Bitnet, a provider of a digital commerce platform designed to enable enterprise-scale merchants to accept bitcoin payments, has just raised $14.5m in Series A funding (read here). CEO John McDonnell, who co-founded the startup in January 2014 along with CTO Stephen Mc Namara, answered our questions about the company, the product and funding and future plans.
FinSMEs: Hi John. what’s your background? Tell me something about you.
John: I am a lawyer by training and have spent most of my career in payments and FinTech. I was the general counsel of a payment network called TNS that went public in 1994, and I have since held executive roles at PaylinX, CyberSource, Paymo (now Boku) and then Visa, which I left last year to start Bitnet.
FinSMEs: Let’s speak about Bitnet. Firstly, How do you see the world in the medium/long term with Bitcoin and other cryptocurrencies? What’s the opportunity you found in the market?
John: the Bitcoin protocol has turned the public Internet into a secure payments network. That is the most exciting technological development ever for FinTech, and the opportunities are profound for both merchants and consumers. Global, seamless, secure payments with no cross-border fees or restrictions, no losses from fraud and the elimination of other costs associated with handling cards and legacy payment methods. And all at vastly reduced processing costs. It’s an incredible advancement.
FinSMEs: How does Bitnet work? Tell me something about the features of the solution…
John: Bitnet enables merchants to accept bitcoin as payment for goods and services and receive a payout at a guaranteed rate in their currency of choice: USD, EUR, GBP, JPY, etc. So Bitnet accepts the Bitcoin on behalf of the merchant, and we convert the bitcoin through our connectivity with the digital currency exchanges. Bitnet eliminates the risk of handling bitcoin and insulates the merchant from any price volatility during the settlement process.
FinSMEs: Can you introduce the team?
John: Absolutely – my co-founder and CTO Stephen Mc Namara was formerly the CTO of CyberSource, which became a subsidiary of Visa through a $2 billion acquisition about four years ago. Stephen and I both left Visa last year to start Bitnet, and we have been joined by a couple dozen incredibly talented engineers, treasury management and business development folks from CyberSource/Visa. Our offices are in San Francisco and Belfast, Northern Ireland.
FinSMEs: Where are you in terms of growth?
John: We are now transitioning from development phase to platform launch. Our system is live and able to process transactions, and we are initiating pilots with select customers and partners in North America and Europe.
FinSMEs: You just raised a round of funding. What can you tell me about the investors?
John: Our largest investor is Highland Capital Partners, a leading Silicon Valley VC firm – they led the recent Series A, and Highland partner Peter Bell has joined our Board along with me, Stephen and Bill McKiernan, the founder of CyberSource. Bill is our chairman and provided a significant part of our seed capital. Also, eCommerce giant Rakuten was a significant strategic investor in our Series A round. In addition, we have a solid list of FinTech and crypto-currency experts who have invested in Bitnet.
How are you using the funds?
John: We have built the core platform and will continue to hire engineers to add features and capabilities. We plan to use the funds to increase staff for our go-to-market efforts: sales, marketing, and customer support. We also plan to open additional offices in Europe and Asia.
John: our primary focus will remain on building the world’s leading crypto-currency processor to enable merchants to safely accept bitcoin as a payment type. We see payments as the ‘killer app’ for Bitcoin, much as email was the driver for widespread adoption of the Internet in the 1990s. However, the disruptive opportunity for Bitcoin as a technology is simply enormous and goes far beyond payments. There are many industries that can be completely overhauled through the use of Bitcoin’s distributed trust capabilities – any service that previously required a centralized ledger system can now be distributed securely and cheaply using Blockchain technology. Functions such as escrow agents and registrars for real estate transfer, car titles, stock trading, etc. can now be automated – my favorite example is voting. Imagine the improvement to voting systems through a secure, transparent and instantaneous system. Bitcoin has opened-up a deep rabbit hole, and Bitnet is taking the leap to see what may be in there, starting with payments.