Balance, a payments platform aimed at B2B merchants and marketplaces, has raised $25 million in a Series A funding round led by Ribbit Capital.
Avid Ventures participated in the financing, in addition to existing backers Lightspeed Ventures, Stripe, Y Combinator Continuity Fund, SciFi VC and UpWest. Other individual investors that put money in the round include early employees and executives from Plaid, Coinbase, Square, Stripe and PayPal, such as Jaqueline Reses, formerly head of Square Capital. The financing comes just over six months after Balance announced a $5.5 million seed round.
The motivation for starting the company was simple, said CEO and co-founder Bar Geron: “We wanted to create an online B2B experience that doesn’t suck.” He and Yoni Shuster, both former PayPal employees, started the company in early 2020.
B2B payments, he said, have historically differed from B2C primarily in that they have not taken place at the moment of purchase (or at the point of sale) but rather within 30 days and with an invoice. This is not an efficient process for merchants or vendors alike, the company maintains.
Meanwhile, most businesses have avoided paying for their supply with credit cards, because cards can quickly max out, Geron said.
“The only element that keeps many merchants offline is payments,” he told TC. “It’s a process that is stuck in the flow of those marketplaces and keeping them from scaling. We got fascinated with the problem.”
After starting out at Y Combinator, Balance has developed what it describes as a “consumer-like B2B checkout platform for merchants and marketplaces,” or a “self-serve digital checkout experience company for B2B businesses.”
What that means is that Balance has built a B2B payments platform that allows merchants to offer a variety of payment methods, including ACH, cards, checks and bank wires, as well as a variety of terms, including payment on delivery, net payment terms and payment by milestone. Behind the scenes, Balance underwrites the terms of those transactions requiring financing by evaluating the risk of the customer, the merchant and the specific payment terms selected. Balance is built on top of Stripe and offers all of Stripe’s credit card payment options, but then extends far beyond them.
Balance, according to Geron, invested “a lot” in APIs for marketplaces.
“We have a very robust API platform so that these businesses can manage the entire payment flow without being exposed to the risk and regulation of payments,” he told TC. “And this is all happening without them even touching the funds.”
The plus for merchants is the ability to get immediate payout that is always reconciled like credits. Marketplaces are equipped with automated vendor disbursement, a full compliance umbrella and reconciliation management, Balance says.
“We want to make the online payments experience for businesses as seamless as it is for consumer payments, and we want to do it globally,” Geron told TC.
The startup has already partnered with e-commerce giants such as BigCommerce and Magento and will soon also work with Salesforce, according to Geron. Its customers range from startups to publicly traded marketplaces to e-commerce enterprises across a variety of industries such as steel, freight, hardware, food ordering, medical supply and apparel. They include Bryzos, Choco, Zilingo and Bay Supply, among others.
It’s early days yet, but Balance has seen growth of about 500% to 600% since the time of its last raise in February, Geron said. The company, which has offices in Tel Aviv and New York, has about 30 employees.
Jordan Angelos, a general partner at Ribbit and former head of M&A and investment at Stripe, believes the fact that Balance has built its platform specifically for “rapidly scaling” B2B marketplaces and merchants is reflective of a “well-placed” focus.
“B2B marketplaces, for example, have a very particular set of payments and capital markets-related needs that can be much more holistically and elegantly solved with Balance’s flexible toolkit than alternatives,” he wrote via email. “Payments and checkout are two sides of the same coin, and Balance’s products allow users to address them together to better serve their customers as well as their own margins.”