Conduit’s ‘Stripe for DeFi’ approach bags startup $21.2 million CAD round led by Portage

Conduit Financial
Conduit wants to make DeFi “invisible” via its APIs.

After less than a year in business, decentralized finance (DeFi) startup Conduit has raised a $21.2 million CAD ($17 million USD) seed round.

Portage Ventures led the round with participation from Diagram Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures, Inovia Capital, and Jump Capital. A number of notable FinTech executives also participated in the round: Mark Britto and Gary Marino (ex-PayPal), Asiff Hirji (ex-Coinbase), and Nik Milanović (Google Pay), as well as a personal investment from Rex Salisbury (ex-a16z).

Conduit plans to use the new funds for hiring and expansion. Started in June, 2021, the fledgling startup currently employs 12, but hopes to grow to 25 in the next quarter.

The round closed at the end of 2021.

“We combine in the best possible way so our customers don’t have to think about this, worry about this.”

Kirill Gertman, Conduit’s co-founder and CEO, contends that for DeFi to catch on with the public it needs to be invisible. “That’s what we’re helping to do,” Gertman said. “That’s what our investors believe is important; that’s what we believe is important to drive adoption, and that’s why they came together to fund us.”

Conduit integrates DeFi products within its platform, and claims to help simplify compliance and development while making the experience customer-friendly. The company connects FinTech startups, neobanks, exchanges, and traditional financial institutions to crypto-backed earning products, so that their customers can use DeFi inside the products they already use.

Currently, Conduit’s API connects customers to growth earnings accounts, enabling them to invest in the startup’s high-yield, decentralized finance accounts; and to Conduit’s corporate treasury, which allows companies to add crypto to their treasury through what Conduit describes as secure, high-yield, crypto-backed holdings.

In an interview with BetaKit, Gertman compared Conduit to Stripe. “What I think our angle is here, our edge, is the fact that we combine in the best possible way so our customers don’t have to think about this, worry about this,” he said. “They can just plug into us the same way an e-commerce store can plug into Stripe, a couple of lines of code to put on the website, and it just works.”

While Gertman said he doesn’t like to lean too heavily on the Stripe comparison as it’s doing something different from Conduit, obviously the analogy works. Not only did the startup attract a healthy round, but it’s also gained two board members. Stephanie Choo, a partner from Portage Ventures, and Dan Robichaud, a managing partner at Diagram, are both joining the board as part of the round.

“I’m thrilled to be joining the board of a company that is, I believe, as innovative and as groundbreaking as Conduit,” Choo told BetaKit. “Conduit is helping to accelerate the convergence of DeFi and FinTech by allowing a new set of consumers to participate in the DeFi economy. At Portage, we have already seen significant interest in what they are building across our ecosystem of FinTechs and corporates.”

Choo was already a fan of DeFi. In a blog post last year along with Portage investment associate Andre Masse, Choo opined: “Decentralized finance, or DeFi, has the potential to become for financial services what the Internet has been for media production and distribution.”

She noted that innovative companies are deploying DeFi technology and capturing billions of dollars of enterprise value in the process. At the same time, “traditional companies, such as banks and credit card networks, are also experimenting with the technology, which is boosting the credibility of its widespread application in the financial sector.”

According to Choo, those dynamics are leading to an increasing amount of mainstream adoption of DeFi.

Backed with its fresh capital, Conduit said it plans to build products and go-to-market teams in Latin America and the United States. As well, the startup intends to hire engineers, business development representatives, and compliance staff.

“Part of the value we bring is we don’t just provide the tech, we also make sure what we’re doing in each market, each country is regulated, is compliant so our customers are comfortable and confident,” Gertman said.

While Conduit is not currently regulated by any of the securities commissions, Gertman said he believes they likely will be in the future. “A lot of the customers we’re targeting you can essentially think of them as neo banks who are not usually regulated themselves,” he said.

“They’re not generally licensed on their own, so where we see ourselves fitting in is providing them with that compliance and regulatory framework essentially so they can operate and have access to crypto for the users,” Gertman continued.

Currently, the startup is looking at compliance country by country. In Brazil, Conduit consulted with legal experts who opined it wouldn’t need a licence there. However, in Canada and the United States, Conduit plans to be regulated. Gertman said once the startup is licensed, then it will be able to provide compliance and regulatory coverage along with its technology.

At the moment Conduit has two customers, which Gertman describes as fairly large crypto exchanges.

Gertman founded Conduit in June 2021 along with his CTO, Michael Gregson. The initial ramp-up was slow, with just the two of them at first. But as they became more confident that the funding round was going to close, they began building out their team.

Gertman and Gregson decided to found Conduit after building several consumer-facing crypto-based products such as digital wallets. Gertman said in FinTech, players like Stripe and Plaid provide different services that are essentially wrapped in APIs. That’s not the case in crypto, Gertman said, and he and Gregson had to build things in-house, which they weren’t keen to do.

The pair decided they wanted to create their own API that would allow customers, for example, to pay their fiats in dollars, convert them to a stable coin, and then deploy that stable coin.

“All of these steps are difficult and complicated and they’re hard to manage,” Gertman said. “So we’re taking on all of that for our customers so our customers can just plug into the API, connect, get ready in a few days as opposed to months and months of work and give their customers a seamless experience of being able to do that.”

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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