Built ‘On The Blockchain’ DAO Payroll Processor Rise Works Gets Sino’s Dollars
Blockworks exclusive: Rise Works, an upstart crypto native payment processor, is looking to cash in on void left by TradFi banking blowup
Co-founder and CEO Hugo Finkelstein (left) and co-founder and CTO Andrew Maurer; Source: Rise Works, modified by Blockworks
Venture capitalists are paying attention to cryptocurrency to fiat payroll processing solutions again — in at least one recent instance.
The latest indicator: Rise Works, which bills itself as a “web3-enabled payroll & compliance solution,” has closed its seed round, the startup told Blockworks exclusively. The US-based startup works with DAOs, including the crypto staking specialist Lido (LDO), as well as a number of other types of decentralized organizations looking to compensate their personnel via digital assets.
The 2023 demise of a number of traditional Silicon Valley banking solutions, including Silicon Valley Bank (SVB), left crypto industry participants and their backers still holding dry powder with what they viewed as an opportunity to capitalize. Results have been mixed.
Read more: Silicon Valley Bank Meltdown Has Little to Do With Crypto
In late March, on the heels of SVB’s collapse, contagion from the venture capital favorite bank spread to Rippling, one of the top solutions for crypto companies when it comes to payroll and other back and middle-office operational and financial needs.
Around that same time, Rippling raised a massive $500 million Series E round, according to the company, which described the round as “an unusual financing” in a March 17 tweet.
Enter Rise Works.
Its recently closed round was co-led by Sino Global Capital and Polymorphic Capital, CEO Hugo Finkelstein told Blockworks in an exclusive interview.
Other participating investors included Draper Associates, Hashkey Capital, Paradigm Shift Capital, WW Ventures, P2P and Cosmo Capital.
How Rise Works… works
The company is looking to capitalize on voids left for solutions in the wake of the series of prominent collapses of both traditional finance and crypto-native firms in that particular line of business, Finkelstein told Blockworks.
The startup’s differentiators, Finkelstein said, include its focus on DAOs. Decentralized organizations like DAOs have unique compensation structures for contributors or in-house employees, and are often headquartered or based in various jurisdictions — whether in the US or abroad.
“The fact that we’ve built ourselves on the blockchain,” is Finkelstein said is what makes Rise unique. “We can onboard DAOs very efficiently, very fast. That’s how we’ve won deals compared [to] our competitors over time, because we have the infrastructure ourselves.”
One of the prominent voices in the Lido ecosystem — who goes by the pseudonym “adcv” and holds the title of “chef” at Steakhouse Financial — told Blockworks that Rise Works is “handling all of the compression of crypto to fiat payments for people who need it,” adding that “some of these [traditional] technologies are unfortunately still a few steps behind.”
Lido is a Steakhouse Financial client. Adcv described the Steakhouse as a “a consulting firm that acts as a CFO-for-hire for DAOs.”
Finkelstein said Rise is intended to straddle the “Web 2.5” line in a manner that appeals to both crypto native types and traditional companies. The startup’s solutions for payroll work with both fiat- and crypto-based treasuries and corresponding internal accounting systems.
The startup’s on-chain solution is built on the Arbitrum (ARB) blockchain and fits ERC-725 token standards for decentralized identity, Finkelstein said.
Crypto firms looking for compliant payroll processing solutions often run into a series of thorny problems when it comes to setting up the right backend solutions for the right jurisdiction under the right regulator. The SEC and CFTC’s series of crypto enforcement actions against crypto companies with US business has placed the industry on edge so far in 2023.
US regulators have also been staffing up in terms of personnel with crypto experience. Crypto market players as a result have been especially on edge when it comes to setting up compliant solutions, solutions that match know your customer (KYC) and anti-money laundering provisions, especially.
And not just in the US; countries including India have amped up their own compliance standards for crypto players that fall under their jurisdiction.
Tim Draper, the managing partner of his Draper Associates, told Blockworks in a statement that “work is becoming borderless, and more people are looking to be paid in cryptocurrencies.”
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