US startup Rain has raised $6 million in seed funding to provide corporate credit cards for decentralized autonomous organizations (DAOs).
The round, announced today, was led by Lightspeed Venture Partners. Other investors include Coinbase Ventures, Uniswap Labs and Terraform Labs.
Founded by Farooq Malik and Charles Naut, the startup aims to tap into the growth of DAOs by providing them with a corporate card and expense management tools. Unlike traditional companies, DAOs work through smart contract tooling and often have flat organizational structures. According to The Block Research, DAOs saw significant growth in the last year, with nearly 1.7 million members and $16 billion in total AUM as of December 2021.
While DAOs hold much of their wealth in tokens sitting in treasuries, they still exist in a world built on traditional financial rails, Malik explained in an interview. This means that they may still have typical business expenses such as travel bills, web hosting or laptop purchases that require fiat, no matter if they happen to be a five-person DAO or a multibillion-dollar protocol.
“Right now, what we were seeing is a lot of people working at decentralized companies are using either their own AmEx cards, business banking cards or even paying expenses from their personal accounts, which obviously is just a messy way to start to build a company,” Ansaf Kareem, the partner at Lightspeed who led the investment into Rain, told The Block in an interview.
Bridging crypto to TradFi
According to Naut, even opening up an account on a centralized exchange such as Coinbase or FTX can take months. Needless to say, traditional banks often don’t want to work with web3 startups, leading to funding freezes.
“We want to be that translation layer from web3 to a traditional financial system,” he says.
Rain cards work by connecting to an individual or multi-sig wallet — currently only on Ethereum and Solana — that holds USDC. When a user spends with the card, Rain handles the swap from USDC stablecoins to fiat with the merchant accepting the transaction on Visa rails.
The raise follows recent rounds from Multis and Coinbooks, two other startups creating accounting and banking services for DAOs.
While still officially in stealth, in January Rain began onboarding customers, some of which are Lightspeed portfolio companies, and currently has over 100 users on its waiting list.
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