Dwolla raises $16.5m round led by Andreessen Horowitz, adds SF officeApril 30, 2013 by Danny Schreiber
Des Moines-based Dwolla today announced it closed a $16.5 million Series C round led by Andreessen Horowitz, the Menlo Park, Calif.-based venture capital firm whose portfolio includes Airbnb, Pinterest and Stripe, another payments startup. Three of Dwolla’s previous investors, Village Ventures, Thrive Capital and Union Square Ventures, also participated in the round.
“Right now, nobody is doing quite what Dwolla has figured out,” Andreessen Horowitz partner Scott Weiss told Silicon Prairie News on Monday. “I wouldn’t call Square a competitor, I wouldn’t call PayPal a competitor because they do things differently than Dwolla does.
“Everybody kind of has the same Dr. Evil plan, which is to be the new payment network, and I think Dwolla’s got the best chance of being it,” said Weiss, who joined the Dwolla board with the investment.
This new funding not only gives the four-year-old startup the ability to hire—the company is looking add 40-50 people, Dwolla founder and CEO Ben Milne told Silicon Prairie News on Monday—but it completes what it calls a “coast-to-coast pipeline.”
“We think it’s important to connect in both areas because they both have their expertise,” said Milne, who noted his company’s had problems finding product talent in the Midwest.
With that in mind, Dwolla has plans to open a San Francisco office in June to focus on West Coast business development, product and marketing. Current Des Moines-based COO Charise Flynn (far right) will oversee the office; she’ll relocate for the expansion.
“She’s going to keep doing her job,” Milne (near right) said. “She’s got to be there to hire the people the company needs.”
Dwolla also will expand its business development presence in New York, where it employs four people, and double its core development and support team in Des Moines, where it has around 32 people, according to a company representative. “There’s a wall right over there, it’s just going to come crumbling down fairly soon,” Milne said Monday from the company’s downtown 18th-floor headquarters.
Aside from hiring, the new funding also will support the company’s enterprise pipeline and use cases and bolster its go-to-market strategies and consumer-facing products, according to the press release.
This raise follows a year that featured a celebrity investor—Iowa native Ashton Kutcher—the debut of FiSync, the company’s alternative to the decades-old Automated Clearing House (ACH) transfers, mass payments and strategic partnerships, including one with the State of Iowa.
Weiss (left), who before joining Andreessen Horowitz sold a company to Cisco, said he sees his firm’s investment coming at Dwolla’s inflection point.
“One of the things that we do very well is market development and they’re right at the point where they have the market credibility,” he said, noting Andreessen Horowitz is ready to vouch for Dwolla as it builds out its two-sided network.
When asked if Bitcoin’s recent jump in popularity played a role in the investment decision, Weiss said it was “nice to have,” but it wasn’t the driving factor, to which he pointed out Dwolla’s ease of use and market traction. He called Milne and Flynn “the primary reasons for the investment.”
“(Milne) has like an encyclopedic knowledge of the payments networks,” Weiss said.
Pitching Andreessen and Horowitz
Milne’s connection to Andreessen Horowitz, however, wasn’t easy to come by for the 30-year-old Iowa entreprenuer.
When he began raising this round, the only people he said he couldn’t get himself in front of were Horowitz and Andreessen. It was thanks to Kutcher and Kansas City entrepreneur Naithan Jones, who took investment from the firm last year, that Milne got in front of the firm.
“We were much further along with other firms when we met them for the first time,” Milne said, “but I had the opportunity to sit down with Ben (Horowitz) and Mark (Andreessen) for an extended period of time and that went well … (At) the end of the day, they put out a great term sheet.”
Like Milne and Kutcher, the Dwolla founder and his new investor share something in common, too. Okay, make that two things.
“We were born in the same town (Cedar Falls, Iowa). He’s also balding, too many similarities to argue there,” Milne said. “It’s just like a quirky similarity.”
Add one more similarity to the mix: “They, like us, don’t know exactly what the future holds, they only see what they believe could happen.”
For more, see Dwolla’s announcement, “Please Welcome Andreessen Horowitz to the Family,” and Weiss’ blog post, “How would you start a PayPal or rebuild Visa today?“
Credits: Photos courtesy of Dwolla and Andreessen Horowitz.