The influence of fintech extends throughout all facets of businesses, becoming an integral part of company operations. Nevertheless, the intricate web of government regulations and compliance often poses challenges when it comes to seamlessly incorporating payment into the existing organizational systems. That’s why one fintech startup has stepped in, with a mission to help companies, particularly those in the software sector, in the seamless integration of payment solutions into their platforms.
Enter Rainforest, an Atlanta, Georgia-based fintech startup that provides a Payments-as-a-Service (PaaS) platform to enable software platforms to efficiently construct and enhance embedded financial services. Rainforest’s key objective is to assist software platforms in delivering top-tier payment experiences to their end merchants, all while alleviating the complexities related to risk, compliance, economics, and operational requirements that come with registering as a payment facilitator with card networks.
In a move aimed at bolstering its expansion efforts, Rainforest announced today it has closed an $11.75 million seed funding round. The round was spearheaded by Accel and saw participation from notable investors, including Infinity Ventures, BoxGroup, The Fintech Fund, Tech Square Ventures, Ardent Venture Partners, as well as several strategic angel investors. Additionally, the funding round includes a noteworthy $3.25 million venture debt facility extended by Silicon Valley Bank (SVB), a division of First Citizens Bank.
Rainforest sets itself apart from other fintech startups by adopting a unique approach. Unlike many others, Rainforest doesn’t engage directly with merchants or diversify into various product lines. Instead, this startup is completely dedicated to assisting software platforms in capitalizing on revenue streams generated through payments.
Founded in 2022 by CEO Joshua Silver, Rainforest’s embedded payments solution is tailor-made to enable software platforms to efficiently monetize their financial transactions. What makes Rainforest stand out is its ability to offer software platforms the best of both worlds: attractive economic benefits coupled with reduced operational and compliance complexities. In a groundbreaking move, Rainforest provides contractual merchant portability, complemented by expert white-glove service to support long-term success and adoption goals for these platforms.
Before founding Rainforest, Silver, a Georgia Tech graduate, had previously founded and successfully sold a healthcare payments company. The core mission of Rainforest is to assist software companies in enhancing their services to clients by enabling seamless payment processing integration.
In discussing the venture, Silver explained the historical challenges faced by software companies in finding partners capable of providing the essential trifecta of technology, banking relationships, and the management of risk and compliance obligations. He added that Rainforest specializes in collaborating with businesses that process payments behind the scenes, whether it’s settling healthcare bills, conducting online purchases, or supporting local retailers.
“Historically, software companies have had a really hard time finding partners who can bring both the technology, the banking relationships and handle all of the risk management and compliance obligations. So anytime as a consumer you’re paying a health care bill or buying something online or supporting your local mom-and-pop retailer, those are the types of companies we would work with to power payments for them behind the scenes,” Silver told The Atlanta Journal-Constitution.
Rainforest’s revenue model involves taking a small percentage from each transaction it facilitates. Thus far, Silver has been funding the company primarily through these transaction fees, alongside some self-financing.
The recent seed funding round represents the first external investment secured by Silver and his team. The incoming capital infusion is earmarked for expanding the team by hiring additional talent, broadening Rainforest’s capabilities to handle various payment types, and introducing lending and credit products to complement the current suite of offerings.
Meanwhile, industry analysts predict a significant shift in consumer payments, with nearly 75% expected to bypass direct processing by banks by 2030. While larger enterprises have the resources to establish in-house payment and technology teams, the same cannot be said for the over 10,000 software firms eager to embed and profit from payments. Unlike Rainforest, the majority of payment providers are primarily designed for direct merchants, lacking the specialized support needed to help software platforms navigate the intricate realms of risk management and compliance. This challenge is further compounded by a shortage of qualified payment experts in the field.
“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.”
Just last month, Rainforest was honored with the title of “Emerging Startup of the Year” by Venture Atlanta.