Y Combinator-backed payments startup Balanced has closed out a total $3.4 million seed round, thanks to the addition of $2 million in new funding from investors such as Andreessen Horowitz, CollabFund, and a bunch of angels.
The funding is somewhat strategic, as the startup is looking to help leverage the expertise of the investors involved to help grow its payments business for peer-to-peer marketplaces. On the Andreessen side, for instance, the funding was led by general partner and former PayPal president Jeff Jordan. And investment via CollabFund could help it to get in front of other companies that are part of that firm’s portfolio.
That’s important, because Balanced was built to help marketplace companies like TheFancy, Kitchit, CrowdTilt, Copious, and Zaarly manage payments between two different sets of users. On the one hand there are buyers, for whom Balanced provides white-label payment processing. And on the other hand there are sellers or service providers that marketplaces need to make payouts to. In between there are various rules and regulations that Balanced needs to keep track of, and the company provides services like fraud prevention and holding funds in escrow while waiting for goods or services to be delivered.
Balanced has sought to differentiate itself not just by serving both sides of the transaction, but also by providing a white-label API for payments and payouts for those who need each of those individual services. While most payout services take three-to-five business days, Balanced has worked to enable next-day and same-day payments.
The new funding comes on top of $1.4 million that the company raised from SV Angel, Airbnb CEO Brian Chesky, celebrity investor Ashton Kutcher, and Reddit CEO Yishan Wong, among others. Balanced was part of the Winter 2011 Y Combinator class, but only started making its marketplace payments platform available last year.
Since launching to the public last November, Balanced has been proving out its model with a number of marketplace clients, and has seen its payment volumes accelerate over the last few months. Transaction volumes have grown at about 30 percent over the last seven months, with new account signups increasing at a rate of about 41 percent. Over the past two months, however, things have been even better, with transaction volume growing at 37 percent.
With the funding in place, Balanced is looking at hiring more engineers to improve its product. That includes improving in accounting and operations, fraud prevention, compliance, and internationalization. Offering its product in multiple currencies, for instance, could open up a whole bunch of new markets for the company. It’s also looking at expanding its addressable market: While marketplaces are a good starting place with unique needs, Balanced hopes to provide individual white-label APIs for companies that just need payment processing or payout services.