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SumUp Raises over $300M, Defies European Fintech Trend

British payments startup SumUp has raised €285 million ($306.6 million) in a new round of funding led by Sixth Street Growth and Bain Capital Tech Opportunities. Existing investors Fin Capital and Liquidity Group also participated.

With this latest round, SumUp’s valuation is now higher than the €8 billion ($8.6 billion) valuation it attained in a funding round in 2022 when it raised 590 million euros. This is notable given the declines in European tech valuations over the past year amidst macroeconomic headwinds.

British Payments Startup SumUp Raises $307 Million

The fresh capital gives SumUp “more firepower to act on opportunities”, including potential acquisitions and expansion into new countries, according to the Chief Financial Officer, Hermione McKee.

SumUp has been expanding into new business lines like lending. What’s more, it recently launched in Australia, making it its 36th global market. The company additionally presented a merchant cash advance product earlier this year, allowing businesses to access funds based on card payment volumes. The company secured a $100 million credit facility to support this.

In addition, the payments company has rolled out new point-of-sale offerings, including self-service kiosks and Apple’s Tap to Pay feature. It is constantly assessing opportunities to grow inorganically through mergers and acquisitions.

While SumUp has no imminent plans for an IPO, McKee says the company is “constantly improving processes” to operate at a standard appropriate for public markets. For now, it continues to attract ample private capital.

Problems in the Fintech Industry in Europe

The funding obtained by SumUp offers a glimmer of hope amidst the problems faced by the fintech industry in Europe since 2022. According to data from the beginning of this year, fintech funding worldwide fell 30% to $95 billion.

A subsequent report showed that fintech also suffered significantly in the first half of 2023, with funding in the EMEA region dropping 50%. As reported by the Pulse of Fintech, a report prepared by KPMG, it amounted to $52.4 billion for 2,153 deals.

KPMG

“The entire tech sector is experiencing fierce headwinds at the moment — and fintech is no different,” Judd Caplain, the Global Head of Financial Services at KPMG International, commented.

However, in the UK, payment fintechs are faring slightly better. Finance Magnates reported a few weeks ago that Worldline, the French-based payments processor, has received Payment Institution Authorization from the Financial Conduct Authority. This clears the way for Worldline to strengthen its UK operations and enhance its service offerings for merchants within and internationally.

Why Do Fintechs Suffer

The European fintech industry faces immense funding challenges in 2023 due to a perfect storm of factors. Difficult macroeconomic conditions, including high inflation, rising interest rates, recession fears, and ongoing uncertainty, have made investors far more cautious about investing in high-risk, high-growth areas like fintech .

At the same time, investors demand that fintechs focus more on profitability than solely chasing growth. Many European fintechs are having to completely rework their business models to satisfy investors’ profitability demands before securing funding.

Moreover, with the massive decline in overall fintech investment capital, competition for limited funding among European fintech startups has reached intense levels. Only those with the most compelling business cases and strategies are likely to attract investor interest.

Scarce funding supply and extreme competition in a volatile macroeconomic environment have created a perfect storm, making capital raising exponentially more difficult for most European fintechs in 2023.

British payments startup SumUp has raised €285 million ($306.6 million) in a new round of funding led by Sixth Street Growth and Bain Capital Tech Opportunities. Existing investors Fin Capital and Liquidity Group also participated.

With this latest round, SumUp’s valuation is now higher than the €8 billion ($8.6 billion) valuation it attained in a funding round in 2022 when it raised 590 million euros. This is notable given the declines in European tech valuations over the past year amidst macroeconomic headwinds.

British Payments Startup SumUp Raises $307 Million

The fresh capital gives SumUp “more firepower to act on opportunities”, including potential acquisitions and expansion into new countries, according to the Chief Financial Officer, Hermione McKee.

SumUp has been expanding into new business lines like lending. What’s more, it recently launched in Australia, making it its 36th global market. The company additionally presented a merchant cash advance product earlier this year, allowing businesses to access funds based on card payment volumes. The company secured a $100 million credit facility to support this.

In addition, the payments company has rolled out new point-of-sale offerings, including self-service kiosks and Apple’s Tap to Pay feature. It is constantly assessing opportunities to grow inorganically through mergers and acquisitions.

While SumUp has no imminent plans for an IPO, McKee says the company is “constantly improving processes” to operate at a standard appropriate for public markets. For now, it continues to attract ample private capital.

Problems in the Fintech Industry in Europe

The funding obtained by SumUp offers a glimmer of hope amidst the problems faced by the fintech industry in Europe since 2022. According to data from the beginning of this year, fintech funding worldwide fell 30% to $95 billion.

A subsequent report showed that fintech also suffered significantly in the first half of 2023, with funding in the EMEA region dropping 50%. As reported by the Pulse of Fintech, a report prepared by KPMG, it amounted to $52.4 billion for 2,153 deals.

KPMG

“The entire tech sector is experiencing fierce headwinds at the moment — and fintech is no different,” Judd Caplain, the Global Head of Financial Services at KPMG International, commented.

However, in the UK, payment fintechs are faring slightly better. Finance Magnates reported a few weeks ago that Worldline, the French-based payments processor, has received Payment Institution Authorization from the Financial Conduct Authority. This clears the way for Worldline to strengthen its UK operations and enhance its service offerings for merchants within and internationally.

Why Do Fintechs Suffer

The European fintech industry faces immense funding challenges in 2023 due to a perfect storm of factors. Difficult macroeconomic conditions, including high inflation, rising interest rates, recession fears, and ongoing uncertainty, have made investors far more cautious about investing in high-risk, high-growth areas like fintech .

At the same time, investors demand that fintechs focus more on profitability than solely chasing growth. Many European fintechs are having to completely rework their business models to satisfy investors’ profitability demands before securing funding.

Moreover, with the massive decline in overall fintech investment capital, competition for limited funding among European fintech startups has reached intense levels. Only those with the most compelling business cases and strategies are likely to attract investor interest.

Scarce funding supply and extreme competition in a volatile macroeconomic environment have created a perfect storm, making capital raising exponentially more difficult for most European fintechs in 2023.

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