After spending the past few years developing its tech, Buckzy Payments was ready to scale its cross-border payments business globally.
The Toronto-based startup initially set out to raise a much larger funding round during Q3 of this year, but amid market turbulence, a recent drop in tech valuations, and a shift in investor priorities from growth-at-all-costs towards profitability, Buckzy decided to scale back those plans.
“The bigger round will be a global growth story.”
-Abdul Naushad, Buckzy
Instead, Buckzy has opted to close a smaller—though still sizeable—$19.5 million CAD ($14.5 million USD) Series A round. Buckzy founder and CEO Abdul Naushad told BetaKit in an interview that this capital will extend the startup’s runway by 12 months and help it reach cash flow breakeven by this time next year.
With this funding, Buckzy plans to focus its expansion efforts on North America and the United States (US) in particular, and specific European countries like the United Kingdom, Germany, and France. “It’s a smaller scope, but it still will get us to the numbers that we have projected,” said Naushad.
Come Q3 2023, if markets are more favourable, Buckzy intends to raise a much larger $40 to $50 million Series B round at a more appealing valuation to truly tackle the global opportunity it sees for its cross-border payments tech. “The bigger round will be a global growth story,” added Naushad, pointing to opportunities Buckzy sees to expand its presence in Asia, Africa, the Middle East, and Latin America.
Buckzy’s all-equity, all-primary round was co-led by existing investors, Ottawa-based Mistral Venture Partners and San Francisco’s Uncorrelated Ventures. The financing, which closed in early October, also saw follow-on participation from New York-based Revel Partners and support from new backers, FinTech-focused Luge Capital of Toronto and Blue 9 Capital of New York. Naushad declined to share Buckzy’s valuation but noted that the company’s Series A was an up round.
This capital brings Buckzy’s total funding to around $23 million CAD (over $17 million USD). As part of the round, Luge general partner Karim Gillani, a former Xoom and PayPal exec, is becoming a Buckzy board advisor.
Founded in 2018 by Naushad, an experienced FinTech exec who previously founded and spent over a decade working in cross-border payments with PayCommerce, Buckzy is a licensed money transfer company that works with some of the world’s largest banks to enable reliable, secure, and affordable real-time international payments. The startup’s platform offers multi-currency bank accounts, local settlement accounts, real-time FX quoting and booking, without any hidden fees or unnecessary overhead costs.
International payments can be costly and take time to settle. Buckzy solves for this with its tech, which facilitates round the clock settlements in between 10 to 30 seconds for traditional banks, neobanks, and FinTech firms.
“The truth is that today, the normal form of cross-border payments is still relatively archaic and frankly a bit of a black hole where you initiate a transaction and hope it reaches the other end,” Gillani told BetaKit in an interview. “International payments should be real-time as a standard, and Buckzy is enabling that reality.”
In addition to facilitating real-time payments, Buckzy provides “the plumbing that enables cross-border payments.” With its fully embedded finance platform, the company’s offering is an international payments infrastructure play upon which financial institutions can build their own solutions.
Naushad noted that within the cross-border payments space, there are a “handful of players,” claiming that many come at the problem with a specific offering for other businesses or individuals. For its part, Buckzy saw an opportunity to take an infrastructure-first approach. As the CEO noted, “no one solution fits all.”
Buckzy previously raised $1.75 million CAD in seed funding in 2019 from Ottawa-based Mistral Venture Partners and New York’s Revel Partners. The startup has spent a lot of time since then building out its tech, raising $2 million in SAFE funding in 2021 to support these efforts.
Over the past few years, Buckzy has built “version 2” of its platform, constructed a two-sided network to support cross-border payments, begun offering banking-as-a-service, and expanded from just payments into providing other complementary components.
“2023 is a big year for us, because all of the hard work that we have done, a lot of the results will come out in 2023,” said Naushad.
Even so, Buckzy has seen considerable growth over the past few years. From a customer base standpoint, the company has grown from 10 customers in 2019 to over 160 today. The startup, which served only a handful of countries three years ago, now covers 100, and facilitates real-time payments in 41 of them.
Between 2020 and 2021, Naushad said Buckzy saw 3.5x revenue growth at 75 percent margins, noting that the startup anticipates similar results in 2022. Perhaps more impressive is the fact that Buckzy has achieved this growth with such a “thin” sales team: according to Naushad, 80 percent of it has been inbound.
“Because [Buckzy] operates in an industry that’s highly durable … we’re confident that this business will just continue to grow.”
-Karim Gillani, Luge
“With the customers we’ve closed today, all together, the opportunity’s over $60 [million to] $65 million in annual run rate,” said Naushad.
Amid current economic headwinds, Naushad said Buckzy has not made any layoffs and is not looking at cutting any other costs to extend its runway, but noted that the startup has become more mindful of its spending.
Naushad anticipates that the flow of capital between countries will slow during the downturn, but claimed Buckzy’s forecasting model accounts for the worst-case scenario.
The CEO believes that with this Series A funding, regardless of broader economic conditions, Buckzy will be able to reach profitability, putting the startup in a good position to continue growing even if it isn’t able to secure that major Series B round later on next year.
“Yes, the current market conditions are particularly unfavorable for both public companies and private companies,” said Gillani. “But because [Buckzy] operates in an industry that’s highly durable—and it’s frankly essential to how the global economy works—we’re confident that this business will just continue to grow.”
Feature image courtesy Buckzy Payments.