Finix has spent years slowly chipping away at Stripe, which processes payments for millions of businesses. But the startup previously helped businesses build their own in-house payment systems before officially becoming a payment processor, similar to Stripe, in 2023. Now, Finix is gearing up for its biggest offensive yet against the fintech giant.
In an interview with TechCrunch, CEO and founder Richie Serna said becoming a payment processor was a “huge change” for the business and was a key driver of the $75 million funding announced Thursday. spoke. When Serna founded Finix, he saw it not as a payments business, but as a “payments infrastructure” company. Not so much now.
Serna said Phoenix's sales have quadrupled in the last year, but declined to say how many merchants it has. However, he told TechCrunch in 2022 that Finix supported more than 12,000 merchants, and now Fix has closed more deals in 2024 than in the company's entire history. Fix currently says it could have more than 24,000 merchants.
That's still a long way from Stripe's customer base, with which Phoenix directly competes, at least if you ask Sequoia Capital. The venture firm led Phoenix's $35 million Series B round in 2020, but pulled out of the investment a few weeks later after determining a conflict of interest with Stripe, which also backed it. Phoenix needed to keep the money, but lost Sequoia as a patron.
Four years later, Serna says that moment put Finix on the map, but it had no lasting impact on the business. In fact, fintech companies like Stripe, Finix, and Adyen have a lot of room to grow in the payments space, Serna says.
“One of the things we're trying to fix, from a narrative perspective, is the idea that Stripe owns the entire market. We live in Silicon Valley. Everyone believes that to some extent. ” Serna said. “So Stripe actually owns only 6% of the U.S. market and less than 2% globally. So payments are still relatively fragmented, probably around 91% of payments today. is still going through a system built in the 80s and 90s.”
So why choose Finix over Stripe and how are they different?
In some ways, these companies are more similar than when Sequoia abandoned its investment in Finix because it was too competitive with Stripe. Both process payments for businesses, require little to no coding to set up, and operate in Canada and the United States.
However, Serna said Finix is building products specifically for businesses that are both in-store and online and don't have the developers to build those experiences. He says there are tens of millions of such companies in the United States. To achieve this objective, Finix integrates with several different payment devices to provide more options for physical payments.
Serna also notes that Finix provides greater pricing visibility. Stripe takes a 2.9% cut from every transaction, plus an additional 30 cents fee. Finix, on the other hand, uses a cost-plus model, which analyzes everything it charges its customers and shows its price range.
With this new investment, Finix says it is focused on growing its team beyond its current 130 employees and expanding into more countries around the world. Ideally, the startup hopes to make even bigger inroads into the American payments system.
The $75 million round was led by Acrew Capital and co-led by Leap Global and Lightspeed Venture Partners. Other investors in this round include Citi Ventures, Tribeca Venture Partners, Homebrew, Insight Partners, Inspired Capital, and Cap Table Coalition. Finix has now raised a total of $208 million in Series C funding to date. It's been more than two years since the startup secured a $30 million tranche. Finix did not reveal its current valuation to TechCrunch, but said this was an uptick round.