summary — the fintech that provides payments and related services to about 4 million small businesses in Europe, the Americas and Australia — has secured some growth funding to navigate the choppy waters of the current fintech market, waters that have been tossed and swayed by SumUp itself.
The startup, which has roots in Germany but is based in London, has raised €285 million (just under $307 million). It plans to use the funds to continue growing its business organically, as it launches more financial services – around card readers and other point-of-sale tools, offering billing, loyalty, business accounts and more. It is also eyeing more geographies beyond the 36 regions in which it is currently active.
It will also turn its attention to inorganic growth, i.e. mergers and acquisitions. The latter is worth watching: We’re currently in a buyer’s market, with fintech startups facing a tougher funding landscape, down 36% globally in the last quarter. According to Standard & Poor’s.
(Sometimes, an M&A deal can check several strategic boxes: When SumUp acquired loyalty startup Fivestars in 2021, it gave it a foothold in the US and also introduced new services to the platform.)
Sixth Street Growth is leading this latest round, with previous backers Bain Capital Tech Opportunities, Fin Capital and Liquidity Group also participating. SumUp has now raised about $1.5 billion per Beachbook data.
Hermione Mackey, who was appointed as SumUp’s CFO earlier this year, described the round as “mostly equity” but declined to give more precise figures. She also declined to give a specific valuation for SumUp, except to say it is higher than the $8.5 billion that SumUp reached in 2022 when it raised €590 million (half from equity and half from debt).
The company says it has been “positive on an EBITDA basis since Q4 2022” (note: this is not the same as profitability). It achieved “higher growth” of more than 30 percent year-on-year.
But on the other hand, there are other indicators that work is difficult at the moment. SumUp says its customer base currently totals around 4 million, which is exactly the same number it quoted two years ago.
Today’s financing news comes on the heels of some other tough data points for the company. Just two months ago, Groupon revealed that, as part of a larger set of secondary transactions among existing shareholders, it had sold part of its stake in the company worth $4.1 billion. In other words, the sale made less than half the value of the company in 2022.
Meanwhile, this $8.5 billion valuation as of 2022 was a significant discount to the €20 billion ($21.5 billion) that SumUp had hoped to achieve, underscoring how difficult it is to raise large equity rounds. (In line with this, SumUp’s last raise, in August, was… Credit facilities worth $100 million.)
Payment technology companies in Europe and the United States have also faced some tough scrutiny and a business slowdown.
PayPal and Square, two publicly traded US companies that compete directly with SumUp, have seen their stock prices and market capitalizations decline since 2022. (PayPal’s stock price is currently under $60 per share, down from a peak of around $300 per share. Square and the company are trading Parent Block is down about 25% from its peak.) Stripe famously saw its valuation nearly halve to $50 billion this year.
Closer to home, listed company Adyen was also in a financial slump after reporting slowing growth. But as a measure of how volatile the market is right now, and how hungry investors are for any signs of good news, Adyen’s mere statement on the turnaround plan (the plan, not the results) sent the company’s shares flying. up to 30%.
Klarna and Checkout haven’t been so lucky so far: Klarna’s valuation fell nearly 85% the last time it raised money; Checkout had a valuation of $40 billion when it raised $1 billion in January 2022, but that number has since been reduced to 10 billion dollars internally.
Now 11 years old, SumUp is one of the biggest startups in the private payments space, and it is counting on its track record of longevity as a sign of its stability.
“For more than a decade, SumUp has consistently achieved sustainable growth and boldly entered and led entirely new product categories and markets,” Nari Ansari, managing director at Sixth Street Growth, said in a statement. “This… track record and culture of innovation combined with SumUp’s thoughtful approach to growth and efficiency aligns well with Sixth Street Growth’s investment strategy.”