Rebuilding the Financial Payment System
Our Investment in Sila, the Portland-based Startup Founded by a Fintech Pioneer.
By Revolution Ventures Partner Clara Sieg and VP Graham Ober
Banking regulations are confusing. For over 150 years, that has worked to the advantage of legacy banks by deterring competition. But emerging fintech companies are breaking into the industry and changing how we transact, send payments, and transfer money. Yet, many of these companies have little option but to partner with big banks to get their financial applications up and running. Due to inflexible processes, this can take up to 18 months: an eternity in the startup world.
Today we’re excited to announce a $13M investment in Sila, a fintech platform developing payments infrastructure for software developers to quickly and inexpensively add regulatory-compliant payment capabilities into their products. Sila’s customers range from early-stage fintech companies to publicly traded companies — really any company that needs to facilitate financial transactions. It is the platform of choice for app developers and is particularly attractive in highly regulated industries such as insurance, real estate, and lending. The Portland-based startup works directly with engineers to launch financial applications within 6–8 weeks, a vast improvement over the status quo. Their platform securely brings together all of the disparate services required to store and move money while remaining compliant with complex banking and financial regulations.
We often invest in the founder as much as the idea. Sila CEO and co-founder Shamir Karkal is one of the original fintech entrepreneurs. A decade ago, he founded Simple, one of the first startups in the neobank wave. Shamir sold Simple to BBVA in 2014 and continued to work for the company, further aggravating his frustrations with traditional banking’s slow adoption of technology and ineffective home-grown solutions, which place heavy implementation burdens on innovators in the space — from clunky payments processing to esoteric banking integrations. Setting out to disrupt the global payments industry — with a massive TAM of about $1.9M trillion per year — Shamir brought together a team of experienced leaders across the financial, legal, and technology sectors and co-founded Sila with Angela Angelovska, Isaac Hines, and Alex Lipton in 2018. Fast-forward to today, and Sila’s banking APIs replace the need for integrating with legacy financial institutions, saving customers months of development time and thousands in legal and regulatory expenses.
So how does it work? Through partnerships with nationally chartered banks, Sila holds funds in FDIC-insured bank accounts while tokenizing those funds into their proprietary stablecoin, called the Sila Token. This allows money to move between users 24/7 without the need to interact with a bank — all transactions are confirmed and verified on the Ethereum blockchain. Sila has built-in Know Your Customer (KYC) and Know Your Business (KYB) capabilities, allowing apps to increase their speed to market and decrease ongoing compliance costs. The company manages all onboarding and risk assessment for customers directly. Sila offers an API for any web, desktop, or mobile application to power digital wallets, link bank accounts, and provide same-day Automated Clearing House (ACH) transfers. Their platform is fully integrated with Alloy for best-in-class identify verification, and Plaid, for securely connecting users’ existing bank accounts.
In the modern economy, businesses and consumers expect the ability to transact and transfer funds seamlessly. The pandemic has only accelerated demand for contactless payments–cashless methods are now considered an essential service for a business to survive. At the same time, cryptocurrencies are slipping into the mainstream. Sila is at the forefront of these trends and plans to use the new funding to scale the team, bring on additional partnerships, and advance product development.
The company’s headquarters in Portland expands our footprint in the Northwest and is consistent with our approach of investing in disruptive startups across the country. We are thrilled to partner with Shamir and the team at Sila to build the next generation of financial products and services.
