Fintech startup Forward wins $16M to take on Stripe and lead the future of integrated payments

After Brandon Lloyd sold his second company, Bypass, a sports and entertainment payment and point-of-sale software company, to Fiserv in 2020, he dove deeper into the payments industry and realized one thing: software companies were getting a raw deal from the payments provider industry.

“Companies like Stripe originally built this platform so that an online merchant could easily accept credit cards,” Lloyd told TechCrunch. “As distribution has moved from software companies to merchants, software companies need support. Instead of generating revenue and doubling their SaaS revenue, they are giving all their payments revenue to their payments provider.”

It’s not uncommon for a software company to pay 2.9% and 30 cents for each transaction, and Lloyd believes they shouldn’t pay that. Instead, he said their costs should be closer to 2% – and that’s the spread that leaves them with a huge business opportunity.

So Lloyd left Fiserv in June 2023, taking colleagues Derek Victory and Danielle Madison with him to form Advance to bring what they learned from the payments industry to the SaaS vertical community.

Forward works by allowing SaaS companies to rent their offerings as a service, charging their own fees. Your software sits inside your customers’ software, saving them money. Forward manages authorizations, settles transactions, moves money and handles reconciliation. And because there are fewer payment fees, customers get some of those savings back.

Lloyd said Forward is also focused on program design, enabling technical onboarding in less than a week, ongoing merchant sales support and the ability to migrate to a registered payment facilitator at any time.

It’s an ambitious goal to take on the likes of Stripe and other payments infrastructure companies, however, Lloyd believes Forward’s model has an advantage in shifting savings back to SaaS companies and helping them save money.

“The software company has acquired customers to enable payments through their software application, but when they execute this, few of them are successful at scale,” said Lloyd. “In some cases, this opportunity equals software revenue. If they execute payments correctly, SaaS companies can double the size of that company from a revenue standpoint.”

Moving forward is still early. Started processing payments in Q4 2023 in beta period. It has made a few million transactions since then. It also already counts former employer Fiserv as a client. The strategic partnership allows Fiserv to expand into the managed PayFac category and bring products to market faster for more than 1,500 SaaS companies that process tens of billions per year in payment volumes.

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Lloyd wasn’t specific, but said the company was generating revenue. And also paying revenue to your SaaS customers. For example, for every transaction made through the Forward platform, software companies receive, on average, 70 cents back when they add payments as a product.

This also got investors excited. On Thursday, Forward announced $16 million in seed funding. Commerce Ventures, Elefund and Fiserv led the round.

Lloyd intends to use the new funding to expand the company’s customer capabilities and technology development, including machine learning and artificial intelligence.

“We have a lot of empathy for software companies because we built them ourselves,” said Lloyd. “When we meet our customers, they remind us of ourselves 10 or 15 years ago. We are genuinely rooting for them and I think this is a breath of fresh air in the payments ecosystem.”