Veem: Could This Bitcoin Company Be The First To IPO?

“It’s definitely not a strategic thing. It’s an opportunity to create a stand-alone company and in the process make a financial return on a good exit or an IPO down the line.” – Karim Faris, Google Venture General Partner

Statement by Faris in September 2018 after GV participated in Veem’s $25 million funding round

“It started as a dream in a parking lot in the Philippines, I wanted to start a great company in Silicon Valley” said Aldo Carrascoso in an interview on CNN. Two serial entrepreneurs came together to solve one problem, and one of Silicon Valley’s most popular fin-tech startups was born. Aldo Carascoso and Marwan Forzley came together to simplify international payments, and created Align Commerce, later know as Veem.

What is Veem?

As mentioned in my presentation, Veem provides small business to make fast and cheap international transfers across 100+ countries through a simple interface. Veem utilizes its API to optimize the route of an international transfer, offering faster transaction times at competitive exchange rates. In a cross-boarder transfer, one option of Veem’s API is to send domestic funds to a local bank, then purchase bitcoin on a crypto exchange, convert the funds into bitcoin, convert the bitcoin to foreign currency, and complete the the transfer locally to the recipient. While this may seem like a hassle and a bit risky, traditional wiring is far more complex and inconvenient. For some basic knowledge on Veem or some additional help forming questions, check out this former Tech Treker’s blog post.

Who Backs Veem?

An All-star team of investors

Goldman Sachs, Former Google Ventures, Softbank’s SBI Group, National Australia Bank Ventures, Silicon Valley Bank, Kleiner Perkins, and Pantera Capital are among the most prestigious investors. Could this fleet of support mean the emergence of an unicorn and potential IPO?

An incredible amount of experienced entrepreneurs entered the blockchain space during the recent bull market as excessive funds were available. However, having a VC fund back a blockchain startup/project is a incredibly challenging. Thousands of announcements of new “revolutionizing” blockchains were made daily for months during late 2017’s ICO craze. Finding a project that would survive the hype wave was like finding a needle in an increasing number of haystacks. So why was Veem so popular among institutionalized investors? Veem stood out to due to its practicality.

The Vision

The founder’s vision was simple and promising – to fix outdated international payments. In the period between the later half of 2017 and early 2018, Blockchain projects reached 10+ millions valuation without any proven utility brought to users; these networks would, as quickly as they came, disappear or retain a fraction of their worth in the coming months. During this period, investors poured over $10+ billion into ICOs. As everyday investors put their saving into the hyped “blockchain” industry, a couple of VC saw an opportunity in a fin-tech company which took full advantage of the expanding influence of cryptocurrencies, but issued no token or overblown promises. These investors found Carrascoso and Forzley’s team.

“It’s not about the ideology of blockchain, it’s about the practical application” – Aldo Carrascoso

Carrascoso’s incredible creativity and impressive technical background combined with Forzley’s seasoned management experience allowed for Veem’s rapid expansion into foreign markets. Veem’s current success of connecting 100,000 small business internationally, from its mere 600 customers in 2015, is due to its focus on customer experience. The company has recruited top talent for compliance, marketing and product management as it continues to hit new milestones.

So What’s New Since the Last Trek?

Around last years Tech Trek West, Veem recruited its new CTO Jonas Edgeworth, former VP at Goldman Sachs.

As Edgeworth replaced Carrascoso as CTO, the company was able to make the pivot of developing a lot of new features. The most exciting feature is the recently added pay link which gives customers a customized link that leads the one to a direct payment page.

After clicking the customized link sent through email, one arrives to the direct payment page

If one has a Veem account, he or she can instantly make the payment. For those without an account, some bank account information is needed. This feature allows the owner of the link to not give away his or her bank account information to random business abroad. If the payer is or becomes a regular, he or she may want to register an account which takes less than 20 minutes. Veem in fact created a 10 minuted demo for new users to ease the adoption of their platform.

One of Veem’s most impressive accomplishments towards enhancing user adoption and experience is integrating its platform with the 3 most widely used accounting tools – Quickbooks, Xero, and Netsuite. Transactions made on a Veem account can be automatically accounted on any of the platforms. Most recently, the company announced its reward program to further gain loyalty and attract new customers. The company also intends to open its XRapid cross-border payment system to increase efficiency for transfers. On top of all that, to engage small business, Veem has been posting a ton of blog posts on Medium, twice as frequently as a BC Tech Treker.

Veem’s Reward Program

All these new features for both side of customers? They must be a platform company! Kinda. Veem main focus is on its service while, at the same time, transitioning to a platform company. Veem has been offering a ton of new free features, creating an end to end user experience, and building a ecosystem for small business to enjoy free and cheap international transfers. As the network of small business which work with Veem grow, the platform becomes more sticky and further attracts other engaged small business, creating a network effect.

Challenges 

Veem faces 3 main challenges aside from competition. As of recent, Veem only processes 10% of transactions through bitcoin. Issues such as liquidity challenges in foreign immature crypto exchanges, high price volatility of Bitcoin, and government regulation impede these transfers. In fact, Veem can’t support large firm international transfers due to liquidity issues, limiting it to small businesses. The recently announced implementation of xRapid platform could solve the liquidity issue. However, Ripple, the parent organization of xRapid, has always been under scrutiny. One of crypto’s most prominent figures, Ryan Selkis who’s a BC alumni, has endlessly criticized Ripple. The use of Ripple or xRapid is highly debated in the industry, but could pivot the company to greater things. The second major issue is Veem’s claim of a 3 day compliance screen. Companies need to pass Veem’s compliance test to create an account; once passed, the company can transfer internationally limitlessly. Three days seems to be too short to determine the eligibility of a company. Unfortunately, Veem offers less explanation on how they screen. This could potentially lead to money laundering on a uncapped scale. The final issue Veem has is the international licensing fees it pays to operate in foreign countries. These vary based on country’s regulation, but high fees could chip at Veem’s regional profits.

So IPO or Nah?

Personally, I think Veem seems a long way from an IPO. A 100,000+ customer base is impressive, but doesn’t justify a imminent IPO. A million customer mark may be the point of a potential IPO. Regardless, Veem has the potential to disrupt the lucrative landscape of international transfers which is dominated by large banks. The company’s customer experience seems to be outpacing most of its competitors, and its rapid international expansion seems to be taking off. Younger business owner, according to research, tend to be very open to using new methods of running a business, which provides an ever growing market. Who knows, if you start a company one day, you might just ‘Veem’ it to your partners abroad.

2 thoughts on “Veem: Could This Bitcoin Company Be The First To IPO?

  1. Great post! I agree with your conclusion about an IPO, Veem seems a long way off from being prepared for the scrutiny of public markets. As Veem expands I wonder if they will tend to focus more on acquiring a very large number of small businesses and accounts, or focus on trying to break into big businesses? In my opinion it seems the small business route may be the way to to go, but we’ll have to wait and see.

    Like

  2. Super informative post. Given all the hype and complexity surround blockchain it’s really nice to see a concrete, real example of how the technology can benefit businesses even if right now only 10% of their transactions are done using cryptocurrencies. I wouldn’t be surprised if as these technologies become more mainstream we will see more companies adopting services like Veem into their business.

    Like

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