The Stellar Development Foundation (SDF) has announced the launch of the $30 million Matching Fund which takes a novel approach by co-investing alongside investors globally, matching investments raised from a lead investor up to $500,000.
The Fund is for early-stage companies interested in building on the Stellar blockchain, and provides a new opportunity for early-stage companies to augment their existing fundraising efforts.
SDF launched the Fund to provide more early-stage companies with access to capital to grow and build blockchain-based solutions. This is critical in markets where venture ecosystems may be underdeveloped, especially in contrast to the demand on the ground for capital from companies designing financial services solutions.
Andrea Lo, SDF’s Head of Investments, said, “The Matching Fund is a way for SDF to promote early stage experimentation for real-world use cases that provide value to more consumers. In 2022, we’re putting our funding behind more innovators in geographies that need blockchain-powered solutions. The Stellar ecosystem is working to address challenges like inflation, affordable remittances, and the high cost of capital — and we’re investing in solutions to these problems through the Matching Fund.”
The Fund’s first four investments announced today support a range of companies working on diverse markets and use cases, from payroll in Latin America to remittances in Africa.
Trace Finance is a cross-border payment platform that leverages stablecoins to help startups in Latin America access funding raised from overseas more quickly (up to 2 days instead of months) and affordably (from 4% per transaction to 0.2%). Inflation has been a challenge in Brazil where they are based, but the local startup industry is growing, with a record number of IPOs in 2021. Leveraging stablecoins on Stellar would allow them to reduce costs further and provide users a broader range of financial products. Co-investors in Trace include HOF Capital and Circle Ventures.
Bitwage provides crypto-powered international payroll, invoicing, and benefits services with a focus on Latin America. The international freelance market will increasingly want to be paid in cryptocurrency and stablecoins as a faster and more liquid store of value. Bitwage expects to capture more of this $1.2 trillion market, and has already processed $120 million in transactions. Integrating with Stellar could optimize transactions in hard-to-reach places. Co-investors in Bitwage include Draper Associates and Gaingels.
Afriex is a payment app that is addressing the issue of slow and expensive remittance payments. They provide free cross-border payments for users in emerging markets including Nigeria, Ghana, Kenya, and Uganda, and integrating with the Stellar anchor network could help them expand into new markets. Co-investors in Afriex include Future Africa, Softbank Opportunity Fund, and Precursor Ventures.
FanVestor is a crowdfunding platform that connects NFT creators to their customers. The investment is an opportunity for FanVestor to use Stellar to experiment with NFTs that are more affordable and accessible than NFTs on other chains, which can be cost prohibitive and leave out creators in underserved markets. Co-investors in FanVestor including Formic Ventures and industry-specific angels.
Denelle Dixon, SDF’s CEO and Executive Director, said, “We need to be more nimble and inclusive in order to truly build an industry that reaches more people with better access to financial services. The way we choose to fund and support companies in their early days is a big part of that, and at SDF, we are very intentionally building out and incentivizing investments in real use cases of blockchain that help everyday people. We invite companies to apply and see how Stellar’s dynamic global ecosystem can support your growth.”
The Matching Fund is an investment track within SDF’s Enterprise Fund targeting new or existing Stellar ecosystem companies.