A decade ago, SumUp was among the army of fintechs that made their name with dongles that turned simple smartphones into card payment terminals. Today, the London-based company has expanded to include a broader range of business services, used by around 4 million small and medium-sized businesses in 35 markets, and as it continues to build on its ambitions, it has closed a major funding round of €590 million ( $624 million).
The money will be used for acquisitions, more hiring (it now employs around 3,000 people) and more organic product development, the company said.
The investment – led by Bain Capital Tech Opportunities, with participation also from funds managed by BlackRock, btov Partners, Centerbridge, Crestline, Fin Capital and Sentinel Dome Partners among others – will be in the form of 50% equity and 50% debt and values SumUp at €8 billion ($8.5 billion).
SumUp has raised about €1.5 billion over the past decade, but most of that was in debt (including a €750 million debt round last year).
SumUp co-founder and CFO Marc-Alexander Christ said in an interview that prior to this round, less than €100 million of that number was actually equity, meaning that despite these high numbers, the dilution is relatively low and there has been little transparency about the company valuation.
Covid-19 has put a damper on many face-to-face businesses and it has had an impact not just on retailers but also on the people and businesses working in their retail ecosystems. The solution for a company like SumUp — with the bread and butter of its business, point-of-sale payments being essentially a part of that in-person trading experience — was to diversify into a broader range of services for its small business and to double retailers customers.
To that end, it’s used significant chunks of the debt it’s raised to date to make acquisitions and build out more services beyond POS payments in areas like business banking (the basic version it’s adding as a freebie), online payments, and more business services around both.
This is an integral part of the development of the room. At a time when others in the same business as SumUp are either heavily diversified into areas like cryptocurrency (with the original player here, Square going so far as to rebrand themselves as Block) or have been snapped up by even bigger fish (see: PayPal acquisition from iZettle), SumUp has positioned itself as an SMB fintech consolidator.
In a very fragmented space, it has recruited companies to complement and expand its payments platform, such as Payleven (a “Square clone” hatched at Rocket Internet), Goodtill, Tiller and US-based start-up for Customer loyalty Fivestars. And when you consider all the elements that go into buying and selling goods and services, there are still many areas SumUp needs to address — big data analytics, more tools to create, manage, and optimize, online sales experiences for its customers, more Technology to improve the sale of items in physical stores, and so on — all areas that SumUp can address either by building its own technology or actually through more M&A.
It appears to be a strategy that has worked: Overall, SumUp’s revenue has grown 60% annually over the past several years, Christ said. And with around 10% of the 4 million companies now using its business banking service, he added that this potentially makes SumUp the “world’s largest neobank for SMEs.”
Flipping that statistic, however, POS payments still represent the bulk of the company’s revenue, so a 60% growth is proof not only that SumUp has been able to grow this business over the past two years, but also that The fact that personal and point-of-sale payments remained active areas for transactions.
The same applies to the company’s global strategy. Though SumUp notes that it’s now in 35 markets and expanding into more emerging markets — its most recent launch was in Peru — its home market of Europe remains its largest geographic region for now. “The powerhouse is clearly Europe, with EMEA continuing to be the driver of new sales,” said Michael Schrezenmaier, the company’s CEO for the region.
“SumUp has continually evolved to provide a growing and diverse field of small businesses with payment solutions and tools to efficiently connect with their everyday consumers,” said Darren Abrahamson, MD at Bain Capital Tech Opportunities, in a statement. “SumUp’s leadership team has led the company to sustained and accelerated growth by expanding into more than 30 countries where it has had a direct and positive impact on the small business ecosystem. We’re proud to bring our deep fintech and payments experience to support SumUp’s remarkable ability to push boundaries and lead an incredibly competitive industry.”