Brex for Crypto
Web3 Corporate Credit Cards
Over the past year, DAOs have experienced an 8x increase in members and currently hold over $11.3 billion in treasuries. This growth has accompanied the increasing demand of corporations to integrate blockchain use cases. The future for many companies is shifting to the decentralized markets where branches of, or corporations in their entirety, have become digitized. In this new future of work, how do companies continue to use this money in a productive physical manner? After all, if decentralized treasuries are backing real world activities, how does a DAO pay for a subscription service, software, travel, or other expenses?
Rain is betting on the future of these neo-corporations, allowing a seamless spending offramp for Web3 companies. Branded as a crypto corporate credit card, Rain provides a seamless way to spend directly from crypto treasuries. Over 65% of businesses have corporate cards. Brex, a web2 corporate card provider, saw more than $1 billion in total payment volume in the first seven months of its existence. Rain stands at the intersection of corporate credit cards like Ramp and Brex, along with crypto payment processing services such as Circle and CoinGate. Particularly, the solution attacks two of the major pain points: 1. Web3 companies have money locked away in treasuries 2. These funds need to be spent on goods and services.
The Case for DeFi in Corporate Finance
Web3 is becoming natural in the modern workplace. We have seen the advent of Web3 protocols owning office space, hosting events, and even hiring interns. But even more importantly, companies have begun to integrate DAOs as a vehicle for making work more fulfilling. Progressive decentralization of companies has allowed for compartmentalization and automation of certain parts of business financing. A live example can be seen in today’s creator economy where content monetization and varieties of consulting work have begun to be fully paid in token shares. In the workplace, DAOs offer novel compensation structures, moving away from full-time employees and providing a more horizontal management — less bureaucracy. Instead of working for a single company, contributors of DAOs can collect bounties and collaborate in a work-to-earn economy.
DeFi makes it easy for companies to be transparent about their funds as well as add individual incentives. This, however, fundamentally changes how finances are managed. Large corporations can earn and raise money in crypto, hire fewer workers, and be community governed. Yet with all of this capital flowing in a DAO-based workforce, there has yet to be similar institutional adoption of cryptocurrency payments for goods and services. This bridge is essential in building the future of work.
A Digital Economy in the Real World
Rain translates traditional financial rails to be compatible with tokens. Their vision is to build the fastest and most direct payment pipeline to connect Web3 companies to vendors. On the payment side, companies can acquire goods from Web2 services using corporate treasures without waiting for funds to settle. This allows protocols to use their treasury with instant liquidity whether it is for leasing office space, buying merchandise, or covering travel expenses. On the other hand, merchants paid by Rain get access to fiat without the regulatory risks of accepting crypto, and the underlying volatility associated with that crypto settlement. This means that you can purchase goods on Amazon, buy a Notion subscription, or rent a Zipcar all without the need for vendors to accept crypto.
Currently, companies need to open an account on a centralized exchange as well as with traditional banks to offramp funds. This causes latency in spending treasuries as well as regulatory issues for Web3 companies in TradFi. On top of it all, there are timing delays associated with using ACH transfers and transaction fees when converting digital assets to fiat. Rain eliminates fees and offers an instant spending tool for companies looking to utilize their funds for corporate expenses. Rain customers can access the Visa or Mastercard rails to purchase things from merchants globally without relying on centralized exchanges, bank accounts or crypto/fiat swaps. Rain is leading the development of a future Web3 finance stack, by building interoperability between Web3 self-custody principles and existing finance use cases.
The Belief Behind Rain
Rain was founded by Farooq Malik and Charles Naut, out of their previous project signandwire.com. In tackling crypto-native fundraising, they stumbled upon the problem of translating corporate spending in Web3 ecosystems. Charles previously founded Playbook HR, a workforce management platform acquired by Intuit. Farooq comes from the investment and finance sector with a decade of experience in structured finance and credit underwriting. He was previously the Treasurer and Investment Officer at the NADB, an international financial institution.
Closing thoughts
The crypto payment processing space has become ever crowded and competitive. Nevertheless, Rain provides practical DeFi use at its core: unfreezing DAO treasuries. As this trillion-dollar asset class continues to expand, traditional corporate finances are headed to the blockchain, and the rails for these new processes are being established. Rain is providing a seamless spending offramp for Web3 companies, a groundbreaking service for the future of corporate finance. With several hundred customers on its waiting list, Rain has been onboarding customers since March.
- Paul Veradittakit
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IN THE TWEETS
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LETS MEET UP
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EthCC, Paris, July 19-22
NEARCON, Lisbon, September 11-14
Pantera Asia Blockchain Summit, Singapore, September 27
TOKEN2049, Singapore, September 28-30
Walks and coffee meetings in San Francisco throughout the year!
ABOUT ME
Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.