Why software companies will need to become payments companies — and how Finix is leading the charge.

Since Lightspeed’s earliest days, we’ve been investing in companies building the infrastructure to drive the digital economy. And one of the most exciting and dynamic areas of that economy is the $2 trillion payments industry.

As a payments infrastructure company, Finix brings together three key pillars of Lightspeed’s investment portfolio: enterprise software, eCommerce, and fintech. Its innovative APIs allow software companies to embed payments technology seamlessly into their platforms, enabling them to not only capture more revenue but to also offer a delightful payment experience to merchants and their customers.

By unbundling the payment technology stack, Finix offers a flexible and scalable solution that avoids long term lock-in with existing third-party providers while bringing more controls in-house. Their latest offering, Flex, offers software companies the opportunity to take control of their payments data at any level of payment volume and become a payment facilitator (“Payfac”) when they’re ready, with minimal switching costs.

These are some of the reasons why we are delighted to announce Lightspeed is leading Finix’s Series B round extension. But another huge reason we’re so bullish on Finix is the people behind the company.

It’s no small feat to provide the infrastructure that allows software companies to elegantly add payments. CEO Richie Serna was previously an engineer at Balanced, one of the few startups to build a modern payment gateway. His co-founder Sean Donovan was COO at Klarna North America and previously led the group at Vantiv (now Worldpay) that pioneered the Payfac model.

As we spent more time with Richie and the Finix team, it became clear to us they have the expertise, ambition, and clarity of vision to help companies take on the difficult job of embedding payments.

We believe every software company will eventually need to build or acquire its own payments infrastructure. Without Finix’s APIs, replacing a payment platform like Stripe would require a small army of talented payments engineers.

Digital payments continue to surge — as Finix’s own 4.5X growth in transaction volume year over year demonstrates — and the market is still far from mature. A recent report by J.P. Morgan notes that US market penetration is less than 10 percent and integrated payments should continue to grow at 2X the market for years to come.

That’s building on a base that is already enormous — some $187 billion in North America in 2018, $14.5 billion of which was driven by software vendors.

With the team’s experience and expertise in payments, we believe Finix is a category-defining company and well positioned to become the de facto platform to enable Payfac. There’s an unyielding challenger mindset at Finix that seeks to topple the incumbents while staying true to the company’s mission statement and values. This is how we strive to operate at Lightspeed, and why we are so proud to partner with the Finix team and lead this round of financing.

— Will Kohler and Natalie Luu