INSUBCONTINENT EXCLUSIVE:
When Eliot Buchanan tried to use his credit card to pay his Harvard tuition bill, the payment was rejected because the university said it
Realizing the same problem exists for thousands of different transactions like board, rent and vendor payments, he launched Plastiq
Plastiq helps people use credit cards to pay, or get paid, for anything.
Plastiq today announced that it has raised $75 million in venture
capital in a Series D round led by B Capital Group
Kleiner Perkins, Khosla Ventures, Accomplice and Top Tier Capital Partners also participated in the round
The round brings the company total known venture capital raised to more than $140 million.
To use Plastiq, users enter their credit card
information on Plastiq platform
In return, Plastiq will charge you a 2.5% fee and get your bills paid
While Plastiq was started with consumers in mind, SMBs have now accounted for 90% of the revenue, according to Buchanan
The new financing round will invest in building out features to give SMBs faster services around payments and processing.
Plastiq provides
a way for SMBs and consumers to pay their bills and make sure they have reliable cash flow
For example, restaurants sometimes have a drop in revenue due to seasonality or, as we&re experiencing now with COVID-19, pandemic lockdowns
Or tourism companies for cities that are struggling to attract visitors
Those companies still need cash flow, and using Plastiq service, they can use credit cards to pay suppliers even in an off season.
There is
no shortage of competition from other companies also trying to solve pain points in small-business cash flow
According to Buchanan, Plastiq biggest competitors are traditional lenders, as well as companies like Kabbage and Fundbox
Similar claims could be made about Brex, which offers a credit card for startups to access capital faster.
Kabbage provides funding to SMBs
through automated business loans
The SoftBank-backed company landed $200 million in a revolving credit line back in July, fresh off of landing strong partnerships with banks
and giants like Alibaba to access more customers
Kabbage loans out roughly $2-3 billion to SMBs every year.
Plastiq, according to its release, is also on track to make more than $2 billion
But unlike Kabagge, Plastiq doesn''t issue loans or credit, it just unlocks a payment opportunity.
SMBs don''t need to be burdened with
additional debt or additional loans,& Buchanan said
&So rather than trying to reinvent the wheel, let use a behavior they have already earned.
Buchanan would not disclose Plastiq current
valuation or revenue, but he did say that it not too far away from $100 million in revenue run rate
The company revenue has grown 150% from 2018 to 2019.
The company also noted that it has surpassed &well over 1 million users,& up 150% in
unique new users from 2018 to 2019.
In terms of profitability, Buchanan said that &we could be profitable if we wanted to be,& noting that
Plastiq revenue and margins could lead them toward profitability if they wanted to focus less on growth
But he added they don''t plan to &slow down& the growth engine any time soon — especially in the wake of the COVID-19 pandemic.
Because
the Series D round closed at the end of 2019, Buchanan said the pandemic did not impact the deal
However, the company had planned to time the announcement with tax season
Now, as small businesses struggle to secure capital and stay afloat due to lockdowns across the country, Plastiq new raise feels more
fitting.
Our customers are more thankful for solutions like ours as traditional sources of lending are drying up and not as easy to access&
&Hopefully, we can measure how many businesses make it through this because of us.
The 140-person company is currently hiring across product
