Portland startup Steamchain Corp. wants to shake up the currency exchange business and make it easier and more cost effective for global companies to process payments of foreign currency within transportation and logistics.
The existing ways to settle payments require going through banks, and that can take time and be expensive as currencies fluctuate. It also means bank fees at different points along the transaction, said Dan Biggs, founder and CEO of Steamchain.
“The system is broken because it’s very expensive,” he said.
Steamchain’s product has been in development since 2009 and launched last year. The company has six paying customers that are all large organizations with high volumes of transfers. Biggs noted one customer has $1 billion in revenue.
The company built smart contract software using the Ethereum blockchain. Customers enter the agreed upon information and the software converts the currency in question and makes the payment to the trading partner. Steamchain doesn’t transmit the money itself but works global exchanges that handle the licensing and regulations. The company has filed for four provisional patents around its technology.
The startup charges a straight 1.5% fee, which is a fraction of the 5% to 11% in fees of the current systems.
“The delta between them is our business model,” said Biggs, adding that the startup doesn’t have the same overhead as banks so it can charge a smaller fee.
The company has raised $415,000 so far and is closing out a $750,000 round. It has a distributed team of seven, including Biggs and several developers. Biggs said the funding will build out sales and marketing as the company looks to scale the business.
Steamchain was part of the 2020 Beaverton Startup Challenge. The startup recently joined the latest cohort of a North Carolina-based Queen City Fintech, a program run by Revtech Labs that has a deep bench of financial industry advisors and mentors. QC Fintech invested $40,000 in the company, and Biggs is participating in the three-month virtual program.