to use, and some come at a price: the main point for offering them together is to build more engagement and loyalty from customers to keep them from migrating to other services. In that regard, credit cards are a cornerstone of how businesses operate, to handle day-to-day expenses in a more accountable way, and this is an area that is already well-served by others, including startups like Brex but also a plethora of challenger and traditional banks. So as much as anything else, this is a clear move to help stave off competition.

At the same time, it underscores how Stripe is leveraging the huge amount of data that it has amassed about its users and payments on the platform: it’s not just about enabling single services, but about using the byproducts of those services — data — to put fuel into new products.

Today, to underscore its global ambitions in that regard, Stripe is adding some expansions to several of its existing products. For example, it will now allow businesses to make payouts in local currencies in 45 countries (an important detail, for example, for marketplaces and network-based companies like ridesharing businesses).

The credit card product will follow a model similar to that of Stripe Capital. As with the lending product, there is a single bank issuing the credit and the card. Amber Feng, head of financial infrastructure for Stripe, confirmed to me that it is actually the same bank that’s providing the cash behind Stripe Capital. Stripe is still declining to name the bank itself, but hints that we may hear more about it soon, which leads me to wonder what news might be coming next.

(Funding perhaps would make sense? The company has raised a whopping $785 million to date and has a valuation of $22.5 billion at the moment. Given that Stripe has made indications that a public listing is not on the cards soon, that might imply, with the launch of these new financing products, that more capital might be raised soon.)

Also similar to Stripe Capital, the underwriting of the card is based on Stripe data. That is to say, business users are verified and approved based on turnover (revenues) as measured by the Stripe payments platform itself; and in cases where applicants are “pre-revenue”, they can be evaluated based on other data sources. For example, if they have used Stripe Atlas to incorporate their businesses, the paperwork supplied for that is used by Stripe to vet the customer’s suitability for a credit card.  

Notably, the cards will be delivered in the spirit of instant gratification: if you are applying and get approved, you can download a virtual card within minutes to your Apple Wallet as you await the physical card to arrive in the post.

Stripe is big on data in its own business, and it’s bringing some of that into this product with spending controls that can be set by person and by category; real-time expense reporting by way of texts; rewards of 2% back on spending in the business’s most-used categories; and integration with financial software like Quickbooks and Expensify.


By Ingrid Lunden

APIs are the next big SaaS wave

While the software revolution started out slowly, over the past few years it’s exploded and the fastest-growing segment to-date has been the shift towards software as a service or SaaS.

SaaS has dramatically lowered the intrinsic total cost of ownership for adopting software, solved scaling challenges and taken away the burden of issues with local hardware. In short, it has allowed a business to focus primarily on just that — its business — while simultaneously reducing the burden of IT operations.

Today, SaaS adoption is increasingly ubiquitous. According to IDG’s 2018 Cloud Computing Survey, 73% of organizations have at least one application or a portion of their computing infrastructure already in the cloud. While this software explosion has created a whole range of downstream impacts, it has also caused software developers to become more and more valuable.

The increasing value of developers has meant that, like traditional SaaS buyers before them, they also better intuit the value of their time and increasingly prefer businesses that can help alleviate the hassles of procurement, integration, management, and operations. Developer needs to address those hassles are specialized.

They are looking to deeply integrate products into their own applications and to do so, they need access to an Application Programming Interface, or API. Best practices for API onboarding include technical documentation, examples, and sandbox environments to test.

APIs tend to also offer metered billing upfront. For these and other reasons, APIs are a distinct subset of SaaS.

For fast-moving developers building on a global-scale, APIs are no longer a stop-gap to the future—they’re a critical part of their strategy. Why would you dedicate precious resources to recreating something in-house that’s done better elsewhere when you can instead focus your efforts on creating a differentiated product?

Thanks to this mindset shift, APIs are on track to create another SaaS-sized impact across all industries and at a much faster pace. By exposing often complex services as simplified code, API-first products are far more extensible, easier for customers to integrate into, and have the ability to foster a greater community around potential use cases.

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Graphics courtesy of Accel

Billion-dollar businesses building APIs

Whether you realize it or not, chances are that your favorite consumer and enterprise apps—Uber, Airbnb, PayPal, and countless more—have a number of third-party APIs and developer services running in the background. Just like most modern enterprises have invested in SaaS technologies for all the above reasons, many of today’s multi-billion dollar companies have built their businesses on the backs of these scalable developer services that let them abstract everything from SMS and email to payments, location-based data, search and more.

Simultaneously, the entrepreneurs behind these API-first companies like Twilio, Segment, Scale and many others are building sustainable, independent—and big—businesses.

Valued today at over $22 billion, Stripe is the biggest independent API-first company. Stripe took off because of its initial laser-focus on the developer experience setting up and taking payments. It was even initially known as /dev/payments!

Stripe spent extra time building the right, idiomatic SDKs for each language platform and beautiful documentation. But it wasn’t just those things, they rebuilt an entire business process around being API-first.

Companies using Stripe didn’t need to fill out a PDF and set up a separate merchant account before getting started. Once sign-up was complete, users could immediately test the API with a sandbox and integrate it directly into their application. Even pricing was different.

Stripe chose to simplify pricing dramatically by starting with a single, simple price for all cards and not breaking out cards by type even though the costs for AmEx cards versus Visa can differ. Stripe also did away with a monthly minimum fee that competitors had.

Many competitors used the monthly minimum to offset the high cost of support for new customers who weren’t necessarily processing payments yet. Stripe flipped that on its head. Developers integrate Stripe earlier than they integrated payments before, and while it costs Stripe a lot in setup and support costs, it pays off in brand and loyalty.

Checkr is another excellent example of an API-first company vastly simplifying a massive yet slow-moving industry. Very little had changed over the last few decades in how businesses ran background checks on their employees and contractors, involving manual paperwork and the help of 3rd party services that spent days verifying an individual.

Checkr’s API gives companies immediate access to a variety of disparate verification sources and allows these companies to plug Checkr into their existing on-boarding and HR workflows. It’s used today by more than 10,000 businesses including Uber, Instacart, Zenefits and more.

Like Checkr and Stripe, Plaid provides a similar value prop to applications in need of banking data and connections, abstracting away banking relationships and complexities brought upon by a lack of tech in a category dominated by hundred-year-old banks. Plaid has shown an incredible ramp these past three years, from closing a $12 million Series A in 2015 to reaching a valuation over $2.5 billion this year.

Today the company is fueling an entire generation of financial applications, all on the back of their well-built API.

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Graphics courtesy of Accel

Then and now

Accel’s first API investment was in Braintree, a mobile and web payment systems for e-commerce companies, in 2011. Braintree eventually sold to, and became an integral part of, PayPal as it spun out from eBay and grew to be worth more than $100 billion. Unsurprisingly, it was shortly thereafter that our team decided to it was time to go big on the category. By the end of 2014 we had led the Series As in Segment and Checkr and followed those investments with our first APX conference in 2015.

Plaid, Segment, Auth0, and Checkr had only raised Seed or Series A financings! And we are even more excited and bullish on the space. To convey just how much API-first businesses have grown in such a short period of time, we thought it would be useful perspective to share some metrics over the past five years, which we’ve broken out in the two visuals included above in this article.

While SaaS may have pioneered the idea that the best way to do business isn’t to actually build everything in-house, today we’re seeing APIs amplify this theme. At Accel, we firmly believe that APIs are the next big SaaS wave — having as much if not more impact as its predecessor thanks to developers at today’s fastest-growing startups and their preference for API-first products. We’ve actively continued to invest in the space (in companies like, Scale, mentioned above).

And much like how a robust ecosystem developed around SaaS, we believe that one will continue to develop around APIs. Given the amount of progress that has happened in just a few short years, Accel is hosting our second APX conference to once again bring together this remarkable community and continue to facilitate discussion and innovation.

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Graphics courtesy of Accel


By Arman Tabatabai

Stripe debuts Radar anti-fraud AI tools for big businesses, says it has halted $4B in fraud to date

Cybersecurity continues to be a growing focus and problem in the digital world, and now Stripe is launching a new paid product that it hopes will help its customers better battle one of the bigger side-effects of data breaches: online payment fraud. Today, Stripe is announcing Radar for Fraud Teams, an expansion of its free AI-based Radar service that runs alongside Stripe’s core payments API to help identify and block fraudulent transactions.

And there are further efforts that Stripe is planning in coming months. Michael Manapat, Stripe’s engineering manager for Radar and machine learning, said the company is going to soon launch a private beta of a “dynamic authentication” that will bring in two-factor authentication and start to see Stripe’s first forays into considering how to implement biometric factors in payments. Fingerprints and other physical attributes have become increasingly popular ways to identify mobile and other users.

The initial iteration of Radar launched in October 2016, and since then, Manapat tells me that it has prevented $4 billion in fraud for its “hundreds of thousands” of customers.

Considering the wider scope of how much e-commerce is affected by fraud — one study estimates $57.8 billion in e-commerce fraud across eight major verticals in a one-year period between 2016 and 2017 — this is a decent dent, but there is a lot more work to be done. And Stripe’s position of knowing four out of every five payment card numbers globally (on account of the ubiquity of its payments API) gives it a strong position to be able to tackle it.

The new paid product comes alongside an update to the core, free product that Stripe is dubbing Radar 2.0, which Stripe claims will have more advanced machine learning built into it and can therefore up its fraud detection by some 25 percent over the previous version.

New features for the whole product (free and paid) will include being able to detect when a proxy VPN is being used (which fraudsters might use to appear like they are in one country when they are actually in another) and ingesting billions of data points to train its model, which is now being updated on a daily basis automatically — itself an improvement on the slower and more manual system that Manapat said Stripe has been using for the past couple of years.

Meanwhile, the paid product is an interesting development.

At the time of the original launch, Stripe co-founder John Collison hinted that the company would be considering a paid product down the line. Stripe has said multiple times that it’s in no rush to go public — and statement that a spokesperson reiterated this week — but it’s notable that a paid tier is a sign of how Stripe is slowly building up more monetization and revenue generation.

Stripe is valued at around $9.2 billion as of its last big round in 2016. Most recently, it raised $150 million back in that November 2016 round. A $44 million from March of this year, noted in Pitchbook, was actually related to issuing stock related to its quiet acquisition of point-of-sale payments startup Index in that month — incidentally another interesting move for Stripe to expand its position and placement in the payments ecosystem. Stripe has raised around $450 million in total.

The Teams product, aimed at businesses that are big enough to have dedicated fraud detection staff, will be priced at an additional $0.02 per transaction, on top of Stripe’s basic transaction fees of a 2.9 percent commission plus 30 cents per successful card charge in the U.S. (fees vary in other markets).

The chief advantage of taking the paid product will be that teams will be able to customise how Radar works with their own transactions.

This will include a more complete set of data for teams that review transactions, and a more granular set of tools to determine where and when sales are reviewed, for example based on usage patterns or the size of the transaction. There are already a set of flags the work to note when a card is used in frequent succession across disparate geographies; but Manapat said that newer details such as analysing the speed at which payment details are entered and purchases are made will now also factor into how it flags transactions for review.

Similarly, teams will be able to determine the value at which a transaction needs to be flagged. This is the online equivalent of when certain purchases require or waive you to enter a PIN or provide a signature to seal the deal. (And it’s interesting to see that some e-commerce operations are potentially allowing some dodgy sales to happen simply to keep up the user experience for the majority of legitimate transactions.)

Users of the paid product will also be able to now use Radar to help with their overall management of how it handles fraud. This will include being able to keep lists of attributes, names and numbers that are scrutinised, and to check against them with analytics also created by Stripe to help identify trending issues, and to plan anti-fraud activities going forward.

Updated with further detail about Stripe’s funding.

Stripe launches a new billing tool to tap demand from online businesses

As more and more spending moves online — whether that’s shopping or subscribing to services like Netflix and Spotify — there’s increasing demand for tools that allow those companies, especially smaller ones, to start getting paid.

Stripe has made its name by providing developers with a simpler way to start charging customers and handling transactions, but today they hope to take another step by launching a billing product for online businesses. That’ll allow them to handle subscription recurring revenue, as well as invoicing, within the Stripe platform and get everything all in the same place. The goal was to replace a previously hand-built setup, whether using analog methods for invoicing or painstakingly putting together a set of subscription tools, and make that experience as seamless as charging for products on Stripe.

“These large enterprise companies have the resources to build internal recurring billing in house,” Tara Seshan, PM on the billing product, said. “Even then they would tell us what challenge it would be. What we did was took a step back and think about, how should this work, how can we make billing tools that are only available to enterprises be available to everyone. That meant something really flexible and really easy to implement. If you’re [running a small operation], you should have the same subscription tools as Spotify. What we have here is a set of building blocks so you get the speed and flexibility you need.”

Indeed, a lot of the Internet has slowly but surely shifted to a subscription model. There’s even a good chance that even the phone you have in your pocket is paid for in an annual subscription to amortize the big ticket price of that product over the course of several months. Larger companies have had these tools in place, but it’s a traditional very startup-y problem to just not have the resources to build them even by cobbling together online payments tools in order to get these running. Startups often have a long list of priorities, and they need to start generating revenue immediately if they want to continue growing.

This launch is, in part, a response to customers demanding a billing product that gets all these invoices and subscription expenses into a single spot. Stripe at its heart is an enterprise company, which means it has to keep close tabs on the needs of its customers while still balancing the needs to continue creating new products that small businesses didn’t realize would actually solve those problems in an elegant way. That’s especially true when it comes to Internet-oriented businesses, which are often changing their business models over time, Seshan said.

“Unlike something like Instagram or Facebook, where you’re doing analytics A/B testing voodoo to figure out what you should build, with Stripe, our businesses know what they want,” Seshan said. “They have clear requests, so we’re much more inclined to listen to our users as opposed to sitting in an ivory tower coming up with a strategy. As they look to add new products, that applies to the startup selling fast and iterating to the large tech companies about to launch a new subscription line or about to add a “for work” side of their product. What we saw often was that billing was the limiting factor to getting a product to market.”

In addition to all this, Stripe looks to apply the machine learning tools it’s created for things like fraud prevention into a new area of expertise. One example of this is figuring out when to intelligently retry a recurring billing charge, which may fail for any number of reasons. Stripe tries to get around problems like lost credit cards or anything along those lines to try to keep the experience as seamless as possible. Seshan said Stripe businesses that implement billing see a 10% increase in revenue — which, for flipping a switch, is pretty substantial.

As companies get bigger and bigger, they will also likely graduate beyond just a simple subscription. An enterprise software company, for example, will probably have to start targeting larger customers that have a salesforce and a different approach for implementing new technology. That means getting invoice-level revenue, which has different implementation requirements than just normal subscription billing. In that case, it’s not like the CIO of a Fortune 100 company can just put a credit card number into a billing service, as those require more robust research and a partnership in place.

While this is a tool that’s a natural fit for something like Stripe, it’s certainly one that’s created a substantial business opportunity. Last month, Zuora — an enterprise subscription services company — filed to go public amid a fresh wave of enterprise IPOs that included Dropbox and Zscaler (and also, to a certain extent, Salesforce’s big acquisition of Mulesoft). Zuora’s subscription services revenue continues to grow, showing that Stripe will certainly have competition here, but also that there’s a large market opportunity.

“We want to think about Stripe as growing the economic infrastructure to increase the GDP of the Internet,” Seshan said. “What we noticed is, we invested in marketplaces in the past, but we’re investing in the next wave of software-as-a-service businesses. We want to power that next trend, and it’s gonna accelerate in the year ahead. We’re really thrilled to power that with billing and subscriptions and we want to make that available to companies with all sizes.”