SumUp – the fintech that provides payments and related services to some four million small businesses in Europe, America and Australia – has raised some growth funding to navigate the choppy waters of today’s fintech market, waters that have tipped SumUp itself and influence.
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 money to further grow its business by organically launching more financial services – around its card readers and other point-of-sale tools, it offers billing, loyalty, business accounts and more. It also monitors more regions than the 36 where it currently operates.
And it will also turn its attention to inorganic growth, i.e. mergers and acquisitions. The latter is something to keep an eye on: we’re currently in a buyer’s market, with fintech startups facing a significantly tighter funding landscape, which according to S&P is down 36% globally over the last quarter.
(Sometimes an M&A deal can meet some strategic criteria: when SumUp acquired loyalty startup Fivestars in 2021, it gave it an edge 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 PitchBook data.
Hermione McKee, who was appointed SumUp CFO earlier this year, described the round as “largely equity-based,” but declined to give more exact figures. She also declined to give a specific valuation for SumUp, other than to say it is higher than the $8.5 billion SumUp reached in 2022 when it raised 590 million euros (half in equity, half in debt).
The company says it is “positive on an EBITDA basis since Q4 2022” (note: this is not the same as profitable). And that it has experienced a ‘turnover growth’ of more than 30 percent year after year.
But on the other hand, there are other indications that things are tough right now. SumUp says its customer base currently stands at around 4 million, which is exactly the same number as two years ago.
And today’s funding news comes in the wake of some other shaky data points for the company. Just a few months ago, Groupon announced that, as part of a larger group of secondary transactions between existing shareholders, it sold a portion of its stake in the company for a value of $4.1 billion. In other words, sales were less than half of what the company was worth in 2022.
That 2022 valuation of $8.5 billion, meanwhile, was a deep discount to the €20 billion ($21.5 billion) SumUp had hoped to achieve, underscoring how difficult it has been to raise large equity rounds. (And in line with that, SumUp’s last raise, in August, was on a $100 million credit facility.)
Payment technology companies in Europe and the US also faced heavy criticism and slower business operations.
PayPal and Square, two publicly traded US companies that compete directly with SumUp, have seen their share prices and market capitalizations fall since 2022. (PayPal’s stock price is currently less than $60/share, down from a peak of nearly $300/share. Square and parent company Block are trading at about 25% of their peak. Stripe saw its valuation nearly halved this year to $50 billion.
Closer to home, listed Adyen was also in financial trouble after reporting slow growth. But as a measure of how volatile the market is right now, and how thirsty investors are for signs of good news, Adyen’s statement about a turnaround plan (plan, not results) alone sent the company’s shares up 30%.
Klarna and Checkout haven’t been so lucky so far: Klarna’s valuation fell by around 85% the last time it raised money; Checkout had a valuation of $40 billion when it raised $1 billion in January 2022, but that amount has since reportedly been internally written down to $10 billion.
Now 11 years old and one of the largest private payments startups, SumUp relies on its track record of longevity as a signal of its stability.
“For more than a decade, SumUp has consistently delivered sustainable growth and boldly entered and led entirely new product categories and markets,” said Nari Ansari, MD at Sixth Street Growth, in a statement. “This… track record and culture of innovation, combined with SumUp’s thoughtful approach to growth and efficiency, align well with Sixth Street Growth’s investment strategy.”