Funds startup Rapyd doubles its valuation to $ 2.5 billion as Covid fuels development
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LONDON – "Every business will be a fintech company," said Angela Strange, general partner of famous Silicon Valley investor Andreessen Horowitz, earlier last year.
Their comments echoed through the fast-growing financial technology industry, and came as tech giants like Google and Apple signaled a growing interest in banking.
Can a Big Brand Embed Finance in their Services? Rapyd, a company that provides what is sometimes referred to as "plumbing" for fintech services, believes.
"We believe that every single company that is a customer-facing brand will end up being a fintech company because the primary method of monetizing your customer base is through financial services," Arik Shtilman, Rapyd co-founder and CEO, told CNBC.
Shtilman's company announced Wednesday that it raised $ 300 million under a mega-funding agreement and raised its valuation to $ 2.5 billion. That's more than double the $ 1.2 billion Rapyd was worth in a 2019 funding round.
What is rapyd?
Rapyd describes itself as a "Fintech-as-a-Service" platform. The company's technology allows companies to incorporate a number of payment methods into their apps, including money collection, bank transfers, digital wallets, and card issuing.
Thanks to a boom in the online payments industry, not least triggered by the coronavirus pandemic, there is massive demand. Shtilman says Rapyd now has 5,000 total customers, despite not commenting on specific names.
Rapyd now has an annual execution rate of $ 100 million, Shtilman added. This is an important metric that companies use to determine how much money they could make in an entire year. It has grown from just 25 employees in 2018 to over 200 today.
The company began life as a consumer mobile payment service. In view of regulatory constraints, Rapyd later switched to a "white label" model in which its technology was instead licensed to other companies. Shtilman calls it a white-lettered version of PayPal.
Rapyd's most recent round of funding, a Series D, was led by tech-focused investment manager Coatue, who previously supported grocery shipping company DoorDash and TikTok owner ByteDance. Venture capital firms Spark Capital, Avid Ventures, FJ Labs, and Latitude also bought new stocks.
"We didn't really raise funds originally," Shtilman said. "We were already very well funded. We were approached by many investors, especially big names who wanted to invest in the company."
"At one point we saw the business explode. It was a great time to pull the trigger on the round."
With an additional $ 300 million in the bank, the company is looking to make new acquisitions to expand into a number of key markets including Brazil and countries in the Asia-Pacific region.
In a sector valued at $ 2 trillion, Rapyd faces serious competition. The company's competitors range from established players like PayPal to younger companies like Stripe, Adyen and Checkout.com. Stripe is itself an investor in Rapyd.
"There's a lot of competition," said Shtilman. "You also need to understand that we're a little different from most companies in this area."
"A lot of companies are payment processors," he added. "We are a financial service provider."
The payments sector has seen a wave of consolidation in recent years as incumbents try to stave off increasing competition from fintech newbies. 2019 was a year of several important deals including the acquisition of First Data by Fiserv, the acquisition of Worldpay by FIS, and the merger of Global Payments with Total System Services.
However, not all business has gone so smoothly. Visa ended its acquisition of Plaid, a start-up that allows fintech apps to connect to users' bank accounts after the U.S. Department of Justice blocked the transaction over antitrust concerns.