Toronto fintech startup Dream Payments Corp. has landed a key financing from Fairfax Financial Holdings Ltd. and will roll out a landmark partnership with banking giant JPMorgan Chase this month as it positions itself to be a friend, rather than a foe, of the industry's established giants.
Fairfax's venture-capital arm, FairVentures, is kicking in half of a $10-million Series-A financing by Dream, one of a handful of investments the insurance conglomerate has made since it began formally backing startups a year ago. Other investors include past backer Real Ventures and the Connecticut state government's innovation-funding arm, which awarded Dream with an $1.5-million (U.S.) equity investment for winning a state pitch competition last year to finance its expansion into the United States. Garibaldi Capital acted as Dream's advisor on the financing.
Dream, which provides software for merchants to process credit and debit transactions on mobile devices, is also set this month to power Chase Paymentech's mobile-payments service as it rolls out across Canada to its merchant customers.
Chase said in a statement it is "looking forward to the launch" in the coming weeks on Apple iOS devices followed by a launch soon after for Android users. "Dream Payments is enabling Chase Paymentech to deliver a Canadian market-specific solution that complements our terminal portfolio," Chase said.
Dream chief executive Brent Ho-Young said "for fintech companies, the key thing is how you distribute your solution to reach as many customers as possible. The cost of [customer] acquisition is expensive. Chase will sell the solution with their sales force in Canada [while] we can focus" on software.
The Chase rollout follows Dream's integration last month into Intuit Inc.'s accounting- and tax-software service QuickBooks. Intuit's online platform, provides a mobile-payments option for its 100,000 Canadian small-business customers. "This will be a key go-to payment platform" for QuickBooks customers, Intuit Canada president Jeff Cates said, adding Dream "seemed to be ahead of competitors" with its system for authenticating, approving and accepting transactions.
North American retailers handle more than $4-trillion in payments annually, and a small but fast-growing fraction of that goes through mobile devices. Dream, with 40 employees, already provides point-of-sale payment services to 4,000 small-business customers through its own offering, which is sold through Telus retail outlets, with back-end processing handled by a Canadian bank. Dream expects to more than triple revenue this year, to $3.5-million (Canadian), and to reach $25-million in 2018. It ended 2016 processing $3-million per month in payments, up twentyfold from the start of the year.
Mr. Ho-Young is an electrical engineer by training who built mobile-payment services for large customers, including Western Union, as a consultant before his firm, Don River Inc., and veteran tech entrepreneur Greg Wolfond's Kili Technology Corp. partnered to create Dream in 2014.
"The company is doing really well," said Janet Bannister, a general partner with Real Ventures who led her firm's investment in Dream and sits on the startup's board. "There are a lot of players in mobile payments, but the vast majority" are challenging the established players, whereas Dream "is providing technology to enable established [merchant-payments players] to offer mobile-payment solutions their customers have been asking for." She called the Chase deal "significant," as it will enable Dream to reach a new customer base while making Chase more competitive.