Originally published on Dallas Business Journal
Richardson-based startup Modo Payments has just completed a $2 million raise that will help support the latest expansion of its payment services platform.
The bridge round was led by Tim Keith, CEO of Texas Central Partners LLC, the private company behind the proposed high-speed rail between Dallas and Houston. Other investors that participated in the round include John Beletic, partner at private equity firm Oak Investment Partners, and Jay Kassing, owner of Marquis, a financial technology company in Plano, along with several other unnamed business executives.
“Over the course of the year, we’re looking to double on almost every dimension,” said Modo CEO Bruce Parker, referring to bookings, collections as well as employees. “Last year, we did $1.7 million in bookings.”
The round follows Modo Payments’ seed round of $2 million, which was completed in 2014. A strategic capital partner (an unnamed large corporation) provided the seed round, Parker said.
Modo, founded in 2010, employs 20 people at its Richardson office. The company, which started as a software company enabling in-store mobile payments, provides technology to help connect payment systems via the cloud. The company, for example, can connect loyalty platforms to retailers, allowing customers to use their points across companies. The transaction service is called COIN, which Modo Payments has registered, trademarked and patented.
The change from serving as a technology developer for the mobile wallet to a connecting digital payments systems began last spring.
“It turns out everyone has their own ideas about money,” Parker said. “So we’re enabling that by providing infrastructure that helps the new digital economy work.”
This spring, the company plans to announce a partnership with a payment system that competes with PayPal. The company will be connecting that payment system to U.S. retailers.
It also plans to rollout new services that will allow companies like Google and YouTube to easily pay content publishers.
“We have a way to connect them to 40 different payment systems around the world,” Parker said.
But the road has not been an easy one for Modo or Parker, who’s worked for financial service companies including Fidelity National Information Services (NYSE: FIS) and ACI Worldwide (Nasdaw: ACIW). The founder invested about $250,000 of his own money to bootstrap the company for the first four years. His team of five people at the time also worked full-time for minimal and sometimes no pay.
“I had a team around me who just slogged through that period,” he said. “They bootstrapped the company.”
But the determination from the team led to Modo doubling in customer payments every year. The company has had to battle for its customers, as local corporations more risk averse when it comes to startups. It’s also had to build a solid business to prove itself to investors.
“The Dallas entrepreneurial community forces you to do things the good old fashioned way,” he said, adding that the area is looking for results and viable products first. “We’ve had to gut it out in the way that East and West Coast startups don’t.
“We have a much longer-term outlook that most startups as a result, but it’s been painful.”
But Parker sees a bright road ahead, as more large corporations start to get wind of Modo’s offerings. It also helps that Dallas is the No. 2 market behind Atlanta in terms of payment companies, he said.
“The collaboration of the upstarts and the big heavy iron systems out there run by very successful companies is a good match,” he said. “Dallas, having a lot of big corporate presence will actually have an advantage in that process.”