PayPal’s venture arm just made a bet on a digital assets startup. There’s nothing unusual about that, but for one thing: the payments giant used its PYUSD stablecoin, which it launched last August, for $5 million of its investment.
The recipient of the stablecoin investment is Mesh, a startup founded by cybersecurity veterans who sold their first venture to LogMeIn, which operates the password manager LastPass. Their new startup is likewise focused on secure communications, though in the form of crypto-based financial transactions.
You can think of Mesh as the crypto version of Plaid, the service you’ve likely used that lets you connect your bank account to apps and websites by entering your online banking credentials. Mesh cofounder and CEO Bam Azizi says the Plaid comparison is accurate, but only to a point as his crypto service has a much larger role when it comes to transferring cryptocurrencies.
In practice, this means Mesh serves as a way to move funds between everything from crypto exchanges to wallets to financial apps that support crypto. The advantage of the service, Azizi says, is that it doesn’t require users to cut and paste a long string of characters—common for crypto transfers—which he describes as a poor security practice. Instead, Mesh users just use an in-app menu.
Mesh says hundreds of companies are integrating its services, including well-known exchanges and fintech firms, but that it can’t disclose specific names at this time. Azizi says the startup, which is pulling in more than $1 million in revenue, is not currently profitable but easily could be if it he so chose.
In addition to the $5 million it gave Mesh in the form of stablecoins, which was recorded on the Ethereum blockchain, PayPal Ventures added another $1.5 million in cash. This comes after the startup’s $22 million Series A funding round last year that included backers such as Money Forward, Galaxy, and Samsung Next.
PayPal launched PYUSD in August with the help of Paxos, a New York-based firm produces white-label stablecoins. While PYUSD still holds only a small portion of the overall stablecoin market, which is worth around $135 billion and is dominated by Tether, it grew over 70% between mid-December and mid-January, and its market cap is around $300 million.
The decision to make the Mesh investment using PYUSD, which is part of PayPal’s broader strategy of offering more payment options around the world, appears designed to further increase the circulation of the stablecoin.
“We are confident that this investment will fuel Mesh’s growth and contribute significantly to the advancement of embedded finance and native stablecoins,” Amman Bhasin of PayPal Ventures said in a statement.