Rainforest lands $20M to challenge Stripe with embedded payments for SaaS providers

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Rainforest: Building the Future of Embedded Finance for SaaS Companies

The world of SaaS is rapidly evolving, moving beyond traditional software solutions towards a world where embedded finance plays a central role. Companies like Rainforest are leading this revolution, empowering software platforms to seamlessly integrate financial services, transforming the way businesses operate and interact with their customers.

Rainforest, a two-year-old startup based in Atlanta, has raised $31.75 million in funding, including a recent $20 million Series A round. This fresh capital underscores the growing demand for Rainforest’s unique approach to payments-as-a-service (PaaS), a service designed specifically for software companies. But what makes Rainforest stand out in a competitive market already populated by giants like Stripe?

A Focus on Software Platforms: Rainforest believes in tailoring its solution specifically for SaaS companies. "There are too many payment products akin to fast food — they fill you up, but you’re sluggish, not nourished. Same for a SaaS,” says CEO and founder Joshua Silver. Unlike competitors who often focus on merchants, Rainforest is built from the ground up to understand and address the specific needs of software platforms.

White Glove Service and Transparency: Rainforest goes beyond just providing payment processing infrastructure. It offers a white-glove service, taking responsibility for risk management, merchant onboarding, and compliance – tasks often burdensome for SaaS companies. This hand-holding approach sets them apart, as Silver highlights: "We have a simple, transparent pricing model and it’s posted publicly on our site because we have nothing to hide." This open and supportive approach, coupled with their expertise in payment processing, appeals to SaaS companies seeking a reliable and hassle-free solution.

Rapid Growth and Customer Wins: Rainforest isn’t just talking the talk, they’re walking the walk. In the past six months alone, their payment volume has increased by 17x, and they’ve signed on "dozens" of platforms across various industries. They’ve also managed to secure a significant customer win, landing Keap, a CRM and marketing automation platform with 200,000 users and billions in payment volume. This is a critical validation of their capabilities, demonstrating that they can compete with established giants in the payment processing space.

The Rise of Embedded Finance: The demand for embedded finance is exploding. In 2021, $2.6 trillion in US financial transactions were completed through embedded finance within e-commerce and other software platforms. By 2026, this figure is predicted to soar beyond $7 trillion. Rainforest is positioned to capitalize on this massive market, targeting the thousands of mid-market vertical SaaS platforms in the US alone. Silver estimates that an increasing portion of the $2.2 trillion US SMB merchant processing volume will be channeled through SaaS platforms as businesses move away from traditional processors.

The Future of Rainforest: The future looks bright for Rainforest. With this new funding, they plan to double down on product development and support. They also aim to expand their reach into new verticals, further solidifying their position as a premier provider of embedded finance solutions for the SaaS world.

Matt Brown, partner at Matrix Partners, a key investor in this Series A round, believes that Rainforest possesses the unique combination of expertise and vision to truly revolutionize the space. "They’ve built their core tech, not just a wrapper around others. They’re experts not just in payments, but in SaaS, platform growth, risk and the many other areas you need to pull this off."

A Shift Toward Embedded Finance: Companies like Rainforest are not alone in the embedded finance space. Forward, another recent fund-raiser, offers embedded financial services to SaaS businesses, allowing them to rent out its solutions and collect its own fees. Gynger offers a unique approach by providing embedded financing to technology vendors through an accounts receivable platform that provides flexible payment terms.

The rise of embedded finance is a game-changer for both SaaS companies and consumers. It streamlines the way businesses operate, enabling quick and convenient transactions while offering customers a seamless, integrated financial experience within the software platforms they already use. Rainforest, with its focus on SaaS companies, white glove service, and strong market traction, is poised to become a major player in this rapidly expanding field. As more SaaS companies seek to integrate financial services into their core offerings, the demand for purpose-built solutions like Rainforest will only continue to grow.

Article Reference

Emily Johnson
Emily Johnson
Emily Johnson is a tech enthusiast with over a decade of experience in the industry. She has a knack for identifying the next big thing in startups and has reviewed countless internet products. Emily's deep insights and thorough analysis make her a trusted voice in the tech news arena.