Bitcoin payment service provider Bitnet closes $14.5 mil series A funding round

Bitnet Technologies, an international payment services provider aiming to make it easier for enterprise-scale businesses to integrate Bitcoin payment support, announced today that it has closed a US$14.5 million round of funding, led by Highland Capital Partners, a venture capital group that has previously invested in Ask Jeeves, Leap Motion, and MapQuest.

As part of the terms of the funding, Highland Capital partner Peter Bell will join the Bitnet board of directors. Highland isn’t alone in this round of funding, though – some of the money is coming from Rakuten, Japan’s largest e-commerce site, and one of the largest in the world by sales. There’s also minority investment from FinTech, Webb Investment Firm, and others.

Bitnet was founded in January of this year by a number of finance industry veterans, including alums of Visa and and CyberSource. The goal is to provide a Bitcoin payment processing platform with extremely high reliability and uptime, which integrates seamlessly with legacy systems to reduce the cost of implementing support. The long term goal? To help break up industry deadlock and allow Bitcoin to achieve some critical mass in the industry. This seems to be an issue near and dear to the heart of the Bitnet CEO, John McDonnell, who wrote the following in his application to the Bitcoin Foundation board of directors election.

“[T]his promise of innovation faces daunting threats from incumbents who maintain the ability and the motivation to thwart progress.  The payments industry generates $500+ billion per year in revenue, and Goldman Sachs estimates that over $200 billion in annual fees are at risk of being shifted away from banks and payment networks by the Bitcoin protocol.

However, these same banks are in a position to deny account services to the companies that are building the Bitcoin economy.  […] A banker recently told me that financial institutions in the U.S. are “locking arms” in an effort to slow down the access of Bitcoin companies to basic financial services under the cover of regulatory concerns – even sharing tax ID numbers to create a blacklist.

The seeds of enlightenment are spreading and germinating, and the plants are taking root.  The “invisible hand” of commerce is fusing with the network effect in a way that has never before been so visibly and transparently quantifiable.   But there are powerful global enterprises who see Bitcoin as a weed and are circling the garden with a big can of round-up.  We need vigilant gardeners, and I hereby pledge to bring my pitchfork.  My money is on Bitcoin.”

For their part, Highland Capital seemed excited about their involvement in the project. Peter Bell, the partner who will be joining the board of directors, was quoted in the press release as saying,

“John, Stephen, and the team they have assembled are the epitome of what we mean when we talk about partnering with innovative entrepreneurs who have the ambition to build disruptive, market-leading companies […] Bitnet is breaking down the barriers of digital currency transactions and has the potential to transform the way we exchange goods and services around the world.”

There are a number of players jockeying to become the de facto standard for Bitcoin payment processing by large, cash-native enterprises, and the results of that competition are sure to be good for the consumer and for the Bitcoin industry as a whole. We look forward to seeing what Bitnet’s platform will be capable of when fully developed.