Rainforest collaborates with software companies to assist them in integrating financial services and payment capabilities into their platforms. In an interview, CEO and co-founder Joshua Silver respectfully disagreed with a16z general partner Angela Strange’s statement from 2019, where she predicted that every company would become a fintech.
Rainforest Competes with Larger Players
According to his perspective, most software companies don’t actually aspire to be fintechs and deal with the associated regulatory and compliance challenges. Instead, they primarily aim to facilitate payments and increase revenue through this capability.
Accel led the company’s $8.5 million seed funding round, with additional participation from Infinity Ventures, BoxGroup, The Fintech Fund, Tech Square Ventures, and Ardent Venture Partners.
It’s exciting to witness startups thriving beyond the coastal regions, and Silver’s belief in Rainforest’s potential to become a significant player in the industry appears well-founded. Established in 2022, the startup has achieved remarkable growth within a short timeframe, securing client commitments totaling over $500 million in processing, with a substantial portion of the volume guaranteed.
Silver is convinced that the company’s dedicated emphasis on software companies provides it with a competitive advantage.
He stated to TechCrunch, “None of the modern processors were originally designed for software platforms. The majority of them were initially tailored for merchants, and they’ve had to modify their platforms extensively just to support fundamental payment processing and reporting functions for software companies.
Consequently, the startup is gaining market share as software platforms transition away from legacy processors like Fiserv and FIS. As this shift occurs, it competes with firms such as Stripe, including its Connect product, to integrate financial services and payment solutions.
Nik Milanović of The Fintech Fund expressed on X his belief that one of the biggest stories of the next decade will revolve around Stripe, “which looks invincible from the outside, losing market share to nimble competitors.
He added, “I think Rainforest is going to be a big part of that story.
Jeremy Expresses Astonishment at Rain Forest
Meanwhile, Jeremy Jonker from Infinity Ventures and a former PayPal executive, who has been involved in the payments industry for 13 years, expressed his astonishment at Rainforest. He shared with email, stating, “I’ve never encountered anything quite like Rainforest before.” He emphasized that Joshua’s background as a software platform founder and a payments consultant is a significant part of the secret sauce.
Having experienced the challenges of payments firsthand, Joshua understood the importance of assuming risk and compliance responsibilities while offering features like data portability. These aspects were highly appealing to platforms. Jonker also appreciated that it wasn’t just Joshua; the entire team he assembled brought a wealth of payments experience. Many team members are seasoned veterans in payments and SaaS who recognized the untapped potential for a superior provider and came together to build it.
Frequently asked questions
How Can Companies Secure Funding for Growth and Expansion?
Companies can secure funding through various means, including venture capital, private equity, loans, lines of credit, and public offerings (IPOs).
What is Due Diligence in the Context of M&A?
Due diligence is a comprehensive review and investigation of a target company’s financial, operational, legal, and other aspects to assess its value and uncover potential risks
What is the Difference Between a Merger and an Acquisition?
In a merger, two companies combine to form a new entity. In an acquisition, one company takes over another, and the acquired company often becomes a subsidiary of the acquiring company.
What are Some Common Challenges in M&A Transactions?
Common challenges include cultural integration issues, regulatory hurdles, financial risk, and potential resistance from employees and stakeholders.
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