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SumUp raises $895M in debt to double down on its B2C payments business

Ingrid Lunden
·5-min read

SumUp, a London-based startup that helps businesses power revenues through card payments -- by way of physical readers, online payments, invoices and other services -- is itself powering up in a big way.

Today it announced financing totalling €750 million (around $895 million at today's rates), money that it will be using to continue expanding its business -- specifically, for acquisitions; to launch in new markets in Europe, Latin America and Asia; and to build out the suite of services that it provides to businesses. The company is already active in 33 countries (most recently Chile, Colombia and Romania) and has some 3 million businesses as customers.

The funding is coming from Goldman Sachs, Temasek, Bain Capital Credit, Crestline and funds managed by Oaktree Capital Management. SumUp confirmed that the financing is coming in the form of debt, not equity, so there is no formal valuation of the company to disclose. To date, it's one of the biggest financings, debt or otherwise, for any startup (that is, any privately-backed tech company) in the region.

Notably, Goldman Sachs and Bain Capital led a $371 million round of debt for the company in 2019.

Marc-Alexander Christ, one of SumUp's co-founders (the company does not seem to use formal titles like "CEO"), said that the company opted for debt over equity because it could.

"We have very stable cash flow, which allows us to take on debt," he said in an interview. Debt is often a route taken by bigger, scaled-up companies, especially those generating a lot of cash. No dilution also means the cost of capital is lower, too.

The company got its start back in 2012 as one of a wave of so-called Square "clones" -- companies being founded in, but mostly outside of, the U.S. and basing their service around small card payment dongles that attached to phones or tablets. Targeting businesses that were either not yet accepting card payments because they were too expensive or complicated, or were using costly traditional alternatives from banks, they quickly picked up steam and represented a new wave of tech-enabled fintech services catering to small and medium-sized businesses.

As with Square, iZettle (eventually acquired by PayPal) and many others in the space, over time SumUp diversified into a range of other card- and payment-related services for their customers, including building online shops and taking payments over the web and via apps, invoicing, gift cards and wider point-of-sale solutions.

It's also emerged as something of a consolidator in the space: In 2016, SumUp acquired one of its bigger competitors, the Rocket Internet-backed Payleven, which helped expand its footprint to a wider set of markets.

Over the years, SumUp has picked up a number of other startups to expand the services that it offers, as well as its markets. Most recently these deals included acquisitions of the business-focused mobile banking platform Paysolut in Lithuania, as well as Goodtill and Tiller to expand into point-of-sale for bigger venues.

That M&A also speaks to how SumUp is approaching its product expansion strategy.

The company's business model is predicated primarily on taking a cut of transactions made on its platform, and so for now, its strategy is about more services for businesses and scaling up that rate of transactions, not a move into more financial services for consumers.

That is in contrast to companies like Square, which has picked up more than 7 million consumer customers to date by way of Square Cash; and iZettle, which never directly launched services for consumers but was acquired by one of the biggest consumer-facing digital wallet companies, PayPal. It's an interesting example of how startups might begin looking like clones of each other, but ultimately they find their own niches and adapt to those. (That's not to say that there are not dozens of other competitors to SumUp, including Square and iZettle.)

Nor is SumUp interested in cryptocurrency, another area where the other two have been active.

"Square has had one of the easier onboarding experiences when it comes to making Bitcoin investments," Christ said. "But it's mainly a customer acquisition tool. They make some money on Bitcoin but not a lot. So I don’t think we will get to that space super soon because it doesn’t represent value for customers. It engages users logging in just to check their accounts but not doing anything else."

That focus has not just helped the company steadily grow at a time when more transactions are moving online and away from cash -- two trends giving a major fillip by the COVID-19 pandemic, which forced stores to close in many countries, made people more reluctant to shop in person, and got everyone using cash less to contain community transmission -- but it also helped it attract this funding.

"We’re proud to be backing SumUp once again and we recognize the truly impressive strides made by the company over the past couple of years. We have huge admiration for what SumUp is doing for small businesses across the world in helping them to keep trading and flourishing in some of the most trying economic circumstances imaginable," said Tom Maughan of Bain Capital Credit in a statement. "The doubling down of our investment in SumUp in this round is both a demonstration of our confidence in the company today and its strong future."

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