Self-financed Steinbach startup long way from Silicon Valley
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Hey there, time traveller!
This article was published 29/04/2019 (1197 days ago), so information in it may no longer be current.
There are all sorts of ways startups can measure success.
The Silicon Valley community will often point to company valuations or how much money they have raised, regardless of the actual financial realities of their operations.
The innovative payment processing company called Rotessa, is not only so far off the Silicon Valley radar in Steinbach, but it can’t even use that metric because it is entirely self-financed.
But it can point to the fact that its main competitor, a venture capital supported company out of Toronto called Plooto, uses Rotessa on a landing page with the caption “Why choose Plooto over Rotessa?”
Greg Lepp, the founder and president of Rotessa, is happy to have that competition as well as the recent entry into North America of a large U.K. firm.
“We think it’s good to have others because they help educate small business on the value of pre-authorized debits,” said Lepp. “It’s a really under estimated payment process for small businesses that are doing recurring payments.”
The fact is that Lepp built the company around solving a solution for customers in a business he had been running since 2003 doing tuition payment plans for colleges and universities who did not want to have to pay the two-to-three per cent fees that the credit card companies traditionally charge for payments.
After digging into the banking networks and the different services that were being offered, Lepp built an on-line, self-service, debit payment system designed to collect recurring payments for a flat fee rather than a percentage of the payment so that small business can drastically reduce their banks fees.
But after designing the system, he initially only attracted a handful of customers in the first year.
“It you build it, they won’t necessarily come flocking in,” he said.
But now they’re starting to. Lepp learned to find his way around the finer points of on-line marketing to drive meaningful traffic to his web site. And the referrals started coming in.
At the beginning of the year, the company’s web site noted that it has processed more than $150 million in payments. It’s now up to more than $350 million in more than one million transactions with more than 1,500 customers.
Earlier this year. Rotessa doubled its staff to eight people and the company now has its regulatory boxes checked to also start doing business in the U.S.
And never mind operating far from Silicon Valley, Rotessa is not even properly connected with the tech startup scene in Winnipeg and instead is doubling down on its Steinbach roots.
In partnership with Lepp’s (silent) partner in Rotessa, they plan to build new office space in Steinbach that will accommodate up coming growth that would see the company triple in size.
Meanwhile, however, Lepp is comfortable with the steady growth Rotessa is achieving.
“We have a very loyal customer base with little churn and a very high retention rate,” he said. “Our model is slow and steady growth.”
That may change though when more small companies start realizing that they can save hundreds of dollars per month on their bank charges.
He’s also started having more conversations with business organizations about partnership relationships where Rotessa might be able to capture larger numbers of customers.
Not surprising, Lepp did not want to disclose the secret sauce that has let a small company from Steinbach insert his own information technology into the national banking system allowing Rotessa to collect recurring fees from hundreds of fitness centres, day cares even a large Alberta energy company.
He would not even disclose the name of the financial institution whose membership in the direct clearer network provides the relationship with all the banks that allows Rotessa to do its transactions.
“We have a third party agreement with them,” said Lepp. “We then can facilitate all the payments through them. They have the relationship with the other banks. We are just a third party to that.”
He said the banking system has been doing this kind of service for large enterprises for a long time but it was never really meant for the the little guys.
“What we have essentially done is plugged into an old legacy software system with an easier, friendlier model at the front end that has made it a lot simpler for small businesses to sign up and process payments,” he said.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.