Gumroad Gets $7 Million Series A From Kleiner Perkins For Indie E-Payment Platform

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Gumroad, the startup that lets individuals receive e-payments through a simple URL link, has received $7 million in new funding led by Silicon Valley venture capital stalwart Kleiner Perkins Caulfield & Byers.

The round, which serves as Gumroad’s Series A, brings the startup’s total outside investment to just over $8 million — Gumroad closed on $1.1 million in seed funding back in February, and all those investors also pitched into this round. Kleiner Perkins partner and former Twitter VP of engineering Mike Abbott headed up the funding and will join Gumroad’s board of directors.

Gumroad founder and CEO Sahil Lavingia tells me the new funding will be put toward hiring more people to bulk up its current staff of three. “I just really want to build a sustainable company that scales, and I think Kleiner Perkins and Mike [Abbott] just want to help me do that. He really believes in the larger vision.”

Small Beginnings, Big Idea

That vision is to let people sell anything online as easily as they can share a link to it — independently made music, crafts, writing, whatever — without having to set up an online store. It all began a year ago as a proof-of-concept hack by Lavingia, a 19-year-old college dropout who was a designer on the founding team of Pinterest and has also worked as a designer for Turntable.fm. He showed it off in a post on Hacker News, writing:

“Over this past weekend I had the idea to build a sort of link shortener but with a payment system built-in. There have been many times in the past where I wanted to share a link – on Twitter or just through IM with a few friends – but did not want to go through the overhead of setting up a whole store. So I built Gumroad.”

Today, Gumroad works worldwide with all major credit cards, and can be used for digital content as well as for physical content, since it lets users collect shipping information if needed. Gumroad takes a 5 percent fee for every payment processed, along with a 25 cent credit card fee. So if an item costs $1, Gumroad takes 30 cents; if an item costs $10, Gumroad takes 75 cents.

Lavingia declined to provide specific user numbers, but said that so far, “people from nearly every creative industry has started using the platform. Music, film writing, photography, illustration; all of these industries have started using Gumroad significantly.”

Disruption Brings Challenges

The idea is that largely because of social networking platforms such as Facebook and Twitter and online media platforms such as YouTube and Flickr, nowadays people can attract followers and fans on their own — they don’t necessarily need to get exposure through old distribution channels (or pay the big commissions those channels typically take.) Gumroad wants to make it just as easy for these people to sell things to their followers as it is to get their attention, and potentially make a living doing so.

It’s potentially a hugely disruptive concept, so it’s not too surprising that a big-idea VC like Kleiner Perkins is getting on board. Lavingia tells me that a few copycat apps have emerged in the past year since Gumroad debuted, and he welcomes the competition as being “good for consumers” — but surely this new funding could help the company keep its edge for a while.

Of course, anything dealing with payments is also hugely complicated from security and regulatory standpoints, so Gumroad certainly has its work cut out for it in making sure its platform is truly robust enough to go up against the powers-that-be. It’ll be interesting to watch how it puts its funding and new staff to use in the months ahead.

Our own Alexia Tsotsis interviewed Lavingia a few months ago on TechCrunch TV, and you can watch that video below: