Rainforest, a Payments-as-a-Service (PaaS) platform, today announced the closing of an $11.75 million seed funding round led by Accel, with participation from Infinity Ventures, BoxGroup, The Fintech Fund, Tech Square Ventures, Ardent Venture Partners and a number of strategic angels.
The round includes a $3.25 million venture debt facility from Silicon Valley Bank (SVB), a division of First Citizens Bank.
Rainforest built an embedded payments solution designed specifically for software platforms' monetization of money flows. It's a unique approach because platforms get the best of both worlds: great economics and low operational/compliance burdens. And in an industry first, Rainforest offers contractual merchant portability, backed by expert, white glove service that supports platforms' long-term success and adoption goals.
Accel backs industry vets reuniting to reimagine embedded payments for software platforms
Analysts project that by 2030, nearly 75% of consumer payments will no longer be processed directly by banks. While enterprise companies have deep pockets to build in-house payments and technology teams, that's not the case for more than 10,000 software firms eager to embed and monetize payments. Unlike Rainforest, most payment providers are built for direct merchants instead of software platforms and don't help these platforms navigate the complexities of risk management and compliance. Further exacerbating the problem is a dearth of qualified payment experts.
"First as a healthcare software company founder and then as a payments consultant, I personally experienced the challenges and tradeoffs associated with embedded payments," said Joshua Silver, Rainforest founder and CEO. "I recruited former colleagues and other all-star payments and SaaS veterans, and together we built Rainforest - the embedded payments platform we always wanted but didn't exist."
He continued, "It's gratifying to have the backing of leading investors who value our differentiated approach, as well as the opportunity to set a new industry standard. It's equally rewarding to have incredible clients - RoadSync, PayGround, Rose Rocket, Curae, QuoteMachine and many more - who appreciate our robust product, consultative service model, and expertise. Not every software company wants to become a full-fledged fintech, but nearly all want to embed financial services."
"Sitting in Silicon Valley, it's easy to assume that most companies have chosen a modern payments vendor, but in reality we're still early on the adoption curve," said Amit Kumar, partner at Accel. "Joshua's experience over the past few years embedded with companies of varying sophistication, consulting and building out their payments strategy, has helped inform his approach. Rainforest marries a world-class developer experience with high-touch customer engagement, which is an offering best suited to onboard the next wave of early and late majority customers. It's exciting to see this differentiated approach resonating with segments of the market previously poorly served by the incumbents," he added.
Rainforest quickly gained product-market fit since its founding in early 2022. Shortly after launch, Rainforest secured client commitments representing more than $500 million in processing, with much of the volume guaranteed. The company is seeing traction with industries ranging from healthcare, non-profit, field and professional services and niche retailers to trucking and logistics, construction, and association management.
"Our unique vertical-specific risk model is attracting clients in a wide variety of industries and is a big part of our early success," said Becky Kopplin, VP, Payments at Rainforest and a twenty year payments veteran. "We're also seeing strong response from platforms who tell us they were disgruntled with the service they received from their prior provider."
"I've been in payments and financial services for thirteen years. I've seen the proliferation of payments startups by people who didn't deeply understand payments. But that's not the case with Joshua," said Jeremy Jonker, co-founder and managing director of Infinity Ventures.
"Joshua is a subject matter expert who understands clients' pain points and the most effective go-to-market strategies. He's focused on client service, risk and compliance and attracts the best talent. He understands the space and that it's a huge addressable market. Together, this all makes Rainforest a very large opportunity for us at Infinity," Jonker continued.
Rainforest reimagined the core foundation of a processing platform and built a dynamic ledger-based system instead of relying on the decades-old batch-based approach favored by industry incumbents.
"Competitors have had to retrofit their systems to support software platforms, but Rainforest was purpose-built for embedded payments," said Chris Church, VP, Engineering at Rainforest and longtime colleague of Silver's from Patientco. He continued, "Building our technology from the ground up means we offer an open ecosystem that encourages alternative payment networks, vertical-specific ledgers, and adjacent financial service providers to integrate with Rainforest. It's a game changer, and I'm thrilled to see platforms' response to it."
Proceeds from the raise will support continued investment in the team and product, with a singular focus on helping software platforms drive revenue and improve retention while enabling their customers to accept and send payments.