San Francisco-based startup Braid has closed its doors after struggling to build a viable business around its multi-user digital wallet offering.
Founded in 2019 by Amanda Peyton and Todd Berman, Braid aimed to make shared digital wallets more accessible for groups of friends and families. The company allowed users to pool funds into a shared FDIC-insured account that came with a branded debit card to easily spend from the account.
Braid managed to raise $10 million in funding over multiple rounds from notable investors like Index Ventures and Accel. However, the company ran into several challenges that ultimately led founder Amanda Peyton to make the difficult decision to shut down operations in September 2022.
Funding and Traction
With backing from top tier VC firms, Braid seemed poised for success in the red-hot payments and fintech spaces.
The $10 million raised gave the startup fuel to gain initial traction and build out its product. Founder Amanda Peyton said the company processed $0 in payments for a period of around 6 months during 2022 due to bank sponsor issues.
Despite securing a new sponsor bank, Braid was unable to rebound and gain the kind of transaction volume and customer growth needed to build a sustainable business.
In a farewell blog post, Amanda Peyton explained some of the headwinds Braid faced that eventually led her to shut down operations.
Bank Sponsor Setbacks
One major challenge stemmed from problems with Braid’s sponsor bank in 2022. Sponsor banks provide the regulatory approvals and infrastructure for fintech startups to operate payment platforms and issue debit cards.
Braid lost its sponsor bank, which essentially “put the company in a coma” for 6 months according to Peyton. This loss of its sponsor bank meant Braid could not process payments during that period.
Even after securing a new sponsor bank, the company had lost significant momentum.
Technology and Vendor Issues
Peyton also highlighted struggles with leveraging third-party vendor solutions. She said off-the-shelf software often broke core parts of their technology stack during painful migrations.
Their multi-user wallet experience meant Braid had to build much of its platform in-house to maintain control over the user experience. But this approach also made their cost structure higher.
Despite the shutdown, founder Amanda Peyton said she has no regrets and stressed the importance of big swings and trying ambitious ideas.
Peyton took responsibility for the failure but said “there is magic in failure too” and that it’s part of the startup life cycle. She was proud of how the company treated customers and employees despite having to close up shop.
The Braid founder was previously involved in other startups like Grand St. which was acquired by Etsy in 2014. She said she still remains passionate about the payments and fintech space.
After the shutdown, Peyton even purchased the intellectual property of Braid in an auction to potentially revive the digital wallet concept in the future.
The story of Braid’s short life offers some cautionary tales and lessons for other fintech founders.
Relying too heavily on third-party vendors can cause major technical headaches down the line. And startup bank partnerships can sour rapidly, putting the entire business at risk.
But Braid’s failure also exemplifies the spirit of testing bold ideas and accepting shortcomings as part of the journey. Despite the challenges, founder Amanda Peyton plans to continue innovating in the startup world.
The digital wallet and payments space still offers massive opportunities. But building a truly seamless and scalable platform likely means overcoming regulatory hurdles and huge upfront technology investments.
Braid made an ambitious attempt to make shared payments mobile and user-friendly. And their journey reinforces that successfully disrupting consumer fintech takes patience, perseverance and accepting failures along the way.