Beyond moving money: Dwolla’s outsized impact
Dwolla acquired by NMI after a 18-year startup journey
The darling startup of Des Moines, Dwolla, sold this week to payment platform, NMI (headquartered in Schaumburg, IL, valued at $2B).
When most startups fail, Dwolla didn’t.
I was only there for a small fraction of the 18-year company journey (2012-2015), when the founding leadership was moving fast to hit ambitious goals and proving that meaningful startups could be built far away from the coasts, in an often-overlooked place like Des Moines, Iowa!
Both national and local media loved this story, which is why Dwolla became the darling of the Iowa and Midwest startup community in the early years. Most everyday Iowans, often outsiders to the startup community, started to share pride for what could be built right here. This ‘signal of support’ alone is critically impactful to the entrepreneurs following in Dwolla’s footsteps today.
Outside the news headlines, every day there was a group of super smart people quietly trying to dominate payments-by-phone (before Venmo was acquired by Braintree/PayPal), move money safely in real-time, and lessen the credit card fee burden on small business merchants.
The model and product have changed since, now enterprise-facing, account-to-account (A2A) payments, but you can still find familiar faces from the early days of the product team staying on for its next chapter with NMI.
One constant over the years: Dwolla’s value, “We are never done," has remained on the wall and on its website right up to this week’s acquisition. This mindset has powered the Dwolla team through many product and business model iterations, even during times that felt like starting over.
Shea Daniels, Engineering Manager at Dwolla:
“I joined Dwolla 12 years ago looking for a new adventure surrounded by a bunch of really smart people. I definitely got what I was looking for! Working at Dwolla has made me the engineer, the leader, and the advocate for culture that I am today…Turns out I like doing hard things. Change always brings opportunity. I’m looking forward to the next chapter of learning, building, and growing at NMI!”
One thing most people won’t see in the headlines
Dwolla’s outsized impact on the Iowa startup community comes from its alumni network, which has since gone on to start companies or work for the next breakout startup.
Some call this term “startup mafias”, popularized by the PayPal Mafia, or you can think of it as a startup’s diaspora.
Here’s my lens on the impact:
New companies started in Iowa by Dwolla alumni:
Brale
Hummingbirds
Workhound
Trility Consulting
Basis Theory
Companies and communities shaped by Dwolla alumni:
Agrisync
TractorZoom
BarnTools
Roboflow
Coviance
Fastpath Solutions
Carrot Fertility
Vertex
FarmlandFinder
ManchesterStory
Lean Techniques
HyVee
Clay & Milk
ISU Pappajohn Center for Entrepreneurship
Techstars Iowa
Monetery Conference
v-Sum
StartupCity Des Moines
Global Insurance Accelerator
ISU Pappajohn Center for Entrepreneurship
Greater Des Moines Partnership
Outside of Iowa, the list is much longer and not in any way exhaustive, including CloudFlare, Trello/Atlassian, Stripe, Amazon, Apple, IBM, Clipboard, Finex, Aeropay, gener8tor, and Mastercraft Ventures to name a few.
What did I miss? Share in the comments!
The right ingredients for a generation of builders
If you go beyond simply defining startup mafias, there were several important ingredients at Dwolla that uniquely positioned many team members for future success:
An early-stage environment with an unusually high level of ownership among its team members
Deep exposure to risk dynamics and the fintech industry
Ben Milne and CloudFlare CEO Mathew Prince at Monetery Conference in 2019 in DSM, Photo Jami Milne Ben Milne, founder of Dwolla:
“For many of us, I imagine Dwolla was a risk apprenticeship in this context. It selected for people willing to work on hard, non-obvious infrastructure, then gave us all years of reps inside high-consequence systems.
A lot of startups take product risk: will users want this?
Dwolla took product risk, regulatory risk, bank-partnership risk, developer-platform risk, geographic risk, and investor-access risk simultaneously. It was what needed to happen to make it all work, and people who can pull things like that off can do just about anything they set their mind to.”
A culture that forged friendships and resilience—the phrase “building in the trenches” was well lived, teaching team members how to navigate ambiguity, solve problems but not alone, and evolve quickly as the company would change
Those conditions don’t just create employees with experience — they create operators who were prepared to go build, lead, and invest elsewhere afterward. Pair that with the sheer concentration of talent Dwolla has attracted, and you start to see the network effect emerge.
Not only have Dwolla alumni gone on to found companies or join ambitious startups, but there is a lot to be said for those who are building ecosystems and backing people behind the scenes, and that’s the layer of the startup diaspora network misses if you only map out the web of companies.
“It’s hard to overstate how proud I am of Dwolla alumni.” Ben Milne
💡 How do you create longstanding entrepreneurial communities?
Bet on the people building startups and creating the space for the next outsized impact right now.
Dwolla became more than a startup — it became a proving ground that produced founders, community builders, investors, and operators who carried those lessons into the next generation of great companies and communities.
Hat’s off to everyone at Dwolla from both the early days to today who have built it and saw its success through to the next chapter at NMI. It was a defining part of my early career that made me who I am, and it’s why I choose to be around those who are “never done” and aren’t afraid of a good challenge.
If you want any reason to join a startup, I think Kate Lidgett Wagner’s article sums it up (p.s., she is hiring): Startups Will Break You. And That’s Why You Should Join One.
Here’s your clue to start paying attention! Many startups have been featured in this Substack and through the Iowa Startup Collective, a community of writers and creatives telling the stories. Who will be the next to create an outsized impact?
Great article! Dwolla was so special. Grateful to be a part of it.
This is super helpful framing because I'm often torn with these acquisitions. In some ways, it's great for investors to make money and learn that they can invest in the Midwest. It's also difficult to see a local startup have its sign painted over with new branding and become a footnote on acquisitions rather than a current leader.
Your point about startup mafias is a better way to think of it because it pours money into talented local people that then have the resume to turn around and start 10 companies instead of just the one.