There’s more funding for Berlin’s FinTech scene as iZettle and SumUp challenger payleven scoops up $10m in Series D funding for its mobile payments business. The backing comes from new investor, Paris-based Seventure Partners, plus return investors Munich’s Holtzbrinck Ventures, ru-Net in Riga, B Cinque, New Enterprise Associates and MePay.
This latest round brings the payleven’s total funding to $51m. For reference iZettle raised €60m ($68m) in its last funding back in August last year in a round reportedly valuing the company at half a billion dollars and bringing its total raised to more than USD200m. Meanwhile SumUp picked up €10m around the same time, bringing its total raised to around USD50m.
Commenting on the funding in a press release, Seventure Partners’ Wolfgang Krause says the firm is on a “clear path” to profitability and that it has a positive bottom line in some markets already: “payleven shows that FinTech companies can reach scale, highly attractive unit economics and ultimately profitability”. Like its peers in the mobile point of sale space, however, the company does not disclosed any specifics about its financials.
Diversifying from payments
Founded in 2012 and employing more than 200 people, the firm’s Chip-and-PIN plug-in card reader is now available in 11 markets across Europe and South America. Alongside its core payments business the firm offers tools including sales reporting. Co-founder and managing director Konstantin Wolff says it will use the funding to expand into new products and invest in customer acquisition.
Diversifying from its core payments service to offer other products for small to medium-sized businesses is the logical next step for the business. Square in the US has been pursuing this strategy for some time with products including cash advances and its marketplace. iZettle launched Advance in Europe last summer and co-founder and CEO Jacob de Geer told PaymentEye in an interview last week that the the vision of becoming a bank for small businesses is “compelling”.
“We see so many other adjacent products we could offer on top of payments that are in high demand from these companies,” said de Geer. “I’ve said in some interviews that the vision of trying to become a next-generation small business bank is really compelling. You see what the current banks offer these companies and how much they lack services they really need to grow.”
With more than 22 million small businesses in the EU that are typically underserved by traditional financial institutions, the addressable market remains huge for these companies. The narrow margin they make on payments, however means that they need to offer a range of products to diversify their revenues.
Speaking to bobsguide this week, the head of iZettle backer Santander Innoventures – Mariano Belinky – said:
“If there’s one thing we know, from a client perspective, it’s that you can’t make money with just one product.” Belinky. “What’s exciting about fintech is that we need to start seeing that amalgamation of companies going beyond the one product – being able to really take a client-centric perspective and being able to serve everything.
“It’s a fascinating model. We saw it with Square in the US and iZettle is doing it too where they have the right data and placement to start offering credit to the merchants. It’s a huge opportunity for banks and non-banks.”
Funding Circle has perhaps started 2017 in a better way than most. The London-based lending platform that connects small businesses with investors has raised $100m (£82m) in equity investment.
IZettle, Square's European rival, has raised €60m ($63.4m) in new funding and has also appointed a new CFO, Maria Hedengren.
Monese, the mobile-only bank aimed at European customers who may struggle to open a bank account in the UK via traditional means, has raised $10m in Series A funding round.
A group of Chinese companies and state-owned businesses are partnering to create a new $1.5 billion fintech fund that will focus on mergers and acquisitions, and nurturing fintech enterprises in China.