European point-of-sale provider SumUp acquires customer loyalty startup Fivestars for $ 317 million – TechCrunch

SumUp, a European competitor to Square, PayPal / iZettle and others that provide mobile card readers and other sales technologies to merchants and small businesses, has made an acquisition in the United States to deepen this market and expand the types of services it provides to customers around the world.

The company acquired Fivestars, which provides loyalty, marketing, payment and other services to small merchants, used by some 70 million consumers and 12,000 businesses in the United States. SumUp said it would pay $ 317 million in cash and stocks. for the San Francisco startup.

It is an increase in the valuation of the startup as a private company. According to PitchBook, Fivestars – which was originally incubated in Y Combinator and later backed by VCs that included Salt Partners, Lightspeed, DCM Ventures, Menlo Ventures and HarbourVest Partners – was last valued at $ 285 million afterwards. fundraising when he raised a Series D of $ 52.5 million a year ago, in October 2020.

It’s unclear why Fivestars sold, or whether it was proactively approached or looking for a buyer, but one can’t help but wonder what kind of impact the past year and a half has been making. where many people have turned away from in-person shopping due to the pandemic, had over the company’s business – which largely relies on in-person transactions.

On a more positive note, SumUp buying Fivestars now represents how it will double the opportunity to come now as people and traders alike. are return to the fold of physical purchases.

SumUp debuted in 2012 as one of several Square clones emerging from Europe at a time when the American company had yet to expand outside of its home market. Since then it has branched out into online payments, billing, and other services needed by merchants and other small businesses. And he grew up. Today, the company has more than 3 million merchant users in 34 markets, a scale that allowed it to raise nearly $ 900 million in debt earlier this year to fuel further expansion.

This funding has been used both to continue to grow SumUp’s platform and footprint in existing markets, as well as to expand into new territories.

Although SumUp has theoretically been active in the United States for a few years, it has a modest presence there, admitted Andrew Helms, Managing Director of SumUp in the country. This acquisition, SumUp’s first in the country, will therefore be used to gain a deeper foothold in this market.

Fivestars is a popular product, and SumUp hopes to leverage this existing business, which Fivestars says generates more than $ 3 billion in sales and 100 million transactions per year, to develop its own relationships with merchants by listing them. specifically to SumUp’s own card readers and other vending technology. Helms confirmed that the plan will be to retain the Fivestars brand for the time being and work on the closer integration of its product into SumUp’s platform.

Victor Ho, co-founder and CEO of Fivestars, will also stay with the rest of the SF-based team.

“We founded Fivestars to give small businesses the opportunity to thrive in the digital economy and over the years we have achieved this,” Ho said in a statement. “Realizing that SumUp shares this mission, it was an easy decision to partner up, and together we look forward to supporting a retail market that champions small business success. “

The acquisition of Fivestars also makes a lot of sense in the context of SumUp’s growth. Part of its strategy has always been to continue inorganic expansion, and over the years this has included merging with Payleven, another Square clone originally incubated by Berlin’s Rocket Internet; and the purchase and integration of Shoplo to give its merchants the ability to sell in multiple online marketplaces.

Notably, SumUp did not have a loyalty product prior to this, so there will likely be opportunities to introduce Fivestars’ technology for the first time in other markets outside of the United States, such as Europe and America. Latin, where SumUp is already active.

Joseph P. Harris