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Sila raises $7.7 million to make ACH payments programmable

Sila raises $7.7 million to make ACH payments programmable

Sila, the banking and API payment platform set up by former Simple co-founder Shamir Karkal, has closed a $7.7 million seed funding round.

The round is co-led by VC firms Madrona Venture Group and Oregon Venture Fund, with support from Mucker Capital, 99 Tartans, Taavet Kinrikus, CEO & Co-founder of Transferwise, and investor & entrepreneur Jerry Neumann.

Sila launched its Infrastructure-as-a-Service (IaaS) platform in April 2019 to help companies integrate their business applications with financial networks. The firm's REST APIs provide a layer on top of the existing ACH network, with applications for identity/KYC verification, bank account linking, and digital wallet deposits baked in.

The API includes a built-in stablecoin - Sila - which is an ERC-20 token pegged 100:1 to the US Dollar, with fully insured funds held by an FDIC member bank. The coin supplants fiat for the purpose of money movement, settling transactions within minutes rather than the two-day timeline on the US ACH network.

Karkal says that global payments networks are too expensive, inefficient, tightly regulated, and difficult to integrate into fintech applications. Having been hired from Simple to head up BBVA's Open API platform, Karkal moved on to pastures new after becoming frustrated by the burdensome compliance demands that come form working with a big bank.

"Despite money being effectively digital for decades, the world of finance has still not truly been disrupted by the Internet," he says. "The global financial system isn't controlled by PayPal or Stripe, but by 30,000 global banks that still run on outdated payment systems like ACH. Our mission is to unite all the payment systems in one programmable layer to spur the next phase of financial innovation."

Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 10 April, 2020, 12:55Be the first to give this comment the thumbs up 0 likes

Tools to connect corporate solutions to banking solutions / payment rails have been around for at least 15 years that I know of. Back in the day, we used to call them C2B (Corporate to Bank) in the ERP industry. These tools have supported programming of ACH and other rails including FPS and BACS in UK, NEFT in India, and FedWire in USA. Where Sila seems to be different is in making corporate payments near realtime via the ERC-20 token despite using the T+2 ACH payment rail. While it's innovative, Sila will join PayPal and Stripe in continuing to be unable to disrupt the world of finance because, like PayPal and Stripe, Sila will also continue to use banking rails, so how it survive by disrupting them, right? But that shouldn't stop Sila from chanting the disruption mantra since disruption may still be a major draw in securing VC funds at exuberant valuations, as I'd highlighted in Fintech Shouldn’t Stop Chanting The Disruption Mantra

A Finextra member
A Finextra member 13 April, 2020, 15:05Be the first to give this comment the thumbs up 0 likes

What I'm reading is this solution is basically attempting to claim money movement and programming through "virtual tokenization" but still use the T + 2 ACH framework to settle. Where's the novelty? 

Mark Boyd
Mark Boyd - Platformable - Barcelona 14 April, 2020, 22:06Be the first to give this comment the thumbs up 0 likes

Congrats to Shamir and his team on raising this investment. Shamir's work on segmenting developer audiences (https://www.cgap.org/blog/youve-opened-apisnow-what) when creating an open API go to market strategy is useful reading for any fintech looking to build an ecosystem around their product.