Tag: Conduit

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Crypto API provider Conduit wants to be the Stripe of decentralized finance

Financial institutions continue to search for ways to pile into the crypto market, and decentralized finance (DeFi) products are one mechanism that could help them capture share. Investors in DeFi products can earn yield on their capital by lending out their cryptocurrency in exchange for interest. 

But DeFi lending is far riskier than traditional lending, in part because of the volatility of the asset class. Just as “high-yield” bonds compensate investors with more cash for betting on riskier-than-average companies, DeFi lending can offer far higher interest rates than the traditional savings account wherein customers essentially lend their money to a bank.

Conduit is building a set of APIs that developers can use to build platforms that provide access to DeFi products. As VP of product at crypto wallet BRD, which Coinbase acquired in November last year, Conduit CEO and cofounder Kirill Gertman experienced firsthand the challenges of finding vendors that would provide the backend tools that his team needed to build its user-facing product. After a stint at Arrival Bank and half a year as product head at consumer fintech Eco, Gertman created Conduit to be the backend solution he was looking for but couldn’t find.

Conduit's team

Conduit’s team on a video call Image Credits: Conduit

“When you look at the fintech side of things, there’s already a huge stack that’s been built right to support that. You have Stripe, you have Marqeta if you want to issue cards – any use case you can come up with, you have somebody with an API that’s ready to give it to you,” Gertman told TechCrunch in an interview. 

Conduit aims to be a one-stop shop for neobanks and financial institutions to plug their own products into the DeFi ecosystem, which Gertman said is made easier because Conduit itself is regulated and compliant, taking the compliance burden off of companies using its tools.

For consumers to earn DeFi yields, their fiat currency is first converted into stablecoins, a type of cryptocurrency pegged to the fiat currency’s value, so it can be invested into various crypto protocols like Compound and AAVE. Conduit offers two solutions to help companies access these yields.

The first is its growth earnings account, which neobanks offer to customers so they can invest their fiat currency in DeFi. The second is Conduit’s corporate treasury solution, which offers high-yield DeFi accounts to companies. 

“We do the ledgering, and we do a lot of stuff that basically creates a very simple bundle for [our clients], so they don’t have to worry about the complexities,” like how to convert dollars to stablecoins or how to calculate rates, Gertman said. 

Gertman declined to name specific Conduit customers, but said they fall into two categories – neobanks and small cryptocurrency exchanges, particularly in regions like Latin America. Its largest clients are in Canada, where its product first launched, and Brazil, and it is looking to expand into markets including the US and Europe next, Gertman said. 

Gertman sees two types of benefits from the expansion of DeFi products, he said. The first is access – DeFi protocols are permissionless, allowing any user to lend and borrow funds without needing to provide a credit score, identity verification, or collateral. The second is that DeFi connects users globally, allowing investors in countries with extremely low or negative interest rates to earn higher yield, and making it easier for companies to borrow money at favorable rates by drawing from a global liquidity pool, Gertman added.

Conduit says it plans to triple its headcount, which is fully remote, during the next year across the North America and LatAm regions by hiring engineering, sales, and compliance professionals with localized knowledge. Regulation has played a role in which countries Conduit has targeted, he added, saying that a lack of regulatory clarity from the Securities and Exchange Commission (SEC) has slowed Conduit’s entry into the US.

To fuel its global expansion, Conduit raised a $17M seed round led by Portage Ventures, with support from Diagram Ventures, FinVC, Gemini Frontier Fund, Gradient Ventures and Jump Capital, the company announced today. A number of fintech executives also participated in the round, from firms including PayPal, Coinbase, Google Pay, and others. 

Conduit bears high legal expenses to ensure it is compliant in all its markets, so Gertman decided the company needed to raise a “larger-than-average seed round,” he said. 

“Obviously, the market conditions helped us, and we took advantage of that, and I’m not going to hide that…Even if there will be a crypto winter or something like that, we can survive that,” Gertman said.

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Spectral raises $6.2M for its DevSecOps service

Tel Aviv-based Spectral is bringing its new DevSecOps code scanner out of stealth today and announcing a $6.2 million funding round. The startup’s programming language-agnostic service aims to automated code security development teams to help them detect potential security issues in their codebases and logs, for example. Those issues could be hardcoded API keys and other credentials, but also security misconfiguration and shadow IT assets.

The four-person founding team has a deep background in building AI, monitoring and security tools. CEO Dotan Nahum was a Chief Architect at Klarna and Conduit (now Como, though you may remember Conduit from its infamous toolbar that was later spun off), and the CTO at Como and HiredScore, for example. Other founders worked on building monitoring tools at Elastic and HP and on security at Akamai. As Nahum told me, the idea for Spectral came to him and co-founder and COO Idan Didi during their shared time at mobile application build Conduit/Como.

Image Credits: Spectral

“We basically stored certificates for every client that we had, so we could submit their apps to the various marketplaces,” Nahum told me of his experience at Counduit/Como. “That certificate really proves that you are who you are and it’s super sensitive. And at each point at these companies, I really didn’t have the right tools to actually make sure that we’re storing, handling, detecting [this information] and making sure that it doesn’t leak anywhere.”

Nahum decided to quit his current job and started to build a prototype to see if he could build a tool that could solve this problem (and his work on this prototype quickly discovered an issue at Slack). And as enterprises move from on-premises software to the cloud and to microservices and DevOps, the need for better DevSecOps tools is only increasing.

“The emphasis is to create a great developer experience,” Nahum noted. “Because that’s where we started from. We didn’t start as a top down cyber tool. We started as a modest DevOps friendly, developer-friendly tool.”

Image Credits: Spectral

One interesting aspect of Spectral’s approach, which uses a machine learning model to detect these breaches across programming languages, is that it also scans public-facing systems. On the backend, Spectral integrates with tools like Travis, Jenkins, CircleCI, Webpack, Gatsby and Netlify, but it can also monitor Slack, npm, maven and log providers — tools that most companies don’t really think about when they think about threat modeling.

“Our solution prevents security breaches on a daily basis,” said Spectral co-founder and COO Idan Didi. “The pain points we’re addressing resonate strongly across every company developing software, because as they evolve from own-code to glue-code to no-code approaches they allow their developers to gain more speed, but they also add on significant amounts of risk. Spectral lets developers be more productive while keeping the company secure.”

The company was founded in mid-2020, but it already has about 15 employees and counts a number of large publicly-listed companies among its customers.

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Conduit launches to help founders find actually useful angels and VCs

The bar for being a successful VC just keeps getting higher. With more and more capital sloshing around and not enough founders and startups to invest in, founders are getting the opportunity to be choosier and choosier about who they want to work with on their cap tables. You can’t just bring a checkbook anymore — founders want operational experience and deep domain expertise in critical areas like growth marketing or recruiting.

That’s led to the creation of more service-led VC models like Sweat Equity Ventures, which “earn” their cap table stake through engineering work for startups among other services (while also offering capital). As these operational VC firms and angel investors proliferate though, how do you find the right ones for your startup?

What you need is a Conduit to great investors, and that’s precisely what Edward Lando and Sree Kolli and their team have been building.

Lando and Kolli have been angel investing from New York City together for a number of years, but increasingly felt that they needed a scalable way to connect their startups to quality operational VCs. Starting from their own networks and expanding organically, they slowly built up Conduit in private beta since January, officially launching to the public today.

Conduit founders Edward Lando and Sree Kolli. Photo via Conduit

So what exactly is Conduit? It’s essentially a matchmaking service for founders and investors. Founders looking for investors setup free profiles of their startups on the platform and then can search for investors based on criteria like investment sector (like “Finance” or “E-commerce”), expertise areas (“Business Development” or “Operations”), and which rounds an investor typically participates in. Founders can also include a short video to give their profile more personality.

On the reverse side, investors can setup profiles giving their specializations and investment areas of interest, and then they can browse available startups and click to get introduced.

There are a couple of interesting mechanics here. Whereas the profiles are free for startups, investors either get a limited set of introductions or have to pay a subscription fee to get more introductions to founders. So Conduit’s revenue model relies on the (hopefully more) flush investor side of the marketplace. Right now, there is only one tier of subscription, although the team is thinking about a “super special tier” that might include early access to some startup fundraises.

Second, many of the elements of the marketplace are curated by the Conduit team. Both investors and startups applying for access to the platform go through an application process and are vetted by the Conduit team. On top of that, the team works to optimize introductions — hopefully to increase the rate of success and the quality of matches. Lando described this as a “white-globe approach” that has been helpful to both founders and investors in their initial testing.

Lando described “the jackpot scenario” as “a startup, you get someone who is super knowledgeable about a problem you’re facing to also just wire you money — so they pay you to also just help you.”

Right now, Conduit only helps connect founders and investors together — the platform doesn’t actually facilitate or broker the underlying startup investment.

In addition to the marketplace, Conduit hosts “office hours” with prominent founders like Jennifer Fleiss of Rent the Runway to discuss specific operational challenges and also has compiled a number of market maps and other operational guidebooks for founders to take advantage of.

Lando and Kolli share an ambition of making it easier for founders to secure funding and get back to building. Kolli said that “I think Conduit is uniquely positioned to not only democratize on the founder side but also on the capital front,” pointing out that family offices in particular have been receptive to getting easier access to startups. For his part, Lando emphasized that he believes much of the world’s capital is effectively wasted on “real estate stuff, or bonds or ETFs or what not” and that even fractionally moving more of that capital to venture could dramatically improve the world and the pace of innovation.

Ultimately, Conduit has a bit of the feel of AngelList — but without the crowds. Whether it can scale carefully to maintain quality on both the startup and investor side without diluting that high value will be the company’s biggest challenge going forward. For startups today, assuming you get through the velvet rope line, an investment may well be a click away.