Strike Raises Series B Led by Ten31
Ten31 is excited to announce the closing of Strike’s Series B capital raise, for which we served as lead investor. Additionally, Ten31 Co-Founder and Managing Partner Grant Gilliam will join the Board of Directors to support Strike’s next phase of growth. Strike is an emerging fintech and payments innovator leveraging the characteristics of bitcoin and the Lightning Network to deliver a superior experience in consumer and merchant financial services. We are proud to scale up our support as a long-term strategic partner to Strike, a company we believe can enable a more efficient, innovative, and inclusive financial experience for all.
At Ten31, we believe the Bitcoin and Lightning stack is collectively the best monetary and settlement protocol in history. Bitcoin is the first-ever digital bearer instrument resistant to debasement, censorship, and seizure, while Lighting offers a permissionless means for instant, low cost transfers of value between peers anywhere in the world. Over time, more businesses and consumers will gravitate to this superior asset and payments network, and the companies providing the best tools and most value for the next billion users will cement themselves as the most important financial platforms of the coming decades. We believe Strike has the potential to become one such company as it leads the transition to an open, global monetary standard. A key aspect of Strike’s model is that a consumer or merchant using Strike’s infrastructure does not need to understand bitcoin and Lightning to benefit from its attractive properties and can choose to continue operating in their native fiat currency; Strike manages the complex liquidity, legal, and tax implications in the background to deliver a superior payments and financial experience to users, an approach that is unique in the space and which we believe has the power to accelerate bitcoin adoption globally.
Legacy payment systems supporting most commerce today are ripe for disruption. Debit and credit card transactions may seem simple at the point of sale, but they typically involve several layers of intermediaries, including an issuing bank for the customer, payment processors / independent sales providers, a card network (Visa, Mastercard, Amex, or Discover), and an acquiring bank for the merchant. A simple card swipe at a grocery store triggers a variety of relaying messages between these parties to authorize and clear a transaction, but final settlement of value typically will not occur for 2-15 days thereafter. In that sense, a credit obligation is therefore transferred in every swipe, rather than a settlement value with true cash finality. When all is said and done, the relevant financial intermediaries typically end up extracting 3% or more of the payment value through interchange fees, fixed swipe fees and other processing costs (collectively the “Merchant Discount Rate” or MDR). When also factoring in the risk, prevalence and cost of fraud, chargebacks and reversals, the burden on merchants (especially small businesses and businesses with low average transaction sizes) is even more significant and in many cases outright prohibitive, creating a very challenging operating and financial environment that has only become more restrictive over time.
The growing adoption of bitcoin and the Lightning Network can significantly improve this dynamic. A Lightning transaction transfers value via bitcoin with immediate settlement from one party to another. There is no need for the creation and subsequent settlement of a credit obligation between counterparties – with bitcoin on Lightning, the payment message *is* the settlement. Instead of value being extracted by intermediaries sitting in the middle of payment flows and exploiting regulatory moats and bloated fixed cost structures, consumers and merchants now have a way to directly facilitate cash-final value transfer through an open network protocol not controlled by any third parties, in which anyone can compete. Similar to the early evolution of the internet, where information could flow freely peer-to-peer and the most significant value accrued to those companies providing the best user experiences, the winners in this new payments paradigm will be those providing the best value to consumers on the one end and merchants on the other.
Strike is uniquely pursuing both ends of this payments flow. On the consumer side, Strike is building a suite of differentiated products to become the go-to bitcoin-native fintech platform of the future, including a debit card, an app for P2P payments over Lightning or traditional rails, tailored consumer rewards, international remittance, micropayments, and more. On the merchant side, its offerings are underpinned by the Strike API, which empowers merchants to accept payments over Lightning at lower cost and with superior settlement characteristics. It is increasingly clear that reducing payment friction and fees is a major focal point for merchants around the world, and Strike is positioned to offer merchant solutions to significantly alleviate these problems.
As the world trends toward the superior payments standard of bitcoin and Lightning, legacy players will be challenged with their significant existing fixed costs and the inefficiencies associated with the credit-based model (risk, credit, fraud departments, etc.) and the inertia of incumbency and disruptive risk to their legacy business (innovator’s dilemma). Meanwhile, the early innovators that can offer reliable and scalable solutions to consistently optimize users’ experiences will build a loyal base of consumers, strong relationships with end merchants, and a durable competitive edge. Strike is poised to be one of these early key innovators and thus has the potential to become one of the most important and valuable companies in this next evolution of financial services, the largest market in the world.
Most importantly, as Strike scales to target consumers and merchants globally, the platform will serve as a catalyst for adoption of bitcoin and Lightning more broadly. As legacy institutional financial barriers give way to open competition and rapid innovation, the resulting backdrop will be a boon for increasing financial inclusion, individual freedoms and ultimately human flourishing. Strike’s Series B thus helps push forward many of the key themes the Ten31 team is most passionate about, and we’re thrilled to help Strike take the next step toward these ambitious and crucial goals.