Dwolla Announces Funding Led by Union Square Ventures

Reaffirms Silicon Prairie roots.

Mr. Milne.

Power to the prairie! That Union Square Ventures-led funding we reported on for investor darling Dwolla—the startup of the 700 name spreadsheet—is indeed happening. (Albeit for $5 million instead of the $10 million we expected.) Village Ventures, Thrive Capital, Marc Ecko of Artists & Instigators and angel investor Paige Craig participated.

Dwolla is doing a million dollars a day in transactions, CEO Ben Milne said in the announcement, and will use the money to build a payments network (a la Visa) that will use the power of the Internet to circumvent normal electronic payment processing fees.

“Every single one of these people I met through individuals I met at events and meetups or through Silicon Prairie News. SPN is the catalyst that you can always trace Dwolla’s story and opportunities back to,” CEO Ben Milne wrote in the company blog.

The company took six months to do the raise, he said, looking for just the right new team members and just the right partners. Especially partners willing to shlep out to the Midwest, because Dwolla ain’t goin’ nowhere. “We’ve added 16 jobs to downtown Des Moines,” Mr. Milne wrote. “Received hundreds of job applications from inside of Iowa, and outside of Iowa… which we think is cool.” Note to New York startups: hide your devs.

Dwolla has grown its user base by 2,500 percent over the last year and grown its merchant base by 3,700 percent, Mr. Milne said.

Fred Wilson of USV, though he gave Mr. Milne “quite a bit of time and some advise” didn’t jump on Dwolla right away; USV’s Albert Wenger and Mr. Milne had a near-botched negotiation. “Albert and I had a disconnect. In the middle of this process, I disagreed on something and didn’t give much feedback as to why. Then I went on my merry way,” Mr. Milne wrote in a refreshingly candid account. But it all worked out now, didn’t it? “Albert came out, patched it up and the rest is history,” he wrote.

The news of the funding broke this morning on Dwolla’s blog, in the Des Moines Register and the Silicon Prairie News. “To us, this was an Iowa story,” Dwolla’s communications chief Jordan Lampe wrote in an email. (It was also a Business Insider story, but nevermind.)


Dwolla Announces Funding Led by Union Square Ventures