SumUp, the London-based fintech company that provides payment and other related services to small businesses across Europe, the Americas, and Australia, has recently raised €285 million (approximately $307 million) in growth funding. The startup plans to utilize these funds to further expand its business through organic growth, launch new financial services, explore new geographies, and pursue mergers and acquisitions.
Key Takeaway
SumUp, a leading fintech startup, has secured €285 million in growth funding, which it plans to use for organic business expansion, launching new financial services, exploring new markets, and pursuing mergers and acquisitions. Despite challenges in the current fintech landscape, SumUp’s longevity and strong growth trajectory have instilled investor confidence.
New Avenues for Growth
SumUp intends to leverage the fresh funds to enhance its suite of financial services beyond the existing card readers and point-of-sale tools it offers. The company aims to introduce new services such as invoicing, loyalty programs, and business accounts to better serve its customer base of over 4 million small businesses. Additionally, SumUp plans to expand its operations into new regions, broadening its reach beyond the 36 countries it currently operates in.
M&A Strategy
With the current fintech market witnessing a reduced funding landscape, SumUp is seizing the opportunity to pursue mergers and acquisitions. Strategic acquisitions can help the company bolster its presence in new markets and enhance its service offerings. For instance, SumUp’s acquisition of the loyalty startup Fivestars in 2021 facilitated its expansion in the United States and introduced new services to its platform.
Investor Confidence
In this latest funding round, Sixth Street Growth took the lead, with participation from previous investors Bain Capital Tech Opportunities, Fin Capital, and Liquidity Group. With this round, SumUp has raised approximately $1.5 billion in total. Although specific figures were not disclosed, SumUp’s CFO, Hermione McKee, confirmed that the funding round was primarily equity-based.
Challenges in the Market
While SumUp has seen positive growth on an EBITDA basis since Q4 2022, the company faces challenges, indicating a tougher market environment. The customer base of 4 million remains unchanged from two years ago, and recent data points, such as the sale of part of SumUp’s stake at a lower valuation and difficulty raising big equity rounds, highlight the financial difficulties faced by many fintech startups.
Industry Landscape
The payment technology sector in both Europe and the United States has experienced challenges and slower growth. Companies like PayPal, Square, Stripe, and Adyen have witnessed declines in their market valuations. However, SumUp’s track record of sustained growth over the past decade positions it as a stable player in the industry.
