A Chicago startup has developed a new contactless commerce platform for small businesses that makes accepting payment as easy as sending a Venmo, and it's quickly catching on with companies across the U.S. by helping them create online storefronts without charging commissions or monthly fees.
Cashdrop, founded in August of last year by Ruben Flores-Martinez, has created a digital commerce platform that solves a range of different pain points that small businesses have seen during the Covid-19 pandemic. It allows merchants to set up online storefronts in less than 15 minutes, facilitates contactless payment without handling cash or swiping credit cards, and charges no fees to the business.
In less than a year, Cashdrop has added more than 200 merchants across the country to its platform---including restaurants, food trucks, barber shops, food halls, fashion designers, event planners and more---who've generated more than 100,000 transactions through Cashdrop to date.
The startup's platform combines the simplicity and ubiquity of Venmo or Cash App, but on the back end has the power of Square or Shopify to be a store's entire point-of-sale system, Flores-Martinez said.
To keep the momentum going, Cashdrop announced Tuesday that it raised a $2.7 million seed round from some notable investors. The round was led by Harlem Capital, a New York-based VC firm that takes a special focus in backing founders of color. Other investors in the round include Founder Collective, Long Journey Ventures and M25, along with individual angel investors such as Silicon Valley investor Cyan Banister, Adobe Chief Product Officer Scott Belsky, Fullscreen founder George Strompolos and streaming video star Michelle Phan.
"We want to take the baton from Shopify and become the e-commerce platform for the internet," said Flores-Martinez, who immigrated to the U.S. from Mexico when he was 13 and taught himself to code from YouTube tutorials.
As the coronavirus wreaks havoc on small businesses across the country, Cashdrop is helping companies fight back. Merchants download the Cashdrop app and set up a commerce platform in minutes. Each business is given a custom Cashdrop link that their customers use to make orders and facilitate payment---with many merchants choosing to put their link in their Instagram bio, Flores-Martinez said.
Customers can quickly and easily place orders through the link and pay with Apple Pay or their credit card, and they don't have to download an app or create an account. The customer is charged a 5% convenience fee on each transaction.
By putting the fee on the end customer, Cashdrop is allowing businesses---who are also using Cashdrop to facilitate deliveries, shipments and appointments---to drive more revenue. Small restaurants no longer have to rely on third party delivery services like Grubhub and DoorDash, which can charge as much as 30% per each order.
Flores-Martinez said the virus "took us from nothing to exponential growth overnight” as companies search for easier and cheaper options to facilitate orders. And he said customers are OK with the extra fees because they know it's being used to help sustain their favorite local businesses at a time when those merchants need it the most.
"How do we make sure that small businesses stay in power? They are the backbone of America, and if they collapse, we collapse," Flores-Martinez said. "We're putting tools into their pocket that can enable them to succeed and thrive."
The startup, which currently has seven employees, says it's on track to do over $10 million in gross sales in its first year.
