How this fintech convinced Andreessen Horowitz to invest in stealth mode

The renowned Silicon Valley VC had previously participated in a Berlin team. For the B2B payment portal Payrails, the investment is an accolade.
COO Emre Talay, CEO Orkhan Abdullayev and CTO Nicolas Thouzea (left to right) worked at Delivery Hero for four years and then founded Payrails together.


The Berlin startup Payrails was only a few weeks old when founder Orkhan Abdullayev suddenly found a message in his mailbox from one of Silicon Valley's top financiers. The former Vice President of Delivery Hero and two of his colleagues had just resigned from the Dax group and founded their own startup. Their Fintech Payrails was still in stealth mode, only a few people would have known about their plan to develop a modular principle for payment service providers, Abdullayev said in an interview with Gründerszene. “Andreessen Horowitz wrote to us on Linkedin because they heard from us. But I don’t know where from either.”
He and his co-founders Emre Talay and Nicolas Thouzeau arranged to meet with A16z, as Andreessen Horowitz's fund is also known. In the end, both parties agreed to participate. The scene VC, which earned billions with portfolio sizes such as Airbnb, Facebook and Slack, then led the seed round of the Berlin fintech. Payrails GmbH was entered in the commercial register in August, and the notary appointment with the lenders was three months later.
Plus point: the founding team worked together for years
More details are now known: the fintech collected a total of 5.8 million euros (6.4 million dollars). In addition to A16z, the money came from HV Capital, Delivery Hero CFO Emmanuel Thomassin, Flixbus founders Jochen Engert, André Schwämmlein and Daniel Krauss, and Hellofresh CEO Dominik Richter.
For Andreessen Horowitz it is the second investment in a German founding team. In the summer of 2020, the fund took a stake in the AI startup Rasa, which, however, had relocated from Berlin to San Francisco a year earlier. Payrails is thus the first portfolio company that is still based in Germany.

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Andreessen Horowitz was not only convinced by the idea of the fintech, but above all by the founding team, says Abdullayev. The trio built up a global payment system at Delivery Hero over four years, with Abdullayev most recently heading the area. Thouzeau was also previously the CTO at several small Rocket internet ventures. The VC welcomed the fact that the developers had been working together for a long time and then also had a top-class employer such as the food delivery service.
At the Dax group, the Berliners made sure that transactions between customers and restaurant partners in over 30 markets ran smoothly. They noticed a problem: New interfaces have to be built for every payment service provider that Delivery Hero cooperates with, be it Mastercard or Paypal, for every currency and every local payment app. There are separate tools for all of these payment partners, and communication is tedious. Their idea: a kind of modular system that can be used to bundle all payment service providers and the technical infrastructure. They called it Payrails.
Mediation between corporate customers and payment service providers
"The market is highly fragmented," explains CEO Abdullayev. "The previous solutions are often either tailored to specific regions or the technology is quite rigid and leaves companies little flexibility." Payrails is cloud-based software for corporate customers, which can be used to process all payment services, regardless of which country, in which currency and which payment methods. All with a single interface. Because all transactions run through one software, companies also get a live overview of their liquidity and payment flows.
The customers themselves decide which payment providers are connected to Payrails. They still have to negotiate contracts themselves with the respective partners, such as Adyen and Visa, and continue to pay for them. Payrails then takes over the infrastructure and further communication. The startup is a kind of mediator, so to speak. The fintech retains a fixed fee for every transaction made via the portal. The CEO explains that there are normally several million orders per day per company.

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Some tech companies are already testing Payrails in a pilot phase, he says. But he doesn't want to name names. The business angels suggest that it could be Hellofresh and Flixbus. The market launch is planned for the second quarter. The team wants to have a handful of customers on board by the end of the year. The focus will initially be on food delivery services and quick commerce, says Abdullayev – the trio has already gained experience with this. And that's exactly what Andreessen Horowitz liked about the team.

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