Payments company Swipely has announced that it raised a Series C round totaling $20 million. This round, led by the Pritzker Group and including previous investors Shasta Ventures and First Round Capital, brings the company’s tally to more than $40 million.
Swipely had recently announced that its payment processing rate had doubled to $2 billion on an annual basis, but declined to tell TechCrunch at the time if it was pursuing more capital. As it turns out, and as this publication presumed, it was in the process of nailing down the Series C. The company’s revenue tracks up with its payment-processing rate, so to see it double that figure from $1 billion to $2 billion in under a year implies quick top-line growth.
Competitor Square is processing around 15 times as much, or in the neighborhood of $30 billion.
Swipely CEO Angus Davis declined to discuss a solid growth expectation for the company’s processing rate, but he did tell me that companies growing at more than 50 percent yearly can be described as going through a period of hyper-growth, and that his firm is growing more quickly than that. Davis is known for his work at TellMe, which sold to Microsoft for around $800 million.
Davis also told TechCrunch that Swipely’s lifetime customer value (LTV) compared to its customer acquisition cost (CAC) was “well in excess” of three, a standard industry threshold. LTV to CAC is a SaaS firm metric that is widely cited. It implies that a company is generating more than thrice the cost of acquiring a new customer in top line. That excess revenue then covers other corporate costs. If your ratio is less than three — or more 0.33, if you flip the numerator and denominator, of course — your growth as a firm can be viewed as a combination of being inefficient and too expensive.
The company intended to raise between $15 million and $20 million for marketing and product expansion.
I also asked the firm about its views on Square’s recent move into loaning clients money for expansion purposes. Swipely, Davis told TechCrunch, already does that in some capacity, using third-party support. The company, if I had to infer, doesn’t view the effort as a core part of its business, but one that it could expand.
Square’s financials, recently disclosed, indicate that the company’s gross profit margin is a pressure point. Moving up the value stack — loans could supply such incomes — will therefore be attractive to market participants.