iZettle — the payments startup based out of Stockholm that competes against companies like Square, Paypal and SumUp to provide card transactions using smartphones and tablets as well as related accounting services — has raised another €40 million ($47 million), money that CEO and co-founder Jacob de Geer told TechCrunch would be used to expand into more markets beyond the 12 where it currently operates in Europe and Latin America.
“What you see right now is a proof point that the company is doing exceptionally well,” De Geer said about the funding. “In the last couple of months, we’ve had significant growth that led to taking the decision to accelerate the business.”
As for which countries it may tackle next, he said that Central and Eastern Europe were “absolutely” in iZettle’s sights alongside more growth in Latin America.
“It’s interesting to see how Poland, for example, is very well advanced in contactless payments,” which many see as a key driver to less cash use and more card use in general. “It’s a big market and very mature.”
This latest equity funding is led by previous backer Dawn Capital, and it also brings a new, solid institutional investor into the mix for iZettle, the Fourth Swedish National Pension Fund, alongside other existing (but unnamed) shareholders.
Past investors into iZettle have included the Spanish banking giant Grupo Santander (whose backing fuelled iZettle’s move into Mexico and Brazil), American Express, MasterCard, Intel, Index Ventures, Northzone, 83North and Creandum, among others. De Geer said that iZettle has raised around €200 million ($235 million) in equity funding to date.
The company declined to disclose its valuation, which last was at €500 million (about $584 million) in its Series D. “It’s absolutely an upround,” De Geer said in an interiview. “We tend to have an internal saying that the valuation of the company is the sum of all the problems that we solved, and we’ve solved millions of those so the valuation should be in line with that.”
De Geer declined to give any specific numbers on growth — citing the fact that iZettle will soon close accounts for the year and report numbers then in accordance with Swedish law. As a marker, however, the company noted a 60 percent rise in revenues in its last fiscal year and expected to narrow its loss year. In FY 2016 it had revenues of 643 million Swedish crowns ($76 million), up from SKr402 million in 2015; its net loss was SKr228 million versus SKr295 million in 2015.
De Geer said iZettle is strong in the UK in particular — which is notable not just because the UK is a large market for commerce, but because it’s also highly competitive, with Square choosing it earlier this year as its first point of European expansion.
De Geer said one key reason iZettle is growing so much is because it’s doing more than just payments for its primarily SMB customer base. “Our commercial and business platform gives us the possibility of cross-selling other solutions,” he noted.
Those other services include cash advances and invoicing, with more to come. iZettle has been investing this year in machine learning and other AI tech (partly by way of a loan from the European Investment Bank) and that is helping the company run risk assessment for cash advances and potentially will be used more for supplementary products down the line.
“We are learning!” he said in reference to the company’s push into machine learning. One of the more interesting applications of AI has been in financial services, used to assess risk for loans (this is what another loans platform, Kabbage, has built its business on for example). Now iZettle is looking at how it can use its deep learning technology to develop other services it can cross-sell in areas like customer data and analytics.
This expanded opportunity, in fact, was what attracted iZettle’s newest investor.
“We invest heavily in companies contributing to sustainable economic growth and are impressed by how iZettle has levelled the playing field for small businesses,” said Per Colleen, head of fundamental equities at The Fourth Swedish National Pension Fund. “We believe in iZettle’s long-term development opportunity through their data-rich technology platform, built for scalability combined with five years of unique insights about the needs of small businesses, which makes it an attractive investment case.”