Bonita Springs-based ConnexPay plans international expansion with $20 million capital infusion

·7 min read

ConnexPay has come a long way.

The company, with its main offices in Bonita Springs, has grown exponentially since its founding in 2017.

COVID has actually benefitted the financial technology — or fintech — business.

With a focus on the travel and tourism industry out of the gate, the company's innovative payment gateway has drawn new interest from the sector because of the pandemic.

The pandemic also lit a fire under the company's leadership to diversify its customer base.

Now, the business has its eyes on the international market, with a fresh infusion of money from outside investors.

ConnexPay recently announced another $20 million capital raise. The latest infusion came from Marqeta, a global, modern card issuing and processing platform for business payments.

Including the latest round, ConnexPay has raised $35 million in venture capital in less than four years.

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The company's patent-pending technology helps business intermediaries, such as travel agencies, e-commerce operators and ticket brokers, accept payments from customers and then issue real-time single-use card payments to the suppliers or vendors of the products or services purchased — on a single platform. Traditionally, these processes have been handled separately.

Go-betweens can save time and money by tapping into ConnexPay's technology. Benefits include lower merchant fees, automatic payment reconciliation and reduced risk in financial transactions.

"There's nobody that we know of today that's doing what we do," said Bob Kaufman, the company's CEO and founder.

Stepping up as investors

Marqeta has been a vendor since the "beginning days," he said, and it previously invested in ConnexPay, in a smaller amount, along with other partners, back in 2019.

"When it came to wanting to raise some money this time, they stepped up," Kaufman said. "They really like our business model, so they did the entire round. They are good partners for us."

The latest funding marks Marqeta’s first corporate investment since going public in June 2021. As part of the investment, Marqeta got one seat on ConnexPay’s board of directors.

In a statement, Renata Caine, a senior vice president for international strategy and planning at Marqeta, said: “ConnexPay’s ability to withstand the demands of COVID-19 in the travel vertical while growing and expanding their business to new verticals is a testament to their team and technology and we’re excited for what’s in front of this company.”

Renata Caine, Marqeta
Renata Caine, Marqeta

In turn, Kaufman said: “We’ve worked with Marqeta as a customer since 2018 and we know the value and payments expertise they bring to the table, so we’re excited about this new investment and what we can accomplish with them in our corner.”

In late 2019, after launching ConnexPay's technology earlier in the year, Kaufman recalls talking to his board members about expanding into new markets, but they felt the company should stay laser focused on the multibillion-dollar travel and tourism industry, with plenty of runway left for growth.

That view soon changed with the onset of the coronavirus pandemic. In 2020, ConnexPay saw more refunds than bookings processed through its payments system in multiple months, Kaufman said.

"So revenue was literally negative because you give back the money you earned," he said.

Investing in the business

In tough times, ConnexPay continued to grow its business, with the help of a $6 million private investment, making no layoffs, Kaufman said.

The company invested in its technology and sales — and brought on new customers, in diverse sectors, he said.

"We signed more new customers in the past 12 months than we have in our history," Kaufman said.

As the travel industry recovered, so did that part of the company's business, which is growing again.

"Travel is still the majority of our customers today, and will be for the foreseeable future," Kaufman said. "We certainly aren't giving up on travel by any means."

With the pandemic, the benefit of its technology became more evident, as a way to safeguard payments for travel, Kaufman said.

"What was bad in the short-term, turned out to be a blessing in disguise for us in the long-term," he said.

The closure of BookIt.com is a prime example of what can happen when intermediaries don't pass along customer payments right away, instead using the money for other purposes, Kaufman said. When the company abruptly shut down, it left customers hanging, canceling their bookings and issuing no refunds, he noted.

ConnexPay's targeted customer is one that processes at least $5 million in payments a year. It has roughly 70 clients.

The focus has been on the quality of the clients, rather than the quantity, Kaufman said.

With its growth, ConnexPay now has about 40 employees, working from its offices in Florida, Georgia and Minnesota, as well as remotely.

"We are encouraging going into the office when possible," Kaufman said. "It helps. Personally, I think you need to have that interaction socially."

International expansion unfolding

As for the company's international expansion, it's hired the first employee in Europe, with plans to launch its product there later this year.

Currently, the company adds four to six new customers a month — and Kaufman said he wants to keep growth at a manageable pace, rather than focusing on the count.

"Some companies fail because they try to grow too fast," he said. "Like anybody, we want to have nice growth, but also growth where we can continue to provide best-in-class service."

Asked if the company is making money yet, Kaufman said it celebrated its first profitable month in November of last year.

"Strangely, that's not the goal," he said. "The goal is to continue to grow."

So for now, investments in the business take priority over making money.

"We expect some unprofitable months here in 2022," Kaufman said. "But that's by design."

He pointed out that even tech giant Amazon lost money in its early years.

One of ConnexPay's earliest capital investments came from a local group, under the Tamiami Angel Fund umbrella.

Through Tamiami Angel Fund III, members initially invested a total of $355,000 in ConnexPay as part of a larger round of funding in 2018, which attracted significant capital from a small syndicate of professional investors, including BIP Capital in Atlanta.

That's the first money the startup received from outside sources, other than from friends and family.

At the time, the technology wasn't even up and running yet, but the company had corporate customers in waiting — and a pilot underway with a few prospective clients.

Local investors offer helping hand

The Tamiami Angel Fund investors, who are successful entrepreneurs and executives, have provided ConnexPay with a helping hand, including assistance with networking and employee recruitment.

Timothy Cartwright, chairman of Tamiami Angel Funds, said the third fund actually invested in ConnexPay twice, topping $568,000.

"What stood out about the company was there was a clearly identified problem that they were solving," he said.

The business had great success, enhancing the profitability of online travel agents, until COVID hit, Cartwright said, but it bounced back quickly — and even stronger.

The latest round of funding from Marqeta, with a market cap or net worth of more than $8 billion, he said, is a testament to ConnexPay's strength and success in navigating through difficult times.

"This new investment will allow them to kind of internationalize their software, so they can do business in different languages and process payments in different languages," Cartwright said. "Most importantly, so they can expand into Europe and the Far East and other countries."

Of all the companies the Tamiami Angel Funds have put their money into, he said, ConnexPay brought the greatest concern when the COVID-19 outbreak reached pandemic status, yet it pulled through with flying colors.

Now, it stands among the investments with the greatest promise, he said.

"We are very excited about the potential outcomes with ConnexPay," Cartwright said. "Fintech is one of the hottest sectors right now."

The company expects to grow its revenues by five times this year.

With a tremendous amount of momentum, it currently has a high projected growth trajectory, forecasting 5x growth in revenue in 2022.

This article originally appeared on Naples Daily News: Bonita Springs-based ConnexPay plans international expansion

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