Dwolla expands with $16.5 million investment

Dwolla Inc., an Iowa-based online and mobile payment network provider, recently reported it plans to use $16.5 million in new investment capital to double its workforce in Iowa and New York, as well as expand to San Francisco.

The new round of funding is led by California Silicon Valley venture capital firm Andreessen Horowitz. Dwolla, which was launched by company Chief Executive Officer Ben Milne in December 2009, doesn't use the traditional credit and debit card rails; instead, its network connects to individual bank accounts to transfer money. The company charges no fee for transactions of less than $10 and a flat fee of 25 cents for transactions of $10 or more. Dwolla is also used as an exchange for the virtual currency bitcoin.

Cross-country connections

Dwolla is processing $1 billion in annual transactions and has more than 250,000 accountholders nationwide, Milne stated in a blog post heralding the new investment. He confirmed the company's intent to remain in Iowa and expand with offices in cities around the country.

"I … believe in a greater opportunity that connects the Midwest, East and West coasts and shares the assets and talents needed to build something that has never existed," Milne wrote. "This all started in Des Moines, and we have again found a partner who supports that."

Charise Flynn, Dwolla's Chief Operating Officer, will oversee the new San Francisco office, which will initially focus on product, marketing and business development.

"There's a great deal of work to be done," Milne noted. "In the U.S. alone, we have [more than $600 trillion] in payments to capture and a global footprint to build. One billion dollars is a drop in a very big bucket. This is a step along the way. There is no party after this. There is much work to be done, and we look forward to doing it."

Andreessen Horowitz Partner Scott Weiss stated, "This 'flat fee or free' pricing model strategy is such a compelling value proposition that large players, like the state of Iowa, are signing up for Dwolla in droves. Dwolla has created straightforward APIs, simple user experiences, social integration, and one of the United States' most sophisticated and advanced banking software, called FiSync."

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