Dream Payments secures funding from Fairfax, key partnership with Chase
SEAN SILCOFF
Posted with permission from Globe and Mail
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Toronto fin-tech startup will offer its mobile merchant payment service across Canada following deal with Intuit's QuickBooks.
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Toronto fin-tech startup Dream Payments Corp. has landed a key financing from Fairfax Financial Holdings Ltd. and will roll out a landmark partnership with banking giant JPMorgan Chase this month as it positions itself to be a friend, rather than a foe, of the industry's established giants.
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Fairfax's venture-capital arm, FairVentures, is kicking in half of a $10-million Series-A financing by Dream, one of a handful of investments the insurance conglomerate has made since it began formally backing startups a year ago. Other investors include past backer Real Ventures and the Connecticut state government's innovation-funding arm, which awarded Dream with an $1.5-million (U.S.) equity investment for winning a state pitch competition last year to finance its expansion into the United States.
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Dream, which provides software for merchants to process credit and debit transactions on mobile devices, is also set this month to power Chase Paymentech's mobile-payments service as it rolls out across Canada to its merchant customers. Chase, a division of financial-services giant JPMorgan Chase & Co., has about 15-20 per-cent market share of the merchant-payments business in Canada.
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Chase said in a statement it is "looking forward to the launch" in the coming weeks on Apple iOS devices followed by a launch soon after for Android users. "Dream Payments is enabling Chase Paymentech to deliver a Canadian market-specific solution that complements our terminal portfolio," Chase said.
​Dream chief executive Brent Ho-Young said "for fin-tech companies, the key thing is how you distribute your solution to reach as many customers as possible. The cost of [customer] acquisition is expensive. Chase will sell the solution with their sales force in Canada [while] we can focus" on software.
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The Chase rollout follows Dream's integration last month into Intuit Inc.'s accounting- and tax-software service QuickBooks. Intuit's online platform, provides a mobile-payments option for its 100,000 Canadian small-business customers. "This will be a key go-to payment platform" for QuickBooks customers, Intuit Canada president Jeff Cates said, adding Dream "seemed to be ahead of competitors" with its system for authenticating, approving and accepting transactions.
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North American retailers handle more than $4-trillion in payments annually, and a small but fast-growing fraction of that goes through mobile devices. Dream, with 40 employees, already provides point-of-sale payment services to thousands of small-business customers through its own offering, which is sold through Telus retail outlets, with back-end processing handled by a Canadian bank. Dream expects to more than triple revenue this year, to $3.5-million (Canadian), and to reach $25-million in 2018. It ended 2016 processing $3-million per month in payments, up twentyfold from the start of the year.
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Mr. Ho-Young is an electrical engineer by training who built mobile-payment services for large customers, including Western Union, as a consultant before his firm, Don River Inc., and veteran tech entrepreneur Greg Wolfond's Kili Technology Corp. partnered to create Dream in 2014.
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"The company is doing really well," said Janet Bannister, a general partner with Real Ventures who led her firm's investment in Dream and sits on the startup's board. "There are a lot of players in mobile payments, but the vast majority" are challenging the established players, whereas Dream "is providing technology to enable established [merchant-payments players] to offer mobile-payment solutions their customers have been asking for." She called the Chase deal "significant," as it will enable Dream to reach a new customer base while making Chase more competitive.