Why We Invested: Pile Capital
Underneath a 21st century digital user experience, much of today’s financial transactions are still powered by COBOL-based engines. Once critical to computing and powering industries from airlines to healthcare, this setup is now overcome with high servicing costs, low velocity and limited scale. While neobanks and fintechs have attempted to step-up to the challenge, they remain skewed towards retail customers and within the business banking space, are yet to provide the full breadth of financial services that traditional banks can offer. The outcome? Customers, especially smaller-cap businesses, and startups are left with a maze of providers to move, manage and reconcile money.
With web3, we are looking at an internet-native financial services infrastructure delivered at lower costs and scale, in real-time, and with the potential to alleviate counterparty risk; service providers both traditional and new can leverage components of this stack to serve more clients or increase their offerings. DeFi applications in custody, payments, lending, securitization, insurance and more are being built at exponential rates. Yet, the non-retail take-up of the ecosystem continues to be low as compared to the total transaction volume. As with traditional capital markets, DeFi stands to benefit from executable institutional use cases and larger-scale adoption — which in turn will drive its maturity, stability and long-term utility. However, aside from regulatory hurdles, there remains a real barrier to entry with complicated, incompatible, and sometimes non-intuitive integrations.
This is where Pile Capital comes in. Pile Capital orchestrates the needed translation between institutions running on web2 (and prior) and DeFi apps built on web3 via APIs. They reduce the burden of tapping into DeFi by sorting through the user experience behind ramps, settlements, custody and connectivity with providers. This way, institutions can focus on BAU yet increase revenue and engagement, in a custodial, secure, and compliant manner. Moreover, as the talent market continues to heat up (or cool down depending on whom you’re talking to), Pile Capital’s tech stack also solves for both scenarios by lowering the hurdle for small and mid-cap players who are looking to participate in this ecosystem but lack the talent or the extensive in-house capital resources to do so.
Why start with Europe? 1) Europe has a different inflation problem than the US (and somewhat more painful) — making it pertinent for effective financial solutions. 2) The EU is on its way to becoming the first major jurisdiction to implement a comprehensive regulatory framework for crypto. 3) Europe is the biggest cryptocurrency economy in the world, representing over 35% of global activity last year. Large transactions (>$10m, of which majority are DeFi-related) made up more than half of European crypto volumes last year, pointing to a growing presence of institutional investors.
Pile Capital’s Co-founder & CEO Jessica Holzbach spent the better part of half a decade building PENTA; keenly observing customer needs and the deficiencies in existing offerings — her laser-sharp focus on managing stakeholders came through even in our initial chats with our team. Her co-founder Balazs grew up in crypto — in building Herdius, he has seen bear and bull cycles in crypto and learned to solve for the long-term. Armed with Benedetta’s pedigree in product, this talent trifecta understands traditional financial services, crypto and how to build a product at the intersection of the two.
Pile Capital is still in the early innings of its build with the potential to offer businesses access to a full suite of financial products that were either traditionally inaccessible, overlooked or only offered to larger-cap players on antiquated rails. Building on this, Pile Capital has the opportunity to own the web3 transaction layer for businesses — this is a TAM that hasn’t even been defined yet. The Female Innovators Lab fund could not be more thrilled to back a majority female co-founded team whose collective skill-sets and experience in navigating existing pain points make for a solid founder-market fit. For more information on Pile Capital, visit: https://www.pile.capital/.
