The global economy remains in a sticky spot, in the words of the International Monetary Fund, so banks and other financial players are looking to do what they can to bring down operating costs while spurring more financial activity. Today, Form3 — one of the startups building pipes to do just that by connecting financial players to each other with microservices and APIs to enable account payments — announced $60 million in funding to continue expanding its business.
British Patient Capital is making the investment, which closes out Form3’s Series C at $220 million. Others in the round include a mix of notable strategic and financial investors such as Visa, Goldman Sachs, MasterCard, Barclays, Molten Ventures and 83North. We’ve confirmed with sources that the startup’s post-money valuation is in the region of $570 million.
A lot of fintechs wade into the market with disruptive mentalities: they are outsiders who simply see what is broken and are inspired to fix it. Form3 has slightly different DNA.
Mike Walters, Form3’s CEO and co-founder, told TechCrunch that the company got its start in 2016 when he and another co-founder, Michael Mueller, were both working at Barclays and found themselves frustrated with the many inefficiencies of building new services.
“Our observation was that, from a product perspective, every time you wanted to do anything to make your business better for your customers, you would crash into a payment estate that would require you to spend many millions of dollars to test and enhance basic infrastructure,” Walters recalled in an interview.
The two knew each other across working in different departments, and they got to talking. If they could apply modern technology to solve that problem, would we build the same solutions that already existed? “The answer was no,” he joked.
Neither of the two was technical — they came from the strategic and product sides of the business. Tapping their networks they were linked up with a third person, Steve Cook, who was an expert in building software as a service for financial transactions. Cook became their third co-founder and the CTO, a role he still holds.
Over the years, Form3 has become a quiet giant in the market, working not just with heavyweights like its investors but also a wide swathe of neobanks like Klarna, N26 and Sumup, as well as banking-as-a-service providers like Thought Machine, all of whom tap Form3’s APIs to create faster and more efficient payment services for their customers.
The services it offers include instant transfers, payment orchestration, fraud protection, direct debit, credit transfers and more. In the U.K. it already handles more than 50% of all of the country’s non-cash payment volume. Walters would not disclose total revenues or payment volume, but he said the company doubled its processing volume globally in the last six to nine months and expects to double it again in the next 12.
The U.S. is its newest market and so the hope (and plan) is to have newer geographies like the U.S. and Europe drive a lot of that increase.
Interestingly, this round has been a long time in the making, with its first investment in the Series C dating back to September 2021 — yes, three years back.
That is partly a consequence of the tight state of the market today. Growth rounds for anything other than buzzy AI companies remain few and far between, and it remains much easier to close a smaller round as an extension rather than start a new, larger round, especially if it helps bring in significant backers and the startup in question does not need the bigger funding amount that might come with a growth round right at that moment.
“Form3 has built a leading solution for a challenge that banks worldwide are facing: how to transition to a modern, future-proof payments infrastructure,” said Tom Haywood, Managing Director, Direct Investments, British Patient Capital, in a statement. “We are delighted to support them as they take the next steps in their growth journey.”