Our Investment in Tilled

We’ve entered an era in which all companies are fintech companies. If you’re running a software business, you’re likely dealing with some facet of payment processing as part of your company. And, it is likely painful.

Payment processors and facilitators such as Stripe and Braintree have made massive strides in reducing the friction and expenses associated with accepting electronic payments. These companies provide facilitation services by processing credit card transactions from a portfolio of different businesses through a single merchant account. It’s simple, and it’s transparent. But it’s not cheap for businesses or their customers. While a whole new wave of entrepreneurs have started processing payments, as they quickly come to realize, the fees (typically 2.9% + a $.30 transaction fee) add up fast. And these costs only grow as a company scales.

Moreover, as money flows in and out of their business, companies are realizing that they’re leaving millions on the table—a potential new revenue stream. Payments services account for more than 35 percent of global financial services revenues.

Until recently, if companies decided they wanted to cut their payments costs and actually make money from their payment processing, they had two paths to bringing facilitation in-house. They could become a payments facilitator (PayFac) themselves, or they could work with a company that provides PayFac technology in a box. Neither have been optimal solutions as they come with their own inherent cost and complexity.

Option 1: For those becoming their own PayFac. The benefit of being a PayFac is clear— companies keep transaction revenue themselves. But it’s neither simple nor cheap. Becoming a PayFac entails onboarding and underwriting sub-merchants and providing them with the infrastructure to process electronic payments. Companies looking to become PayFacs must also have a dedicated payments team to manage underwriting, integration, chargebacks and other complex workflows. There are regulatory requirements and ongoing legal risks. It’s no surprise that the cost is generally too substantial for most small and medium sized businesses to justify.

Option 2: For those working with a PayFac-in-a-box. PayFac-in-a-box products have sprung up to help streamline and accelerate this process by supplying the tech to handle the payments facilitation. For a company with sufficient scale, this can deliver a tremendous ROI, but it actually still requires a company to become a PayFac. Becoming a PayFac requires companies to hire teams of 5 or more to handle the implementation and support, as well as do their own underwriting, settlement, and fraud monitoring—fundamental regulatory components of any payments infrastructure. 

After surveying the entire payments processing ecosystem, we discovered that there was actually a company that handles the process from end-to-end, fully delivering on the “in-the-box” promise. With their innovation around PayFac-as-a-Service, Tilled improves on the limited existing software solutions, handling the entire scope of services that it requires to become a PayFac—from onboarding to implementation to settlement. The result?

Companies of all sizes can now convert their payments processing from being a cost center to revenue source—in a matter of weeks instead of months, and without assuming regulatory risk or adding ongoing staffing costs.

I’m thrilled that Canvas Ventures is leading Tilled’s $11M Series A. 

We’ve already seen just how powerful this product can be. Within three weeks of implementing Tilled, healthcare software company PatientPal was able to reduce transaction fees for their clinics from over 3% down to 2.75%—and also began generating over .5% of revenue on every single transaction. All without hiring a single employee or taking on any additional liability.

The winning wedge

Through best-in-class tech and game-changing partnerships, Tilled makes it possible for companies to plug in to Tilled’s infrastructure and activate their own PayFac capabilities with the most streamlined, developer-friendly solution in the market. The technology supports seamless merchant onboarding, with fully managed KYC & AML and fraud management functionality. Instead of charging for the processing fees, Tilled then shares the profits with their customers, allowing companies to monetize their payments and keep the lion’s share of the revenue. 

From opportunity cost to revenue opportunity

The implications of this are massive; companies of all sizes, from startups to enterprise-scale, can now turn what was once a cost center into a new revenue stream almost overnight. With Tilled, a company with $200M in annual transaction value can add $1M in net revenue in a matter of days, with no operational costs, no compliance burden, and no need to create a payments team. For growing software companies seeing accelerating transaction volume—and chafing at their Stripe bills—Tilled presents a truly compelling alternative.

The team to get it done

Caleb Avery and team have been heads’ down on this problem for years, perfecting the tech and service model to make this vision a reality. With nine years of experience within the payment processing space, most recently as an Independent Sales Consultant in the payments space, Caleb has an intimate understanding of the pain points within payments and the needs of his customers. He architected Tilled to be a turnkey approach that simply did not exist in the market. The team pairs this with the focus on relentless execution and product excellence that defines some of the best companies.

Given our deep focus on fintech and marketplaces, Tilled is a natural fit for Canvas Ventures and we’re thrilled to help them on the next step of their journey.  We’re proud to be part of the story alongside our friends at Clocktower Technology Ventures, Abstract Ventures, and Global Founders Capital.

Learn more about Tilled and how to implement it within days. And if you’re looking to help build, the team is hiring!