Fintech
Fintech startup Forward raises $16 million to take on Stripe, leader of the future of integrated payments
After selling his second company, Bypass, a sports and entertainment payments and point-of-sale software company, Brandon Lloyd in 2020 to Fiserv, he dove deeper into the payments industry and realized something: software companies were getting a bad deal from the market. payment provider industry.
“Companies like Stripe originally built that platform so that an online merchant could easily accept credit cards,” Lloyd told TechCrunch. “As distribution has moved through software companies to merchants, software companies need support. Instead of generating revenue and doubling SaaS revenue, they are giving all payment revenue to their payment provider.”
It’s not uncommon for a software company to pay 2.9% and 30 cents for each transaction, and Lloyd believes they shouldn’t have to pay that much. Instead, he said their costs should be closer to 2% – and that’s the spread that leaves them with a huge business opportunity.
So Lloyd left Fiserv in June 2023, taking colleagues Derek Victory and Danielle Madison with him to form an Austin-based company. Forward bring what they’ve learned from the payments industry to the vertical SaaS community.
Forward works by allowing SaaS companies to rent their offerings as a service, collecting their own fees. Its software sits inside its customers’ software, saving them money. Forward manages authorizations, settles transactions, moves money and handles reconciliation. And because there are fewer payment fees, customers recoup some of these savings.
Lloyd said Forward also focuses on program design, allowing for technical integration in less than a week, ongoing merchant sales support, and the ability to migrate to a registered payment facilitator at any time.
Photo of the attacking team (Image credit: forward)
It’s an ambitious goal to take on companies like Stripe and other payment infrastructure companies, however, Lloyd believes Forward’s model has an advantage by shifting the economy towards SaaS companies and helping them save money.
“The software company has acquired customers to enable payments through their software application, but when they run it, very few of them succeed at scale,” Lloyd said. “In some cases, that opportunity is equal to the revenue from the software. If they execute payments correctly, SaaS companies can double the size of the company from a revenue perspective.”
It’s still early ahead. It began processing payments in the fourth quarter of 2023 in a beta period. Since then it has made a few million transactions. Former employer Fiserv is already among its clients. The strategic partnership allows Fiserv to expand into the managed PayFac category and bring products to market more quickly to the more than 1,500 SaaS companies that process tens of billions per year in payment volume.
Lloyd didn’t go into specifics, but said the company was generating revenue. And also pay revenue to its SaaS customers. For example, for every transaction executed through the Forward platform, software companies recover, on average, 70 cents by adding payments as a product.
This also got investors excited. Forward announced $16 million in seed funding on Thursday. Commerce Ventures, Elefund and Fiserv led the round.
Lloyd plans to use the new funding to expand the company’s customer and technology development capabilities, including machine learning and artificial intelligence.
“We have a lot of empathy for software companies because we built them ourselves,” Lloyd said. “When we meet our customers, they remind us of ourselves 10 or 15 years ago. We’re really rooting for them and I think it’s a breath of fresh air in the payments ecosystem.”