Why We Invested in Higlobe
The complex and lengthy settlement time for cross-border payments has long been a challenge for consumers and businesses alike. For decades, sending payments internationally required utilizing a service like Western Union or MoneyGram to move funds, which is costly and takes days to settle, with many humans in the loop. Service providers like PayPal, Wise, and Payoneer are able to hold local balances, which speeds up the process but comes with hefty fees for each transaction.
However, the payments landscape is changing dramatically, and the opportunity to use stablecoins to settle real-time global payments at a fraction of the cost is coming into focus.
In October, we saw a flurry of excitement around Stripe’s acquisition of Bridge, valued at more than $1B. In announcing the acquisition, Stripe CEO Patrick Collison predicted that “businesses around the world will benefit from significant speed, coverage, and cost improvements” from the use of stablecoins; Bridge founder Zach Abrams said that stablecoins will “become a core, global, regulated payment platform.”
The conversation around Bridge’s acquisition has focused on the company’s massive valuation, as well as the future of stablecoins as cross-border payments infrastructure. I’d like to take a moment to dig into another element of the deal that jumped out at me. Bridge – along with other startups that are using stablecoins to settle international payments, like TTV portfolio company Higlobe – are classic examples of counter-positioning (in the context of Hamilton Helmer’s 7 Powers). These challengers are turning the current fee-based model on its head. Since stablecoin settlement takes seconds and costs cents (or even fractions of a cent), the entire paradigm for international payments is changing. Companies leveraging stablecoin infrastructure no longer need to rely on transaction-oriented fees to cover the high cost of moving funds; instead, an entirely new monetization approach is suddenly economically viable – for example, charging a monthly or annual subscription fee to send potentially unlimited transfers. This framework is likely another reason why Bridge was appealing to Stripe; incumbents recognize the need to adapt, but many are unable or unwilling to do so if it cannibalizes their current business model. Stripe sees where the industry is headed and is positioning its business for the future.
If Zach Abrams and Sean Yu at Bridge are modeling their business after Microsoft by opening up the field to multiple entrants via their APIs, then Teymour Farman-Farmaian and Jeff Bolton at Higlobe are akin to Apple in building a vertical technology stack. Teymour and Jeff saw a massive opportunity for stablecoins to change the B2B payments landscape, so they co-founded Higlobe in 2020 with a vision to move the world’s money instantly and at no cost. To make that vision a reality, Higlobe has built unique infrastructure; the company has relationships with banks to take in fiat, then settle with stablecoin, and then disburse through local bank or card partners. The company’s proprietary network enables real-time global settlement at effectively zero cost.
Our approach at TTV has always been one of “inductive reasoning.” We work to identify a problem first through observable events, and then search for founders who are building applications that leverage emerging technologies to solve the problem. We’ve seen the biggest opportunities when new technologies become relevant to a specific problem, rather than trying to fit a technology into the business model because it’s trendy. Higlobe’s laser focus on global B2B payments was an important differentiator. Teymour and Jeff’s vision – combined with their impressive leadership in helping to scale Spotify, Zynga, and Google in their early days – led us to make our initial investment in February 2022. Today, Higlobe remains the only stablecoin payments platform focused exclusively on serving mainstream professionals and businesses.
In addition to its proprietary network, Higlobe stands out for its enterprise-grade security and regulatory compliance. The company is registered as a Money Services Business (MSB) and is regulated by the U.S. Treasury Department’s FinCEN; it is our understanding that Higlobe is the only stablecoin player with a SOC 2 Type II certification. Further, Higlobe uses USDC to settle transactions, which holds itself to accountability and transparency with regard to reserves. Over the past two years, Higlobe’s high standards for security, regulatory compliance, and fraud prevention have earned the trust of enterprises across the globe.
Higlobe may be TTV’s first stablecoin investment, but it likely won’t be our last. As we’ve seen with the internet, cloud, mobile, and now Generative AI, enabling technologies have the potential to turn specific, complex problems into massive market opportunities. We’re proud to support Teymour, Jeff, and the entire team at Higlobe as they continue to move payments around the globe instantly, reshaping how business is done.
