Mechanism Capital co-led a $2.5 million pre-seed round for Diagonal, a platform aiming to make it easier for Web 3 companies to process subscriptions.

The subscription economy has experienced rapid growth over the past several years, but while many services exist to help Web 2 companies process payments and subscriptions, Diagonal says Web 3 companies are mostly left fending for themselves.

Collecting subscriptions in a decentralized fashion is not trivial, and if implemented sloppily can lead to companies and customers unnecessarily paying extra fees.

Diagonal CEO Tony Rosler told CoinDesk that his team’s goal is to provide Web 3 merchants “an entire product suite to make payments as simple as possible,” from connecting wallets and processing payments to handling accounting and sending subscription notifications to customers.

Rosler said MetaCartel Ventures, The LAO, Coinbase Ventures and other investment firms joined the funding round; angel investors Ryan Selkis, Anthony Sassano and others were also involved.

Diagonal’s team is working on developing a public beta, which they plan to initially release on Ethereum layer 2 blockchains Polygon, Arbitrum and Optimism.

Diagonal’s service is based on infrastructure from Superfluid, whose tools enable Ethereum-based apps to initiate streams of payment between parties that settle instantaneously with limited transaction, or "gas," fees.

The company says they have plans to eventually establish a decentralized autonomous organization (DAO) to handle protocol governance.