SnapCard has announced a $1.5m seed round led by noted bitcoin investor Tim Draper.
Launched in November 2013, snapCard has long offered a browser plugin that enabled consumers to purchase items from major e-commerce platforms that don’t currently accept bitcoin. However, the investment marks its emergence from four-to-five months of relative quiet and under-the-radar development.
The funding round coincides with snapCard’s launch of its own digital currency payment processor that will allow merchants the ability to accept bitcoin, popular altcoins such as litecoin and dogecoin, and XRP, the native digital currency that powers the distributed payment protocol offered by Ripple Labs.
Speaking to CoinDesk, CEO Michael Dunworth voiced his belief that snapCard can compete in an established field of merchant processors by focusing on developing markets, particularly Latin America.
Dunworth told CoinDesk:
“We’re focused on payment processing, establishing infrastructure you can use globally and being really coin-agnostic. We know that digital currencies are here to stay, so we want to make sure that we can scale as communities grow to adopt different currencies along the way.”
Brock Pierce-led investment group Crypto Currency Partners, Fortress Investment Group-backed Insikt Ventures, Great Oaks Venture Capital, noted bitcoin-friendly startup incubator Boost VC, as well as a number of undisclosed angel investors, also contributed to the investment round.
In conjunction with the launch, snapCard also unveiled a point-of-sale (POS) app for its brick-and-mortar merchant clients, available for Android devices from the Google Play Store.
Selling a big vision
While Dunworth framed snapCard as an aspiring global service, initially the company will open to merchant customers in bitcoin’s most developed markets, Australia, Canada and the US.
Still, Dunworth said this will change soon, should the company be able to execute its market strategy:
“We want to have it all up and running to 30–40 countries before the holiday season starts to kick in.”
Boost VC’s Adam Draper told CoinDesk that this big-picture vision was one of the core reasons he has invested in the platform, which also earlier graduated from Boost VC’s startup incubator.
Calling snapCard a “force to be reckoned with in the payments space”, Draper added:
“We met Michael Dunworth and (COO) Ioannis Giannaros and loved their ambition. People love their products, and they sold us a big vision.”
Enrollment for merchants
SnapCard will accept bitcoin on behalf of consumers and provide local fiat via direct deposit, or send the digital currency directly to a third-party wallet of the merchant’s choice. Like competitors BitPay and GoCoin, the company does not offer its own digital wallet.
To ease merchant concerns regarding security, snapCard indicates it will leverage a bug bounty program offered by CrowdCurity, the IT security startup that raised $1m in seed funding this July from a group of investors including Tim Draper.
SnapCard will further conduct identity verification through BlockScore, a California-based startup that garnered $2m in seed funding from Battery Ventures, Lightspeed Venture Partners and Boost VC.
To begin with, merchants must provide an email address, as well as details of the type of service they provide, how they plan to use snapCard, and whether it will be used at all or some of the businesses locations or at only events and promotions.
Merchants are then verified by snapCard after providing their full legal name, home address, phone number, date of birth and the last four digits of their social security number.
First-mover advantage
The funding news provides the latest evidence that, despite the number of established providers in the bitcoin merchant processing space, major VCs believe there’s room for more alternatives.
SnapCard will now need to compete for new clients against BitPay, Coinbase and GoCoin, all three of which recently gained the ability to onboard merchants through PayPal’s Payments Hub platform.
Dunworth acknowledged the challenge of competing against these companies in more developed markets, but suggested that snapCard’s international focus will be its key advantage.
“We’re trying to act really quickly,” he said, “lining up essential partnerships that can allow for strong distribution to get a footprint going.”
Ultimately, he even took an optimistic view on this aspect of the space, suggesting it will help all of the ecosystem’s processors continue to innovate.
“I think the competition is healthy because it gives consumers a choice,” he concluded.
Merchant image via Shutterstock