Paydiant Picks Up $12M to Set Up Mobile Payments for Banks and Retailers
In a very busy week for startup financings, a few stand out in their respective fields. One would be Paydiant in mobile payments. The Wellesley, MA-based company has raised a $12 million Series B round from new investor Stage 1 Ventures, along with previous investors North Bridge Venture Partners and General Catalyst Partners. It sounds like more money could be on the way from a strategic investor, too. The company has raised about $20 million to date.
Mobile payments—which most people think of as buying stuff in stores with your phone—is one of those sectors that has been poised to take off for a while, but hasn’t yet. And everybody wants in. Big tech guys like Google and PayPal want to make things simple for consumers, while organizing and controlling the transaction data. Wireless carriers AT&T, T-Mobile, and Verizon are pushing a competitor called Isis. Apple is waiting in the wings. Meanwhile, some banks and retailers are figuring out how to roll out their own payment systems (see Starbucks), so as not to give up control over customer data and relationships to middlemen.
It’s those banks and retailers that Paydiant is going after as customers. The startup says it’s in regional pilot tests with five of the top 15 card-issuing banks. The idea is Paydiant’s software platform lets financial institutions put a payment button inside their existing mobile-banking app. Similarly, retailers can add payment and offer-redemption capabilities inside their own apps (iOS or Android). This “white label” approach means consumers don’t ever see Paydiant, and the startup can’t really talk about who it’s working with.
“We’re the most successful mobile payments company nobody’s heard of,” says Paydiant co-founder Chris Gardner (see photo).
Gardner comes from good digital-payments stock. He was an exec at m-Qube and edocs and has experience at several other tech companies as well, including (most recently) ExtendMedia, which was bought by Cisco in 2010. His fellow co-founders, Kevin Laracey and Joe Paratore, share his edocs heritage and also bring to the table experience in venture capital and big companies like Verisign.
Together, their startup story sounds fairly typical so far. Paydiant now has 40 employees and “real revenue,” Gardner says. “We’re growing fast. It’s fun, fast moving, and we work our butts off. We’re huge fans of hiring general-purpose athletes.”
Yet the specific challenges of mobile payments remain. “It will take a while,” Gardner says. One of Paydiant’s advantages is that … Next Page »