PayPal Invests $5M PYUSD in Plaid for crypto startup Mesh

PayPal’s venture arm recently invested in a digital assets startup. There’s nothing unusual about that. However, for one thing, the payments giant used its PYUSD stablecoin, launched last August, for $5 million of its investment.

Among stablecoin investments, the chosen domain focus is Mesh, a startup founded by cybersecurity veterans who sold their first venture to LogMeIn, the operators of the password manager LastPass. Their new startup is likewise focused on secure communications in the form of crypto-based financial transactions.

Think of Mesh as the crypto version of Plaid, that service you’ve probably used that lets you connect your bank account to apps and websites by entering your online banking credentials. Bam Azizi, Mesh co-founder and CEO, says the comparison to Plaid is accurate but only to a point, as his crypto service has a much larger role outside the act of picking up cryptocurrencies for delivery.

In practice, Mesh can move funds between everything from crypto exchanges to wallets to financial applications that support crypto. Azizi says the service has the advantage of not requiring users to cut and paste a long string of characters, which is common for crypto transfers, and that is, of course, a poor security practice. The users of Mesh use an in-app menu.

Mesh says hundreds of companies integrate its services, including well-known exchanges and fintech firms, but he can’t disclose specific names. Azizi says the startup is pulling in more than $1 million in revenue and is yet to be profitable, but it could be easy if he so chose.

The PYUSD Investment & PayPal’s Strategy

The decision to invest in Mesh using PYUSD is part of PayPal’s broader strategy to expand payment options globally. This move appears designed to boost the circulation of the stablecoin.

“We are excited to partner with Mesh and its impressive management team to invest in the vision of embedded finance and native stablecoin issuance,” PayPal Ventures’ Amman Bhasin said in a statement.

Besides giving Mesh $5 million in stablecoins and recording them on the Ethereum blockchain, PayPal Ventures invested another $1.5 million in cash. This comes after the startup’s $22m Series A funding round last year that counted backers including Money Forward, Galaxy, and Samsung Next.

In August this year, PayPal launched its PYUSD with help from New York-based Paxos, which produces white-label stablecoins. While PYUSD still represents only a small portion of the overall stablecoin market, worth an estimated $135 billion and dominated by Tether, it grew more than 70% between mid-December and mid-January, and its market cap is around $300 million.

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