Today, Rainforest announced its $11.75M seed led by Accel, including participation from Ardent, Infinity Ventures, Box Group, The Fintech Fund, Tech Square Ventures, and a number of strategic angels. The round also includes a $3.25M venture debt facility from Silicon Valley Bank (SVB), a division of First Citizens Bank.
The Right Team
We first connected with the company’s founder and CEO Joshua Silver several years ago and remained closely engaged with him across our portfolio as it was clear he was one of the leading experts in payments. After successfully exiting Patientco as cofounder, which was acquired by Waystar for over $450M, he lent his experience to countless software companies advising them with their payments strategy, and it became evident to him that many of the incumbent solutions out there had large gaps in their offerings. When he told us that he was ready to start another company to help companies better monetize their payments, we knew we had to back him. Since then, he’s recruited a top-tier team, stacked with domain experts from leading companies — many of whom he’s worked with previously.
The Challenges with Embedded Payments
Embedded payments are hard for software companies to execute themselves. With success stories like Toast and Square, who have transitioned from software companies to fintech powerhouses that now derive a majority of their revenue from embedded financial products like payments, many SaaS companies want to follow suit and become payment facilitators (PayFacs). However, once they dig in, they soon realize how significant of an operational lift and investment it can be that may not make sense for all companies to do on their own.
Joshua and the team like to frame the problem software companies must consider when choosing to monetize payments into “The Three Rs”:
- Risk and Compliance: Given the inevitability of fraud in money movement, what’s your appetite for risk and ability to monitor 24/7/365 to avoid losses?
- Relationship with Banks: Are you willing to manage multiple sponsorship bank relationships and integrations?
- Reconciliation: Can you manage the tricky task of operating a pristine ledger across your customer base?
The Rainforest Advantage
Rainforest allows software companies to grow revenues by embedding payments into their products — without the ops and compliance headaches — thereby enabling its customers to have more control than they would with Stripe but less risk and lower costs than if they were to build it themselves.
Designed after having a deep understanding and proximity to the pain point, the team has built a world-class product and a strong pipeline of customers ready to scale their payments with Rainforest. Being a former engineer, Joshua felt compelled to build a platform that was designed for the best developer experience by focusing on simplicity, flexibility, and pre-built components. Additionally, the team offers robust support for its customers — something that customers of incumbents have struggled with if their volumes aren’t in the hundreds of millions.
A Boundless Opportunity Ahead
Embedded payments are on a meteoric rise, projected to hit $59 billion in global revenue by 2027, with the gross payment volume soaring into the trillions. This growth is fueled by SMBs embracing tools to digitize their processes and workflows. Understanding this opportunity, Joshua and the team have built an incredible company aimed at helping companies generate new revenue streams via payment processing. We are thrilled to partner with them as they revolutionize the payment landscape.
If you’re a SaaS company interested in learning more about their solution, check them out at rainforestpay.com or read the exclusive Techcrunch announcement here. If you’re a payments nerd looking to join this incredible company — they’re hiring!
