Paystand Raises $50M to Revolutionize B2B Payments

Streamlining B2B Payments: Paystand's Innovative Approach

Sending money between individuals is now remarkably straightforward, with numerous cash transfer applications readily available. However, facilitating a $100,000 transaction for a business using the same methods presents significant challenges.

Introducing the Paystand Bank Network

Paystand is aiming to revolutionize this process. Based in Scotts Valley, California, the company leverages cloud technology and the Ethereum blockchain to power its Paystand Bank Network. This network facilitates business-to-business (B2B) payments without incurring any fees.

Recent Funding and Growth

Paystand has recently secured $50 million in Series C funding, spearheaded by NewView Capital, with additional investment from SoftBank’s SB Opportunity Fund and King River Capital. This latest round brings the company’s total funding to $85 million, as confirmed by Paystand co-founder and CEO Jeremy Almond in a statement to TechCrunch.

The Genesis of Paystand

Almond’s motivation stems from personal experience. During the 2008 financial crisis, his family faced home loss. This prompted him to pursue graduate studies, focusing his thesis on improving commercial banking through digital transformation.

Drawing inspiration from the consumer market, Almond explained that Paystand mirrors the functionality of Venmo for consumers, but tailored for commercial transactions between mid-market and enterprise-level clients.

Revenue as Software

“Revenue is crucial for any business, and money is increasingly becoming software-based,” he stated. “Despite the widespread adoption of cloud technology, revenue processes often remain outdated.”

Addressing Inefficiencies in B2B Payments

Almond estimates that nearly half of all enterprise payments are still conducted via paper checks. Furthermore, many fintech solutions rely heavily on card transactions, which typically involve fees of 2% to 3%. He argues that these fees are unsustainable for businesses regularly processing $100,000 invoices.

Paystand distinguishes itself by implementing a flat monthly subscription fee, rather than charging per-transaction costs.

A Different Approach to Fintech

Companies like Square and Stripe initially focused on accounts payable before expanding into broader business process software. Paystand, however, has taken a different route.

Focus on Accounts Receivable

The company believes that managing accounts receivable is a more complex challenge, resulting in fewer competitors. This strategic focus positions Paystand at the forefront of the next wave of fintech innovation, driven by blockchain and decentralized finance.

Paystand aims to transform the $125 trillion B2B payment industry by providing an autonomous, cashless, and fee-less payment network as an alternative to traditional card systems, according to Almond.

Demonstrated Benefits and Growth

Clients utilizing Paystand for three years have experienced, on average, a 50% reduction in receivables costs and savings of $850,000 in transaction fees. The company is also witnessing a 200% month-over-month increase in network payment value, alongside a doubling of its customer base in the past year.

Future Investment Plans

The newly acquired funding will be allocated to further business expansion through investments in open infrastructure. Almond envisions a reboot of digital finance, beginning with B2B payments, and a complete reimagining of the CFO technology stack.

“I’ve been anticipating a solution like this for two decades,” Almond remarked. “Often, the most impactful changes occur in areas that are overlooked.”

Board Addition and Industry Perspective

Jazmin Medina, Principal at NewView Capital, will be joining Paystand’s board as part of this investment. She shared with TechCrunch that while NewView Capital is a generalist firm, it maintains a strong foundation in fintech and fintech infrastructure.

Medina also expressed agreement with Almond’s assessment of the B2B payments landscape, acknowledging its relative lack of innovation and voicing “strong conviction” in his efforts to assist mid-market companies in proactively managing their cash flow.

The Urgency of Digital Transformation

“The payment industry presents a vast opportunity, and companies must embrace complete digitalization to remain competitive,” Medina added. “A significant gap exists if revenue processes hinder progress due to a lack of digital integration. Therefore, the time for action is now.”