A decade ago, SumUp was one of the army of fintechs that made names for themselves with dongles that turned basic smartphones into card payment terminals. Today, the London-based company has expanded into a wider range of business services that are used by some 4 million small and medium businesses in 35 markets, and as it continues to scale out its ambitions, it’s closed in on a major round of funding of €590 million ($624 million).
The money will be used for acquisitions, more hiring (it now employs some 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, and others — is coming in the form of 50% equity and 50% debt and values SumUp at €8 billion ($8.5 billion).
SumUp has raised some €1.5 billion over the last ten years, but most of that has been in debt (including a €750 million debt round last year).
Marc-Alexander Christ, SumUp co-founder and CFO, said in an interview that in fact before this round less than €100 million of that figure was equity, meaning dilution is relatively low despite those high numbers, and there has been little in the way of transparency on the company’s valuation.
Covid-19 put a dampener on a lot of in-person commerce, and that had a knock-on effect not just on retailers but the people and companies that worked in their commerce ecosystems. The solution for a company like SumUp — with the bread and butter of its business, point of sale payments, fundamentally a part of that in-person commerce experience — has been to diversify and double down on a wider array of services for its small business retailers customers.
To that end, it has used significant chunks of the debt it’s raised to date for acquisitions and to build out more services beyond POS payments, in areas like business banking (the basic version of which it throws in as a freebie), online payments and business services around both.
This is part and parcel of how the space has evolved. At a time when others in the same business as SumUp have either diversified strongly into areas like cryptocurrency (with the original player here, Square, going so far as to rebrand as Block), or been snapped up by even bigger fish (see: PayPal acquiring iZettle), SumUp has positioned itself as the SMB fintech consolidator.
In what is a very fragmented space, it has snapped up companies to complement and expand its payments platform such as Payleven (a “Square clone” that was hatched at Rocket Internet), Goodtill, Tiller, and US-based customer loyalty startup Fivestars. And when you consider all of the elements that go into buying and selling goods and services, there are a lot of areas left for SumUp to tackle — big data analytics, more tools to build, manage and optimise, online sales experiences for its customers, more technology to use to improve how items are sold in physical commerce experiences, and so on — all areas that SumUp can approach either through building its own technology, or indeed through more M&A.
It’s a strategy that has worked, it seems: altogether, SumUp’s revenues have grown 60% annually in the last couple of years, Christ said. And with some 10% of its 4 million businesses now using its business banking service, he added that this potentially makes SumUp “the world’s biggest neobank for SMBs”.
Nevertheless, turning that statistic around, POS payments still represents the bulk of the company’s revenues, so 60% growth is not just a testament to SumUp being able to grow that business in the last two years, but also the fact that in-person and point-of-sale payments remained active areas for transactions.
And the same could be said for the company’s global strategy. Although SumUp notes that it’s now in 35 markets and driving into more emerging countries — its most recent launch was in Peru — its home market of Europe remains its biggest geography at the moment. “The powerhouse clearly is Europe, with EMEA still the driving force for new revenue,” said Michael Schrezenmaier, the company’s CEO for the region.
“SumUp has continually evolved to empower a growing and diverse field of small businesses with payment solutions and tools to efficiently connect with their everyday consumers,” Darren Abrahamson, an MD at Bain Capital Tech Opportunities, in a statement. “SumUp’s leadership team have led the company to sustained and accelerated growth through expansion to more than 30 countries where they have had a direct and positive impact on the small business ecosystem. We’re proud to contribute our deep fintech and payments experience to aid SumUp’s remarkable ability to push the boundaries and lead an incredibly competitive industry.”