Fintech is in great demand these days, with numerous acquisitions and rounds of financing in abundance. It's also a relatively new area where startups are really only violating the set of rules that have defined the modern banking and financial world in recent years.
So it is fascinating to see how Shamir Karkal, one of the original fintech entrepreneurs, returns for a second round in this still young industry.
Karkal was a co-founder of Simple (19459005) in 2009, based in Portland, a company that was among the first in a wave of startups known today as "neo-banks". ”Karkal and his co-founder Josh Reich expanded the online banking startup for a while before selling the company to BBVA in 201
However, Karkal was "frustrated" when he dealt with the incredible bureaucracy associated with working in a large banking institution that is over 150 years old, and said, "They could integrate into the sandpit in a few weeks. [and] It would only take a few years for you to achieve risk compliance, legal requirements, and everything else internally. “At the end of 2017, he finally set off on his own to find out where fintech should lead next.
Finally, he partnered with three co-founders, Angela Angelovska, Isaac Hines and Alex Lipton, and started thinking about how funding from the beginning started with the venerable but creaky ACH payment system. ACH continues to drive much of the U.S.-based financial payments, but it's slow – it takes days to process – and is still based on ideas that were worked out decades ago.
Together, their thinking eventually became Sila, a payment and banking API infrastructure company that ACH is ultimately designed to displace as a payment option for companies that need to move money. Sila follows the ERC-20 token protocol and builds on the Ethereum blockchain.
The startup today announced a $ 7.7 million start-up round of funding led by Hope Cochran from Madrona Venture Group and Rick Holt of Oregon Venture Fund, both of which are part of the investment will join the board of Sila.
Sila's key product is an identity verification API that allows developers to identify their users and then use that information in the company's banking API. Users can debit their accounts and move money from one account to another. In addition to this basic infrastructure, Sila's Ethereum base enables intelligent contracts to be created automatically, which should enable faster delivery of financial applications.
Karkal now sees a stronger shift to online banking services, especially given the outbreak of the novel corona virus the world. "I think this whole crisis will tend to accelerate this change because people didn't go to bank branches that often last year and they definitely don't now and I don't think they'll just start again next year. “Without the existing physical branch infrastructure, financial services have to solve problems such as identity verification of people and companies.
Madrona's Cochran, based on her previous experience as CFO of King Digital, the producer, sees a great opportunity for better payment solutions behind the popular mobile game Candy Crush and Clearwire, a telecommunications operator. Payments "seem easy, but it's not," she said. "I think people who haven't lived in payments think they just happen [but]. The time it takes to move money has always frustrated me." As a CFO.
In terms of customers, Sila is in production with several. The team focuses on reliability and scalability. For this reason, the team ultimately decided to start with Ethereum as the basis instead of developing their own solution. "Speed is always a relative thing – you get transactions on Ethereum in a minute or two, which isn't two seconds, but it's still much better than two days for an ACH transaction," said Karkal. Ultimately, he sees a future where customers can choose which ledger technology they want to use.
A key aspect of Sila's pricing model, which may be attractive to certain customers, is the fixed, flat-rate pricing of the All Transactions company. As with many fintech startups today, pricing is a combination of SaaS subscriptions and fixed transaction fees that offers companies better options for transaction volume than established payment solutions.
The company plans to use the venture funds to fill out more of its API offerings and expand its customer base. "You can't underestimate how many companies need payments," said Cochran.
In addition to Madrona and Oregon, Mucker Capital and 99 Tartans also took part in the round with Transferwise co-founder and CEO, Taavet Hinrikus and Jerry Neumann.