Braintree Buys Venmo for $26.2 Million | Hacker News Reader

Braintree Buys Venmo for $26.2 Million

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93 pointsdcosson22 comments

What I love about Venmo is that they took payment processing and aggressively went after a niche - 'spotting' or paying back a friend for cash - tailoring the app to that unique experience. Good job Venmo!

Very glad to see this. Venmo is possibly the most useful app on my phone, and one of my favorite products.

Is it just me or is the number kinda low, based on Venmo's success so far (and the financial predictions)?

There have been several "pay-your-friends" apps that achieve a lot of success for a while because they're free, then lose all momentum when they start charging. I'm not sure if Venmo is in the same boat, but it seems possible.

I remember waaaaay back in the day when PayPal was called Confinity and they were doing this for PalmPilot. They pivoted and the rest is history.

Venmo hasn't been very successful thus far. They have a small to mid sized user base and they are currently operating at a loss (no fees on transactions that cost them money), so I think $26m is a pretty good number.

They're only processing $10M of transactions/month, so even if they were to start charging fees, that wouldn't translate into much revenue. Agree that this is a great exit for the team.

Seems high to me. Minimal traction in a difficult-to-make-money niche (paying people you know).

Their pricing is 3% on credit cards, and 0 on everything else. At best they would see 1% margin on credit cards, so $250M at 1%, is $2.5M/year. 10X optimistic projected revenue is a great deal for Venmo, and BrainTree is getting a functioning custodial account system and the team that built it.

The number is a reflection of 3 things:

- Multiple of revenues - Tech acquired vs time to build and opportunity cost. - Braintree's perception of how much they can aggressively grow the offering when they offer it to their much larger customer base

So it is what it is.

Smart move, Venmo has a pretty solid product. Congrats to their team!

Congrats Iqram, Kortina, and team!

Thanks, Ivan. For those who are wondering, the Venmo apps aren't going away: http://bit.ly/bt-venmo

Woops, that's http://bit.ly/venmo-bt

Interested in revenue vs exit valuation... Can you say anything about it? The margins must be phenomenally low if the valuation was only 10% of what you process yearly...

If you process $260mm and charge 0% it's not really fair to view $26mm as a 10% revenue multiplier.

(Even for the small part of their business funded by credit cards, there's a $500 per customer lifetime exemption, and 3% minus higher fraud rate and 2-2.5+% CNP processor and interchange still puts their revenue at less than a small team's salary with 100% credit cards, and probably less than $100k/yr revenue on credit cards overall.

They're obviously being bought for team, technology, and growth potential; current customers are just traction, not revenue.

That's nice, but calling Braintree a startup is quite a stretch. (The article doesn't, it's just the HN headline.)

Judging by the URL, I think the article used to call it a startup and was then edited.

Yeah, they've been around. And they're hiring 150 people soon.

Congrats! I went to school in Philadelphia, I think Kortina paid for cheesesteaks at a hackathon once..

That's a tradition--we'll be doing the same at pennapps again in a few weeks.

Massive congrats guys! :)

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