SumUp, a European-based competitor to Sq., PayPal/iZettle and others that present mobile-powered card readers and different gross sales expertise to retailers and small companies, has made an acquisition within the U.S. to dig deeper into that market, and to broaden the sorts of companies that it supplies to prospects globally.
The corporate has acquired Fivestars, which supplies loyalty, advertising, funds and different companies to small retailers, utilized by some 70 million shoppers and 12,000 companies within the U.S.. London-based SumUp stated it is going to be paying $317 million in a mix of money and inventory for the San Francisco startup.
That may be a bump up on the startup’s valuation as a non-public firm. In response to PitchBook, FiveStars — which was initially incubated in Y Combinator and later backed by VCs that included Salt Companions, Lightspeed, DCM Ventures, Menlo Ventures and HarbourVest Companions — was final valued at $285 million post-money when it raised a Collection D of $52.5 million a 12 months in the past, in October 2020.
It’s not clear why Fivestars bought up, nor whether or not it was proactively approached or in search of a purchaser, however you may’t assist however surprise what sort of an impression the final 12 months and a half, the place lots of people turned away from purchasing in particular person because of the pandemic, had on the corporate’s enterprise — which is essentially predicated on in-person transactions.
On a extra optimistic observe, SumUp shopping for Fivestars now represents how it is going to be doubling down on the chance forward now that folks and retailers are coming again into the bodily purchasing fold.
SumUp acquired its begin in 2012 as one of many many Sq. clones rising out of Europe at a time when the U.S. firm had but to broaden outdoors of its house market. Since then it has diversified into on-line funds, invoicing and different companies wanted by retailers and different small companies. And it has grown. Right this moment the corporate has greater than 3 million service provider customers in 34 markets, scale that helped it elevate almost $900 million in debt earlier this 12 months to gasoline additional growth.
That funding has been used each to proceed constructing out SumUp’s platform and footprint in current markets, in addition to to maneuver into new territories.
Though SumUp has in principle been lively within the U.S. for a few years, its presence there’s modest, admitted Andrew Helms, SumUp’s managing director within the nation. So this acquisition — SumUp’s first within the nation — shall be used to get a deeper foothold in that market.
Fivestars is a well-liked product, and SumUp hopes to leverage that current enterprise, which Fivestars says drives greater than $3 billion in gross sales and 100 million transactions per 12 months, to develop its personal relationships with retailers, particularly signing them as much as SumUp’s personal card readers and different gross sales expertise. Helms confirmed that the plan shall be to maintain Fivestars’ branding for now and to work on integrating its product extra intently into SumUp’s platform.
Victor Ho, Fivestars’ co-founder and CEO, may even be staying on, together with the remainder of the corporate’s SF-based crew.
“We based Fivestars to present small companies the chance to thrive within the digital financial system and through the years, we’ve achieved simply that,” Ho stated in a press release. “Understanding that SumUp shares this mission, it was a straightforward resolution to associate, and collectively, we stay up for supporting a retail market that champions small enterprise success.”
Buying Fivestars additionally makes quite a lot of sense within the context of how SumUp has grown. A part of its technique has at all times been to pursue inorganic growth, and through the years that has together with merging with Payleven, one other Sq. clone initially incubated by Berlin’s Rocket Web; and shopping for and integrating Shoplo to present its retailers the flexibility to promote throughout a number of marketplaces on-line.
Notably, SumUp didn’t have a loyalty product earlier than this, so there’ll possible be alternatives to deliver Fivestars’ expertise for the primary time into different markets outdoors of the U.S., comparable to in Europe and Latin America, the place SumUp is already lively.