According to Hermione McKee, Chief Financial Officer of SumUp, the additional funding provides the company with “more firepower to act on opportunities,” such as acquisitions and new country launches.
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The British payments startup SumUp, which is well-known for its tiny card readers, revealed on Monday that it has raised 285 million euros ($306.6 million) in a massive funding round, valuing the business at over $8.6 billion.
The latest round of funding for SumUp included participation from debt financing firm Liquidity Group, fintech investment firm Fin Capital, and current investor Bain Capital Tech Opportunities. Sixth Street Growth, the growth division of international investment firm Sixth Street, led the investment in SumUp. Although a small amount of the funds were raised as debt, equity made up the majority of the round.
The new funding, according to SumUp Chief Financial Officer Hermione McKee, gives the business “more firepower to act on opportunities that we see arising over the course of the next two years.”
Prior to the announcement, McKee told CNBC in an interview conducted last week, “If we think about our geographical expansion, we launched Australia as our 36th market globally in August.”
“We can still expand into Latin America now that we have a foothold there. After that, we consider Asia and our perceptions of that continent, and finally, opportunities throughout Africa. Globally, there are a ton of opportunities. We evaluate this “buy versus build” approach on a continuous basis.”
After raising an incredible 590 million euros in funding for growth and international expansion in 2022, SumUp was last valued at 8 billion euros ($8.6 billion). With this round, the company says it “continues to build further” on that valuation. A SumUp representative verified that the transaction is an up round, indicating that the valuation has increased from the previous round.
This is quite an accomplishment considering the current state of European technology valuations, which have plummeted in the last 12 months as investors have fled the sector owing to rising interest rates and macroeconomic challenges.
All stages saw a decline in median valuations in the third quarter compared to 2022, according to venture data firm PitchBook, with growth-stage valuations showing the least resilience and late-stage valuations showing the most.
Previous owners of SumUp sold their shares earlier this year for a significant discount to the company’s most recent official valuation. One, the online discount website Groupon, revealed to the U.S. Securities and Exchange Commission that it was liquidating its SumUp shares at a price that would only be worth 3.9 billion euros ($4.2 billion).
SumUp: M&A shopping spree ahead
SumUp has been branching out into new business sectors recently, not the least of which is lending. SumUp is largely in competition with Jack Dorsey’s payments company Block, formerly known as Square, as well as PayPal’s iZettle, FIS’s WorldPay, Stripe, and Adyen. The business introduced a service that lets merchants apply, subject to a cap, for business loans or cash advances based on the sales of their credit cards.
This summer, SumUp obtained a $100 million credit facility from Victory Park Capital to support its cash advance program. As of right now, the majority of the lending product’s merchants have been making timely repayments, according to McKee.
“We’re seeing merchants who are actually assisting their growth, as well as rapid returns on that capital. In addition, given the volume of transactions we see, they can quickly reimburse that,” McKee stated.
“We haven’t seen any real pullback in terms of repayment data over the course of the last six months,” she said. “Our models are constantly iterating to make sure that that those factors we’re observing don’t become stale.”
New point-of-sale products from SumUp were also introduced, such as self-service kiosks that allow customers to place orders in-store using a touchscreen interface.
Recently, SumUp introduced Apple’s Tap to Pay function in the Netherlands and the United Kingdom. This feature allows customers to use a smartphone app to tap their phone or card on a vendor’s iPhone. Along with updating its current point-of-sale systems, it has introduced countertop POS Lite and POS Pros systems that are compatible with SumUp’s card readers.
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In order to support its international expansion, SumUp intends to investigate additional merger and acquisition possibilities in the future.
“M&A is always something that’s on the table,” McKee stated. Through M&A, we have previously expanded into new geographic areas. That’s something we evaluate continuously. We have expertise in both purchasing and creating ecosystems. And it goes without saying that we have access to both of these things.
McKee continued, “SumUp does not currently have any plans to go public because it has sufficient access to capital in the private markets.”
“I think it’s proven by this round that we actually have access to private pools of capital, so we don’t need to IPO,” she explained.
In order to ensure that we are functioning at a level and quality suitable for public markets, we are continuously refining our processes. However, we’re not actively planning for this to happen today; it’s not something that, you know, is close at hand.”
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