Banking API Platform Sila Raises $7.7M on Promise of Programmable Money
The $7.7 million round from Madrona Venture Group and others will help Sila bring bespoke stablecoins to fintech entrepreneurs.
Banking services provider Sila has raised $7.7 million to build out features for a platform that allows entrepreneurs to easily launch programmable, USD-pegged stablecoins.
Sila is an application programming interface (API) platform for entrepreneurs to quickly tap banking tools. The platform has a developer suite that issues an ERC-20 stablecoin called SilaToken (SILA). Every transaction on the platform is done using the token, which is pegged 100:1 to the U.S. dollar (i.e., if a customer deposits $100, they receive 10,000 SILA).
The expansion of Sila’s platform could one day make bespoke stablecoins a common feature of traditional fintechs.
After several months of testing, Sila went into full production in October 2019 with four clients. The company expects to have 20 clients by the end of this quarter and 40 clients by the end of the year, according to Sila CEO Shamir Karkal.
“I’m not sure how much of that is early stage or just that the whole world is forced to do better electronic payments,” Karkal said. “This past month, we have more large companies in the pipeline and more customers overall than we have ever had.”
Still, only about 20 percent of Sila’s customers are using the programmable parts of SILA – such as automatically converting between tokenized land registries or by setting limits on how much someone can withdraw from an account.
Sila’s growth plans
Currently, it takes around two business days for customers to purchase tokens after they have connected their bank account to Sila’s platform. With the new funding, Sila plans to install card payments, international payments, business ID verification and begin issuing tokens within one business day. Its partner bank, Memphis-based Evolve Bank & Trust, also plans to connect to the Clearing House system, a network started by big banks that provides access to instant payments.
Evolve provides insurance from the U.S. Federal Deposit Insurance Corporation (FDIC) for the funds that tokens are pegged to. (FDIC insurance only protects a user’s funds in the case that Evolve has a bank failure.)
The $7.7 million round was co-led by Madrona Venture Group and Oregon Venture Fund, with participation from Mucker Capital, 99 Tartans, Transferwise CEO Taavet Kinrikus and entrepreneur Jerry Neumann. As part of the deal, Hope Cochran, managing director at Madrona, and Rick Holt, lead investor at Oregon Venture, are joining Sila’s board. Matt Compton, general partner at Oregon Venture, will join Sila as a board observer.
The round was raised in four stages, starting with $770,000 that was raised in the spring of 2018, while the bulk of funds came in two weeks ago, Karkal said.
Crypto use case
Crypto exchange Vertbase plans to eventually allow users to hold SILA themselves, said Vertbase CEO Justin Seidl. Once USD is converted to SILA, transfer times between SILA and other tokens can happen in minutes. Currently, the exchange just uses Sila as a payments processor, seeing USD transfer to crypto in as little as two days.
Before using Sila, Vertbase users wouldn’t see their funds be transferred for five to seven business days. Customers regularly filled out support tickets when they saw money leave their bank account for a week without getting any bitcoin, Seidl said.
“There are lots of opportunities to build out what has been laid as a foundation, and we’re very excited that we’re not relying on ancient technology,” he said.
UPDATE (8, April 21:27 UTC): This article has been updated to clarify that Vertbase will not be using SILA to pre-fund user accounts.
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