What’s the secret to scoring big investment in fintech? It seems to be all about payments, payments, payments.
Investment in fintech is reaching such heights that some have raised concerns that it’s creating a bubble fit to burst. In fact, in the first quarter of 2016, global investment in fintech reached $5.3bn – a 67pc increase year-on-year.
Funding to payments start-ups, in particular, has been prolific, with 2015 marked out as a record year, totting up over $3.3bn in funding across 293 deals. All manner of payments technology appears to be attracting investors, be it bitcoin-based, m-commerce, billing, money transfer or point-of-sale solutions.
Investment database CB Insights tracked the most-funded payments start-ups for the period between 2011 and 2016. Here we have the top 10 based on these figures and expanded to reflect an extended period of time.
Total funding: $177m
Swedish payments start-up iZettle has raised $177m in four funding rounds, with Creandum, 83North, Charles Dunstone, American Express Ventures and Banco Santander its backers. That last one, Santander, has partnered with iZettle in South America as the start-up’s appeal to small businesses continues to grow.
With 275 employees, the Stockholm-based start-up has quickly become a major fintech disruptor. Providing a payment platform for small businesses, iZettle’s revenue comes ‘per transaction’ with no added charges for companies. Stores are provided a mini chip-card reader, with iOS apps and Apple Pay supported as well.
The platform has proven so popular that, using the sales data it has acquired directly from its clients, iZettle is now diving into the lending market. By working out each business’s unique performance, micro-lending at short notice is enabled.
Headquarters: England, UK
Total funding: $185m
WorldRemit is a money transfer company, founded in London in 2010 by Ismail Ahmed.
Set up with the intent of lowering the cost of transferring money to other countries, and making the entire process simpler and more convenient, WorldRemit is a successful player in the increasingly competitive game of currency exchange.
That success carries over to its funding rounds. Since its Series A in 2014, World Remit has raised total funds of $185m, with a whopping $100m picked up in Series B.
Most notably, that Series A featured an investment from Accel, a global fund that gave Series A support to tech big-hitters like Facebook, Dropbox, Slack, Spotify and Etsy.
The WorldRemit service is available to senders in 50 countries, who can transfer to 120 destinations. Headquartered in London, with a satellite office in Denver, Colorado, the global company is entering an expansion phase, recently announcing its intention to set up shop in Australia, too.
Headquarters: California, US
Total funding: $242.5m
Founded in 2007 in Silicon Valley by former WebEx and Salesforce.com execs KV Rao, Cheng Zou and Tien Tzuo, Zuora is a global provider of subscription management and billing software, enabling businesses to launch and monetise subscription-based products and services, and to transition to the subscription economy.
The software company is an investment darling. Salesforce founder Marc Benioff and Benchmark Capital have supported the company from the start, participating in Series A through F funding rounds. Other notable investors include Lehman Brothers.
Since 2007, Zuora has raised a total of $242.5m, experiencing steady growth from a $6.5m Series A in 2008 to a $115m Series F just last year.
That growth has manifested outside of finances, and Zuora now supports offices in Silicon Valley, New York, Boston, Atlanta, Colorado, Paris, Tokyo, London, Amsterdam, Munich, Beijing and Sydney.
Zuora has recently launched new software allowing businesses to track subscription revenues alongside other revenues on a single platform.
Total funding: $266m
Much like its northern European competitor Klarna, Dutch e-payments company Adyen has been running since 2006 as a company that aims to streamline payments processing online.
With its headquarters in Amsterdam and offices in 10 other countries, Adyen focuses on single-click, single-page payments, having built a platform that can handle almost every type of payment method, from credit cards to bitcoin.
Adyen was valued at $2.3bn towards the end of 2015 following an investment from Iconiq Capital, which followed a $250m investment round in December 2014 from General Atlantic, Felicis Ventures, Temasek, and Index Ventures.
In January this year, the company revealed that it had a record year of sales, processing as much as $50bn in payments across 2015. Its customers include some of the biggest names in tech, including Airbnb, Facebook, Uber, Netflix, Spotify, Dropbox, Yelp and Vodafone.
Headquarters: California, US
Total funding: $280m
The company was founded six years ago when Patrick was 22 and John was 19. The Collison brothers had previously sold their first start-up, Auctomatic, to a Canadian company called Live Current Media for $5m when they were still teenagers.
Stripe is a payments technology platform that developers use to build internet businesses. Hundreds of thousands of businesses – ranging from start-ups to Fortune 500 companies – rely on Stripe’s software tools to securely accept payments, expand globally, and create new revenue streams.
Stripe is now one of the fastest-growing tech companies in Silicon Valley and the company has received investment from Peter Thiel, Elon Musk, Sequoia Capital, American Express and the aforementioned Visa, to name a few.
Today, the San Francisco-headquartered company processes billions of dollars a year for customers including Kickstarter and Salesforce. As well as its main US HQ, Stripe also recently signed a lease on a new premises at The One Building on Grand Canal Street in Dublin’s famous Silicon Docks.
Headquarters: Texas, US
Total funding: $313.7m
Clocking up $314m in funding to date, Mozido is a provider of ‘white-label’ services, allowing under-banked consumers to transfer money across multiple platforms. Its backers are Adolfo Salume, Julian Robertson Jr, Brentwood Investments, Atlanticus Corporation and Bob Turner.
With a HQ in Austin, Texas, it operates in the financial inclusion area of banking, servicing some 2bn people in the world who own a mobile phone but not a bank account.
To reach out to the populous but hard-to-contact audience it requires, Mozido has taken to some key partnerships. Last month, Saavn, a music-streaming service with 18m customers in India, partnered up in a deal that helps Mozido’s mobile wallet reach a new wave of customers. Beyond India and the US, Mozido operates in China, Africa, the Middle East, Europe and Latin America.
Headquarters: Ohio, US
Total funding: $383.3m
Founded in Stockholm, Sweden back in 2005, Klarna established itself early on as a rather unique fintech company within the realm of e-payments.
On a website using Klarna, a customer can purchase an item with one click, with no financial details having been exchanged. Instead, Klarna pays out on this transaction to the retailer, then follows up with the customer afterwards. This approach favours impulse buying as there’s no need to add payment details with every purchase made online.
Last valued towards the end of last year at $2.25bn following a $23m investment from Swedish insurer Skandia, Klarna has raised $383m in multiple major funding rounds in the last 11 years.
In the last few months, the company has moved its focus from just Europe to the US and now serves 45m consumers and 65,000 merchants, attracting major international clients such as Spotify, Disney and Samsung, as well as landing deals with Twitter and Facebook to provide buy buttons for instant transactions.
With a new US HQ in Columbus, Ohio, and additional offices in San Francisco and New York, the company expects to see revenues increase by 40pc this year.
3. Ant Financial Services Group
Headquarters: Zhejiang, China
Total funding: $400m
The Alipay payment platform launched by China’s Alibaba Group in 2004 got itself a rebrand as Ant Financial Services in 2015. Fresh out of the traps, Ant Financial scored a $400m Series A funding round in the third quarter of that same year.
An affiliate company of the gargantuan Alibaba Group, Ant Financial continues to operate the Alipay platform and incorporates the more recently launched Sesame Credit, a credit rating system using data from Alibaba’s services to calculate scores in a process dubbed ‘social credit’.
Alibaba CEO Jack Ma is planning to float Ant on the Hong Kong Stock Exchange before the end of 2016. Recently privately valued at $60bn based on plans for a further $3.1bn in fundraising, it could be the biggest IPO in China since 2010.
Alipay competes with Tencent’s WeChat Payment service and has 450m active users with plans to grow this to 2bn users within 10 years. Headquartered in Hanghou in China, Ant Financial also manages Alibaba’s online bank, MyBank.
Headquarters: California, US
Total funding: $425m
Affirm is an online lending start-up, founded by PayPal co-founder Max Levchin, that offers point-of-sale loans to consumers to allow them to buy big-ticket items and pay the balance off over a period that they choose.
According to CB Insights’ original chart, tracking the period between 2011 and 2015, Affirm raised $325m. However, it was announced just last week that the company raised $100m in a Series D funding round led by fellow PayPal co-founder Peter Thiel’s Founders Fund, bringing its funding tally to date to around $425m and boosting its ranking to No 2.
The Series D round also saw investment from existing investors, including Lightspeed Venture Partners, Khosla Ventures, Andreessen Horowitz, Jefferies Group and Spark Capital, which led a $275m Series B investment in the company in May of last year.
At the moment, the firm’s technology can only be used in the US, where it is headquartered in San Francisco. It is believed the company plans to use its latest round of funding to develop new products.
1. One97 Communications
Headquarters: Delhi, India
Total funding: $1.265bn
India-based One97 Communications was the most well-funded payments start-up between 2011 and 2016, according to CB Insights, raising almost $1.3bn in total funding.
Paytm, One97’s flagship product, is India’s largest digital goods and mobile commerce platform. It is also a leading payment solutions provider for merchants through its semi-closed wallet.
With headquarters in New Delhi, One97 has a staff of 3,200 and offices throughout India, as well as in Africa, Europe, the Middle East and south-east Asia.
One97 had two huge funding injections last year: in January, Alibaba affiliate Ant Financial Services took a 25pc stake in the company in a deal believed to be worth more than $500m, while, in September, Alibaba itself announced that it had made a strategic investment in the company that was widely reported to be worth $680m. It is now believed that, between them, Alibaba and Ant Financial own about 40pc of One97.
Money from payments technology image via Shutterstock