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Entrepreneurial Success Story: How Venmo is Disrupting Our Wallets


Forgetfulness and paying for a restaurant bill were the inspiration for Venmo, the peer-to-peer payments app that lets you send money to other people with just a tap on your smartphone. Since its launch in 2009, this mobile payment service has come a long way and is now so ubiquitous among its core audience, especially millennials, that it has become a verb. For example, "Venmo me the $25 you owe me."

However, the path to success wasn't always a smooth ride for co-founders Andrew Kortina and Iqram Magdon-Ismail. They endured numerous obstacles in the early days, struggled to raise capital, and at one point, considered giving up. But the entrepreneurial duo persisted through the darkest hours. Three years after launch, Braintree acquired Venmo for $26.2 million, and the following year, PayPal acquired Braintree for $800 million.

What follows is the story of how Venmo came to disrupt our wallets.

Dreams of Working Together

In 2001, Andrew and Iqram were randomly paired freshman roommates at the University of Pennsylvania. They hit it off straight away and became firm friends. When the time came to think about what to do post-graduation, the two were not interested in following the same routes as their peers, such as working for an investment bank. The only thing they did know was that they wanted to work together.

Following graduation, they started looking for ways to make ends meet while trying to figure out what they were passionate about. Iqram majored in computer science while Andrew was a double major in philosophy and creative writing. They ended up cold calling in-person local restaurants, salons and bars offering to build their websites for a few hundred bucks. It was touch and go, and they were living from paycheck to paycheck. Eventually, they had enough and decided to dabble with a few joint startup projects.

After failing to scale those businesses, they spent several years working individually for various tech companies, Andrew in New York and Iqram in Philadelphia. Both still harbored dreams of working together and so they began to meet up on weekends to hack different ideas.

The Seed of an Idea

During one of these weekends, Iqram was visiting Andrew and had left his wallet in Philadelphia. So Andrew subsidized his entire visit, but when it came to talking about settling up, the pair recognized the inconvenience of paying by check.

With the world going mobile, they thought that paying by check and cash was old-fashioned, so they set out to solve the problem by creating a way to pay each other back.

One of their first thoughts was that somebody else must already have figured this out and would be working on a solution. So they fired up their laptops and started googling, coming across Obopay, which allows people to send money to anyone directly from their cell phone. This mobile payment service had recently raised $70 million from Nokia, so Andrew and Iqram thought that was the end of the road for their idea. However, when they looked around the platform, they felt it was a little clunky, and they could offer something different.

It wasn't long before they had the first prototype, which worked over SMS. To send Iqram $20, Andrew texted "iqram 20" to a number they had set up. The recipient saw "kortina paid you $20. Then they decided that each text should be accompanied with a little note of the payments to help people keep track of them: "iqram 20 for thai lunch at Nooch."

They roped in a few friends to try out Venmo, and their SMS inboxes were soon filling up with similar messages, and resembled newsfeeds of restaurants and other places they had visited. They decided that users should share this sort of information, so they added a shareable option to make transactions show up in friends' feeds on

Financing Failures

Shortly after the prototype was finished, Andrew and Iqram began meeting with investors. They were still working part-time at their respective jobs and were not prepared to leave them until they raised sufficient funds.

With only a prototype and no user traction, they struggled to raise even one cent. Every meeting with an investor concluded the same way, with a rejection. One investor said he was only interested in "billion-dollar, home run opportunities," to which Iqram responded, "This will be a trillion-dollar company."

Although they weren't having any luck raising funds, they were not too downhearted. Andrew and Iqram realized they had a lot to learn about building a product and company and so enlisted two friends, Sam Lessin and Chris Stanchak, as company advisors. Both were entrepreneurs operating their own companies and acted as sounding boards, providing product feedback and operational advice.


This also proved fortuitous because Sam and his father led the first angel round of financing, which raised $100,000. With that money, Andrew and Iqram quit their jobs to work full-time on Venmo, and they hired their first engineer.

The first couple of years were spent evolving the product from a barebones SMS prototype into a fully-functioning service. Eight months after founding the Venmo iPhone app was launched. A month later, the company won the Mobile Monday Mid Atlantic Demo Night, a gathering of top mobile technology companies.

During their presentation, Andrew and Iqram invited the crowd to use Venmo to donate to Relief Foundation to build an orphanage in Haiti. In less than a week, the charity raised over $15,000 through Venmo text message donations, $600 of which came during the first three minutes of the talk.

Ten months after founding, Venmo was profiled for the first time in the press, helping spread the word about the company. In fact, word of mouth was the main growth engine. During the enterprise's first year, whenever Iqram was at dinner or outings, he would pay for everything by credit card and encourage his friends to pay him back with Venmo. He would guilt trip them by saying, "if you don't pay me back with Venmo, don't pay me back".

Iqram's hands-on role in attracting clients was also evident earlier when the pair thought food trucks would be their primary users. He would go from food truck to food truck in Philadelphia, asking them to put up placards saying they accepted Venmo. Three food trucks on the University of Pennsylvania's campus took up the option. Occasionally, Iqram would stand in line and say to other people, "Hey, did you know this truck accepts Venmo?"

Troubled Times

In the company's second year, it raised a $1.2 million seed round, $400,000 in debt financing and launched its Android app. The following year, Venmo raised an undisclosed amount of Series A funding and came out of beta. It was growing at a 30% rate every month and was processing around $10 million in payments monthly. However, about halfway through the company's fourth year things were not going so well behind the scenes.

At the time, they had 25,000 users, of which 5,000 were active. But it was one of the darkest times in Venmo's history. Andrew and Iqram realized they were spending exponentially compared to the revenue they were creating, so weren't making any money.

None of the investors were willing to put up any extra funds, and things were so bad they thought they would have to let everyone go because they weren't going to make the following month's payroll. The pair spoke to employees, telling them of the dire situation so they could all start looking for jobs. Andrew and Iqram didn't want to wind down the company and discussed how they could continue with just the two of them. And then the phone rang.

Saving the Day

On the other end of the line was Bill Ready, the CEO of Braintree, a company specializing in mobile and web payment systems for e-commerce companies. The introduction had come via one of Venmo's board members. Bill said he was really impressed by what they were doing at Venmo and wanted to fly them out to Chicago for a meeting.

During that meeting, Iqram asked if Braintree could fund Venmo for six months in return for a piece of equity. Bill replied by offering to acquire the company, and Iqram agreed on the spot. Bill then asked, "how much?" to which Iqram responded "$26.2 million." "OK, I'm in," came the reply. And that was it, the deal was done. Then a little more than a year later, Braintree was acquired by PayPal for $800 million.

Present Day

Fast forward to the present day, and Andrew and Iqram have moved onto other business ventures and have very little to do with Venmo. Meanwhile, the company they founded is going from strength to strength. At the beginning of 2020, PayPal reported that Venmo closed the previous year with more than 52 million active accounts with a revenue run rate of more than $450 million. The peer-to-peer payment app is on the path to profitability, and new, monetizable, value-added services will be added to the platform throughout this year. Venmo is now poised to make big money for its parent company.

This entrepreneurial success story that's helping to disrupt the payment industry has been several years in the making, and it all started because of a forgotten wallet and a genius idea.

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How a forgotten wallet led to the creation of a multimillion-dollar company that's disrupting the payment industry. Click here to read about the origin and rise of Venmo.