SumUp: €285M Boost for Global Expansion
SumUp, a fintech that serves nearly 4 million small businesses in Europe, America, and Australia by providing payments and related services – has secured some fresh funding to navigate the choppy waters of the current fintech market. Unfortunately, the waters it tipped SumUp into weren’t so navigable.
The startup, rooted in Germany but based in London, has gathered €285 million (just under $307 million). The aim is to use this funding to continue expanding its business in a formal manner, introducing additional financial services around card readers and other point-of-sale tools – currently encompassing invoicing, loyalty programs, business accounts, and much more. It’s actively present in 36 more geographies beyond its current operations.
SumUp Eyes M&A Amidst Fintech Challenges
SumUp also has its sights set on non-organic growth, specifically through mergers and acquisitions (M&A). Recent reports show that according to S&P, fintech startups are facing tough financial outlooks globally, with a 36% decrease in the past three months.
The occasional M&A deal can sometimes be a strategic move: when SumUp acquired Lightricks’ startup Fivestars in 2021, it expanded its footprint in the U.S. and introduced new services on the platform.
Leading the charge in this latest round is Sixtus Strießnig, backed by supporters like Bain Capital Tech Opportunities, Fin Capital, and Liquidity Group. According to SumUp’s pitch deck, they’ve now amassed approximately $1.5 billion.
Hermione Mackay, who took over as SumUp’s CFO at the beginning of this year, described this round as “mostly equity” but declined to provide further specific figures. She also refuted giving SumUp a distinct valuation, other than saying it’s more than the $8.5 billion SumUp secured in 2022 when it raised €590 million (half in equity; half in debt).
SumUp’s Growth Amidst Market Challenges
The company asserts its achievement of EBITDA positivity starting from Q4 2022, emphasizing that this does not necessarily equate to overall profitability. Additionally, it proudly highlights a year-over-year “top-line growth” surpassing 30%.
On the flip side, indications suggest that the business is currently facing challenges. SumUp reports its user base is currently around 4 million, the same figure it cited two years ago.
Today’s funding news comes as another data point in contrast to some other rocky situations for the company. Just a few months ago, the group revealed that, as part of a significant transaction between existing shareholders, it sold a portion of its stakes in the company for $4.1 billion, a value that’s less than half the company’s valuation in 2022.
At $8.5 billion during 2022, amidst a $20 billion ($21.5 billion) boon for SumUp, it signaled how challenging it was to raise significant equity rounds. (And according to reports, it’s last addition in August was a $100 million credit facility.)
The business of payments technology in Europe and America has also faced some tough scrutiny and a sluggish market. Companies like PayPal and Square, two publicly-listed American firms in direct competition with SumUp, have seen fluctuations in their share prices and market caps since 2022. The underlying company Block is trading at roughly 25% of its peak.
Closer to home, publicly-listed Adyen is also suffering a financial crisis after reporting slower growth. However, the company’s turnaround plan, based on measuring how much market correction there is currently and how thirsty investors are for good news, saw a 30% increase in the company’s stock.
SumUp Thrives Despite Market Challenges
Clearna and Checkout, meanwhile, haven’t been as fortunate: Clearna experienced an 85% decrease in its valuation since it last raised funds, and Checkout’s valuation was $40 billion when it raised $1 billion in January 2022 but has since seemingly decreased to an internal figure of $10 billion.
At 11 years old and privately held, SumUp is one of the largest startups in payments by processed payments. It continues to bank on its track record of sustained growth, product category introductions, and market entries guided by a disciplined approach to innovation.
SIXTUS STRESSNIG, MD of Sixth Street Growth, commented, “For more than a decade, SumUp has demonstrated continuous growth, introducing new product categories and markets with full determination and clarity of thought. We are aligned with it’s track record of innovation and performance, and we are excited to partner with them on their journey of growth and culture.”
Conclusion
SumUp secures €285M to navigate fintech challenges, signaling resilience and expansion plans. Despite recent market fluctuations, the company’s strategic growth initiatives, including mergers and acquisitions, position it for success. Backed by substantial funding and a proven track record, it remains dedicated to innovation and sustained growth, fostering excitement for its future trajectory.
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