hv holtzbrinck ventures

Mobile Payments Startup Payleven Raises Another $10M

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The days of Square clones popping upeverywhere you looked and capitalizing on Square’s conservative approach to global expansion, are long gone. But those startups are not. And today, one of them is announcing a Series D round.

Payleven, a mobile payments startup originally incubated in 2012 at Berlin’s Rocket Internet, says it has raised a $10 million growth round from a selection of existing investors — Holtzbrinck Ventures, ru-Net, B Cinque, New Enterprise Associates (NEA) and MePay — as well as new backer Seventure Partners.

Today’s round brings the total raised to date by Payleven to $51 million, with no valuation being disclosed.

This total and the growth round itself may sound like small amounts of money — not least for an e-commerce startup whose margins are thin and based on economies of scale. As a point of comparison, another European rival, iZettle, has raised nearly $245 million; Square before it went public disclosed nearly $600 million in funding.

There is definitely an argument — especially these days when you consider Square’s financial situation — for a startup holding down spend, fundraising and valuations, and instead trying to grow slowly and maybe more sensibly. But in any case, a Payleven spokesperson hints there may be another round getting announced soon.

Payleven is not getting very specific about how it plans to use the funds, except to note that it will go towards “expansion into new products and the acceleration of customer acquisition.” A spokesperson claims that Payleven is already profitable in certain markets and will be tipping into the black globally soon.

To date, the company has built its business around point-of-sale hardware that works with iOS or Android smartphones and tablets (with two hardware options covering contactless and chip-and-pin at £59 and £79 in the UK and equivalent currencies elsewhere), with some accounting software around the transaction data — all of which it targets primarily at small retailers that may have previously found card-charging options too expensive to adopt.

As with other providers of POS solutions, Payleven charges a flat 2.75% transaction fee that reduces down to 1.5% depending on volumes. (Amex transactions are always at 2.75%.) Payleven claims that the cost of setting up is returned back to retailers within six months of using the devices.

Unlike Square, Payleven has from the start tried to build itself out as an international business, and currently, it’s live in 11 markets in Europe as well as Brazil. Part of Payleven’s early expansion was by way of  Rocket’s own footprint, where Payleven used some of the infrastructure of Rocket’s other operations to grow its business. But down the line that strategy may take a different turn: in 2015, Payleven was rolled into a joint venture with the Philippines Long Distance Telephone company to create mobile payments services for emerging markets — although no new operations have been announced since then.

There is another interesting piece of business development that could push Payleven’s growth. It seems that the company quietly became the point-of-sale provider for customers of Adyen just this month, with Adyen — itself a payment processing powerhouse valued at $2.3 billion — apparently shuttering its own Shuttle mobile point of sale system for small businesses and referring customers over to Payleven.

Adyen has decided to no-longer support their mPOS SME product, and hence have offered their existing and potential new customers the opportunity to work with us,” a spokesperson from Payleven said.

It’s for these reasons, it seems, that Payleven has raised more money and may be attracting more.

“We are very excited about Payleven’s growth. They have demonstrated to be on a clear path to profitability having a positive bottom line in some markets already  today,” said Wolfgang Krause, Seventure Partners, in a statement. “Payleven shows that fintech companies can reach scale, highly attractive unit economics and ultimately profitability.”

Seventure’s portfolio also includes Parrot, Vistaprint (now called Cimpress) and Calendra (acquired by BMC).

“We are delighted to have won Seventure Partners’ support and look forward to further grow the business together with them,” said Konstantin Wolff, MD of Payleven, in a statement. Wolff, along with CTO Rafael Otero, is also a co-founder of the company.

“Payleven has an outstanding track record of differentiating in payments through changing the customer experience, offering great technology and tackling an underserved segment. This has enabled them to achieve customer payback periods of less than six months, something unheard of in financial services,” said Sven Achter, general partner at Holtzbrinck Ventures and chairman of the Payleven board.