Months before bitcoin payments startup Zap announced a coveted partnership with Visa
Officially closed in April, the seed round was led by Green Oaks Capital, which previously backed fintech unicorns Robinhood and Stripe. Frequent bitcoin investor Morgan Creek, co-founded by hedge funder Mark Yusko, and bitcoin bull Anthony Pompliano, also joined the round. Prior to April, the company had been bootstrapped by Mallers’ influential family. In 1973 his grandfather, Bill Mallers, helped found the Chicago Board of Exchange (Cboe), and then in 1984 co-founded First American Discount Corporation with Bill Mallers Jr., Jack’s father, who grew it into one of the largest discount futures brokerages before selling it.
While Mallers’ idea of a payments network for bitcoin is nothing new Chicago-based Zap has distinguished itself by being one of the more sophisticated operations using a new platform built on top of bitcoin, called the Lightning Network, that can instantly confirm settlement instead of the 10 minutes it normally takes. In addition to being faster, the Lightning Network sidesteps the fees associated with bitcoin, which are much cheaper than traditional fees when sending large amounts, but have proven prohibitive to people looking to use tiny amounts of bitcoin in daily transactions.
“One of the early use cases for us is content creators. Journalists or video game streamers or adult film actors and actresses, put up profiles backed by our infrastructure, and anyone in the world can tip them,” says Mallers, 26. By moving the transactions off-chain and reducing the fees associated with smaller transactions, Mallers believes he’ll have an edge over a rising tide of more mature cryptocurrency startups, including cryptocurrency giant Coinbase, also working with Visa.
“Our users today, don’t ever know we’re using bitcoin when they’re using dollars. It’s just kind of like we’ve melted it in the background,” says Mallers. “I think tens of millions of people will be using this stuff in the next few years, and that just takes a little bit of capital.”
Zap now employs 13 people, including developers in Barcelona, Berlin, Serbia, Austria, and the Ukraine. The young Mallers expects to spend much of the new funding to surround himself not only with more experienced employees, but…