Alpaca raises a $50M Series B from Tribe Capital

At a Glance

Alpaca, a developer-first API for stock trading, raised $50 million in a Series B financing sponsored by Tribe Capital. It also said it would enter the cryptocurrency sector, teaming with Plaid to make money transfers easier for investors.

Alpaca, a developer-first API for stock trading, has announced that it has raised $50 million in a Series B funding round led by Tribe Capital. Other participants include Spark Capital, Portage Ventures, Social Leverage, and Horizons Ventures.

According to the company, the funds will be spent on building and hiring. Alpaca raised a $6 million seed investment in late 2019 and a $10 million Series A financing in late 2020. It also announced that it is entering the cryptocurrency business and teaming with Plaid to make money transfers easier for investors.

Alpaca provides API access to stocks trading applications. Initially, the company allowed companies to hook into its technology, using it to fuel their trading operations. Alpaca has lately begun allowing other fintech companies to offer stock trading to their consumer user bases through its service, work that falls within the larger embedded finance trend.

Alpaca has expanded its market remit by providing trading services to fintech with consumer end-users – the B2B2C model. According to the company, the number of brokerage accounts it supports has increased by 1,500% this year to over 100,000. Yoshi Yokokawa, the company’s CEO, told TechCrunch that by the end of 2021, the company aims to have secured 100 partners for its stock trading technology. Before its embedded finance solution was released at the end of 2020, that figure was zero.

Collaboration with other finance organizations brings up new revenue streams for Alpaca. The company will continue to produce payment for order flow incomes (PFOF). Still, by assisting international consumers, it will be able to make income from foreign currency fees and other sources, according to the company.

By sharing PFOF income with partners who incorporate Alpaca’s fintech APIs, the company hopes to turn its service into an anti-cost center. Yokokawa declined to share the PFOF split with customers. Still, according to TechCrunch, something in the range of 15% to 25% makes sense, giving potential partners a reason to choose Alpaca over competing technology while keeping enough top line on the Alpaca side of the ledger to continue growing a venture-scale business.

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