Just six months after raising $17.5 million, payments infrastructure startup Finix has raised a $35 million Series B round led by Sequoia Capital. Other investors participated, including Acrew Capital, Bain Capital Ventures, Activant Capital and Inspired Capital.
The San Francisco startup, which is aiming to build the AWS of payment processing, now has $55 million in venture capital to date.
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When I caught up with Richie Serna, Finix’s CEO, he shared lessons he’d learned since the last funding round, growth plans and what Airbnb and Uber did wrong. So, without further ado, let’s get into it.
From A To B
Founded in 2015, Finix wants to help companies bring payment processing infrastructure in-house, compared to costly third-party partnerships, or burdensome “from scratch” mentalities, where startups try to build an API on their own with engineering talent and can cost anywhere from $2 million to $3 million. Finix’s payment processing infrastructure-as-a-service equips startups that process over $50 million in transactions per year.
Serna phrases it as “enabling the new Stripe’s and Square’s” of the world, nodding to two behemoths which help businesses handle ecommerce payments. By becoming your own Stripe or Square, the processing fee that would go to those companies goes right in your pocket, Serna said back in July.
Since the $17.5 million Series A, that focus has stayed consistent. What’s new is that Finix is pushing growth into international markets. Currently, the payment processing company has customers in Costa Rica, Colombia, Canada, Mexico and the U.K.
“The customer base we were selling into, the biggest block of them entering into international markets was their payment strategy,” Serna said. The CEO noted Finix’s recent general manager hire, Billy Chen, who once led Uber’s international payment strategy.
It’s also worth mentioning that Zuora, another SaaS company that provides payment tech to other SaaS companies, told us a while ago that “anecdotally, it doesn’t seem like price is much of a determining factor when companies are selecting a payment service provider. It tends to be a mix of functionality, regional coverage, relationships with acquiring banks and fees.” Finix focusing on international growth makes sense. The company declined to disclose numbers around revenue or comment on if it was profitable or not.
Engineers, your move
Beyond international growth, the new venture capital will be used to hire across all departments for Finix, especially on product and engineering, according to a release.
And speaking of engineers, Finix wants to help those who work in startups spend less time in hairy payment processing and more on product development.
“Integrations will change, there will be new compliance burdens, and new payment methods, and you’ll have to enter international markets,” Serna said. “It becomes this ballooning part of your organization.”
He added that Airbnb has around 200 people, and Uber has around 500 people, all working on payment processing.
“Rather than trying to build that in-house, outsource that to someone like Finix,” he said. Uber and Airbnb, he guesses, did it in-house because “they were growing at a time where there wasn’t a solution … and they had to [build payment processing] out of pure necessity.”
Beyond those examples, Finix thinks the future will include all software companies becoming payment companies, and that a large percentage of revenue will be from payments “in the not so distant future.” So far, customers include a private club management software platform called Clubessential, a retail point-of-sale company called Lightspeed POS, and small business platform Kabbage.
Regardless of if we believe that Finix is right about a future where companies want to own their payments, one thing is for sure: It has Sequoia on deck now, and that’s the same investor that has cut checks into behemoths that got it right: PayPal, Stripe and Square.
Illustration: Dom Guzman