Earlybird Leads $4m Round for B2B Platform Traxpay

By David Knight |

Here’s a figure for you – the global non-cash payments market is worth $296 trillion. Within that market, banks earn a total income of $250 billion from 65 billion transactions. Who wants a piece of that?

Well, one startup which was born in Cologne but which now is jointly based in San Francisco has put its hand up, offering what its new CEO describes as a unique way to simplify the whole process. And Traxpay, a B2B real time payment provider, has just closed a $4 million funding round led by Berlin-based Earlybird VC.

Traxpay brings together expertise in software and banking, with an enterprise-level solution for sending and receiving payments across a supplier and/or customer network. The new funding will enable the company to build on its initial momentum with European customers as well as prepare for its Q3 expansion into the US.

John Bruggeman, a veteran of the tech scene in Silicon Valley, is the newly-appointed CEO of Traxpay. He told Silicon Allee that the business-to-business payment space is an emerging yet highly inefficient marketplace: “The world has changed dramatically in the last five to seven years. People no longer do business on an 8-5 basis. There is an expectation that I can work any time, anywhere.” The system has been optimised most of the way, he said, but falls short of concluding transactions by actually making a payment.

“You can create an invoice, send an invoice, track it, ship it; we can do everything except pay for it.” But Traxpay is designed to take that final step and allow businesses to make a payment to a supplier, for example, whenever and wherever they want. It is, John said, a “revolutionary change to the way corporate networks work.”

New Traxpay CEO John Bruggeman

The crucial part which allows Traxpay to stand out from the crowd is its links to the banking industry. Banks hold the funds and the regulatory licenses necessary to move money between companies and countries. John added: “We worked out a really neat way to partner with banks, to be able to leverage the goodness of banks while adding the flexibility, the visibility and the control of software… The tricky bit of how you disintermediate the bank without competing with the bank – that’s the secret sauce.”

The product went live in March this year, and the first hub customer is EOS, one of the largest collections firms in Europe. It in turn has brought 50 of its suppliers onto the network, with the hope that they will then add their commercial partners and so on, creating a truly viral growth effect.

Traxpay’s unique selling point and high growth potential were enough to persuade Earlybird, which had been considering more than ten startups in the same space. Jason Whitmore, a partner at Earlybird, said: “Traxpay’s unique blend of enterprise software, payments and banking expertise will deliver one of the most disruptive technology solutions since Paypal reshaped the B2C payments market. Moreover, we believe Traxpay has the potential to become the de-facto B2B online payment network.”

Partnering with Earlybird, meanwhile, enabled Traxpay to meet its desire to have an investor which already had strong traction in central Europe, John added. But the company’s global ambitions are clear, and focus will soon be switching to the US. Highlighting the $296 trillion dollar figure, John said: “You can just take a teeny tiny piece of this (market) and build a multi-billion dollar company… When everyone is enamored with social media and advertising revenue, where’s your good old fashioned software company that brings value? Traxpay has that. To me that’s really exciting.”

Now the challenge for Traxpay is to expand both geographically and in terms of adding functionalities demanded by customers like dynamic discounting and cash auctioning. John, however, feels that the biggest problem is not how to drive growth, but how to keep up with demand: “This is the first company that I’ve ever worked for – and I’ve worked for some stellar companies – where demand has far outstripped our ability to meet it. We have so many leads in the pipeline that we just can’t get to everything fast enough. The biggest challenge we face is scaling fast enough to meet the demand. It’s a really unique problem.”