The fintech startup grew payment volume by 17x
in six months, enabling vertical software companies to increase
revenue and engagement, and reduce churn
Rainforest, a payment provider purpose-built for software
platforms, today announced it has raised an oversubscribed $20
million Series A funding round led by Matrix Partners. Additional
participating investors include Accel, Infinity Ventures, BoxGroup,
The Fintech Fund, Tech Square Ventures, Ardent Venture Partners –
all of whom participated in the company’s seed round announced in
2023. The fresh capital brings Rainforest’s total funding to $31.75
million and will be used to advance the company’s core technology
and product offerings, expand its platform success team, and
accelerate its growth via new go-to-market initiatives.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240626839878/en/
From left to right: Jeremy Jonker
(Infinity Ventures), Joshua Silver (Rainforest), Matt Brown (Matrix
Partners), Dana Stalder (Matrix Partners) (Photo: Chloe
Jackman)
Rainforest helps software platforms grow revenue by embedding
payments into their products, without introducing any risk or
compliance complexities. The company has achieved a stronghold
amongst software companies processing $50 million - $2 billion in
annual payments, a previously underserved segment. Rainforest
provides a data-driven customized risk model for each platform,
creating vertical-specific merchant scoring and precise fraud
monitoring.
Since Rainforest’s seed round last year, the company grew its
payment volume by 17x. It has signed dozens of platforms
representing billions in processing volume across a variety of
industries, including trucking and logistics, healthcare, specialty
retail, professional services, field services, donation management,
and more. The company has also advanced its product in ways that
help software platforms grow payments revenue and reduce fraud.
- Streamlined merchant onboarding, including becoming one of the
few PayFacs to enable Plaid bank verification and self-service
options
- Added support for Apple Pay, reducing checkout friction and
growing platforms’ payment volume
- Reduced fraud through implementation of 3DS
- Optimized interchange passthrough fees to help platforms save
upwards of 20-30 basis points
- Certified for Visa SMB rates which enables qualified merchants
to save up to 10-25 basis points
The overall payments landscape is quickly evolving
According to UBS, SMBs account for 25-30% of U.S. payment volume
but 65-70% of net revenues. The portion of SMB merchant acquiring
revenue processed through horizontal and vertical SaaS platforms is
expected to increase from 24% of total merchant acquiring revenue
in 2022 to 33% by 2027, as SMBs move away from traditional
processors. Financial services embedded into e-commerce and other
software platforms accounted for $2.6 trillion of total U.S.
financial transactions in 2021, and by 2026 it’s expected to
surpass $7 trillion. This represents a growing opportunity for SaaS
platforms to capture SMB payment processing revenue.
SaaS platforms rely on payment providers to increase sales and
satisfy consumer demand via secure, embedded payment processing. To
date, incumbent providers haven’t served these platforms well for
two primary reasons. One, they reserve higher-touch support for
larger enterprise software platforms, leaving mid-market platforms
hugely vulnerable with low support DIY models. Two, many incumbent
providers started as direct merchant acquirers and later
retrofitted their offerings for software platforms, meaning that
core functions including merchant onboarding, reporting, and
reconciliation were not optimized for platform use cases. This
tacked-on tech model creates customer support nightmares with a
snowball effect that impacts both the platforms themselves and the
SMBs that rely on them.
“Historically, Stripe excelled at helping startups take their
very first payment – but they’ve very publicly shifted their focus
to large enterprises, leaving mid-market platforms to choose
between a DIY Stripe solution built for early stage startups or
cobbled-together solutions from a bevy of upstarts. These
mid-market platforms tell us that, prior to Rainforest, it was
impossible to find a payment provider that offers a full package of
modern technology, platform-friendly commercials, and high-touch
support,” said Joshua Silver, founder and CEO of Rainforest. “With
Rainforest, software companies don’t have to sacrifice or choose
between robust technology, excellent support, and attractive
contract terms. By providing embedded payments via white glove
service that’s risk-adjusted and customized for software platforms,
we’re empowering more companies to focus on what they do best:
building software that improves economies and experiences for
everyone.”
Matt Brown of Matrix joins Rainforest’s board
“We’re thrilled to join the Matrix family alongside iconic
companies like Afterpay, Canva, Flex, Flock Safety, Hubspot, Quora,
and Zendesk,” said Silver.
“Payments are still surprisingly siloed, inaccessible, and
user-unfriendly. However, trillions in payment volume are shifting
from old-school solutions to modern software platforms with
embedded financial services,” said Matt Brown, Partner at Matrix
and Rainforest Board member. “Rainforest is a dramatically better
experience for buyers, sellers, and the platforms that connect
them. I’ve founded and invested in companies with this software
plus embedded financial services model over the last decade. I’ve
seen dozens of approaches to payments, but none come close to
Rainforest. They’ve built their core tech, not just a wrapper
around others. They’re experts not just in payments, but in SaaS,
platform growth, risk, and the many other areas you need to pull
this off. Their impressive traction speaks for itself. I’m thrilled
to support them as they continue modernizing embedded
payments.”
“While many products in the industry were built for merchants
and later retrofitted for platforms, Rainforest’s product was
designed and built from the ground up for software platforms,” adds
Jeremy Jonker, Co-Founder and Managing Partner at Infinity
Ventures. “Rainforest has invested in processes and automation to a
degree that we don’t usually see at a company of their size.
Everything is planned, built, and stress-tested to support rapid
growth. I’m not surprised Rainforest is winning competitive deals
over 80% of the time, against some very well funded payment
companies.“
Rainforest was founded in 2022 by Joshua Silver, who previously
led healthcare payments company Patientco (acquired by Waystar in
2021) and later served as a payment strategy consultant across more
than 50 engagements. The company’s leadership team includes VP of
Payments, Becky Kopplin, VP of Engineering, Chris Church, and VP of
Finance, Cailey Ryckman, who all worked with Silver previously and
bring decades of experience scaling software platforms and payment
providers.
About Rainforest
Rainforest is a payment provider that helps software platforms
build and optimize embedded financial services. With Rainforest,
software platforms can provide a best-in-class payments experience
for their end merchants without the risk, compliance, economic and
operational burdens of registering as a payment facilitator with
card networks. Rainforest provides low-code integration technology,
true merchant portability, transparent pricing, the industry's most
flexible contract terms and a no-risk model. In September 2023,
Venture Atlanta named Rainforest Emerging Startup of the year.
Learn more at https://www.rainforestpay.com/.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240626839878/en/
Media Whitney Topping whitney@walkercomms.com