Accel Puts $34 Million In Online Payments Platform Braintree

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It’s no secret that Accel is making major investments in the online payments space, funding both Wonga and e-payments company Yapstone. And today the venture firm is announcing a $34 million Series A investment in Chicago-based online payments company Braintree. Accel partner Ryan Sweeney will be joining Braintree’s board.

Braintree essentially powers and automates online payments for merchants and companies online. The company provides a merchant account, payment gateway, recurring billing, credit card storage, support for mobile and international payments, and PCI Compliance solutions. BrainTree has become a one-stop-shop for all the services a business needs to receive payments from anywhere in the world.

The company, which has not raised any funding previously, says that 99% of its business comes from word-of-mouth endorsement as it does not have outbound sales reps and its products are virally distributed via the web. And Braintree has grown at compounded growth rate in excess of 600% since inception and will grow over 150% in 2011 in terms of revenue. Additionally, Braintree is profitable and is currently on a $3 billion run rate in payment volume from over 2,000 merchants.

Braintree’s client list features a number of well-known web companies, including Airbnb, LivingSocial, OpenTable, Animoto, Lookout, Shopify, Brightcove, Hotel Tonight, GoMobo, 37Signals, and GitHub. For example, Braintree helped LivingSocial handle $13 million Amazon voucher offer.

One of the virtues of Braintree, explains founder Bryan Johnson, is that the company provides a flexible payments platform that allows clients to not only streamline their payments process but also allows them to tailor the payments to their use cases. And on the consumer side, Braintree focuses on making the checkout process as easy as possible.

Sweeney says that BrainTree hit the ‘sweet spot’ in what Accel was looking for in terms of investing in a disruptive payments company. “The company is growing, profitable and bootstrapped,” he explains. For Accel, Braintree represents a company that will be providing the core foundations for consumer-facing plays.

As for the future, Johnson says that he believes that the payments industry is undergoing a transformative change as significant as what occurred with Netflix and Blockbuster and the movie rentals space. He says that the online payments industry will will consolidate dramatically and payments will be bundled with a larger set of services. His goal is to help shape and lead this shift.

Of course, Braintree faces competition from eBay-owned payments giant PayPal. But Johnson isn’t too fearful of PayPal as a competitor. We’re focused on helping merchants scale their businesses so they don’t have to worry about payments, security, compliance and other issues. And Johnson says that the company is actually getting a lot of customers who are migrating from PayPal.

Johnson says the new cash will be used towards hiring additional engineers and for expansion of the company’s sales and marketing efforts.