PayPal's venture arm used PYUSD in a $5 million investment in Mesh. Illustration: Fortune
PayPal's venture arm just made a bet on digital asset startups. There's nothing unusual about this, but for one thing, the payments giant used his PYUSD stablecoin for his $5 million in investments, which he launched last August.
The stablecoin invests in Mesh, a startup founded by cybersecurity veterans who sold their first business to LogMeIn, which runs password manager LastPass. Their new startup similarly focuses on secure communications, albeit in the form of crypto-based financial transactions.
You can think of Mesh as an encrypted version of Plaid, a service that lets you connect your bank account to apps and websites by entering your online banking credentials. Bam Azizi, co-founder and CEO of Mesh, said the Plaid comparison is accurate, but to some extent his crypto service plays a much larger role when it comes to sending crypto. states that it is correct.
In practice, this means that Mesh can act as a way to move funds between everything from cryptocurrency exchanges to wallets to financial apps that support cryptocurrencies. The benefit of the service, according to Azizi, is that users don't have to cut and paste long strings of text, which is common in crypto transfers, but he says this is not a sufficient security measure. Instead, Mesh users simply use the in-app menu.
Mesh said that hundreds of companies, including well-known exchanges and fintech companies, have integrated the company's services, but he could not name specific companies at this time. Azizi says the startup has generated more than $1 million in revenue and is not currently profitable, but could easily become profitable if he chooses.
PayPal Ventures added an additional $1.5 million in cash on top of the $5 million it gave Mesh in the form of stablecoins recorded on the Ethereum blockchain. This comes after the startup's $22 million Series A funding round last year, which included backers like Money Forward, Galaxy, and Samsung Next.
PayPal launched PYUSD in August with support from Paxos, a New York-based company that produces white-label stablecoins. PYUSD is worth about $135 billion, and while it still only accounts for a small portion of the total stablecoin market dominated by Tether, it gained more than 70% between mid-December and mid-January. It has grown and its market capitalization is approximately $300 million.
The decision to use PYUSD to make mesh investments is part of PayPal's broader strategy to offer more payment options around the world, and appears to be aimed at further increasing the stablecoin's circulation. is.
“We believe this investment will accelerate Mesh's growth and significantly contribute to the advancement of embedded finance and native stablecoins,” Amman Bhasin of PayPal Ventures said in a statement.
