Payments company Checkout.com is raising once again. The company has closed a $450 million Series C round with Tiger Global Management leading the round — Greenoaks Capital and all existing investors are also participating.
If you’re not familiar with the company, Checkout.com wants to build a one-stop shop for all things related to payments, such as accepting transactions, processing them and detecting fraud. It focuses on large merchants and tries to make its product as customizable as possible so that you integrate it as an infrastructure partner in your product.
The company’s fundraising story in particular is jaw-dropping. The startup was founded in 2012 in London. At first, it grew slowly and methodically. Every time it would generate a bit of revenue, it would hire more people. “We can hire one employee this month. Now we can hire two employees this month,” founder and CEO Guillaume Pousaz said at TechCrunch Disrupt when thinking about the early days of the company.
But Checkout.com kept growing and growing until it raised one of the biggest Series A rounds ever for a European company — $230 million at a $2 billion valuation. Just a year later, Checkout.com added $150 million in funding at a $5.5 valuation.
Checkout.com is now valued at $15 billion based on today’s funding round. According to the startup, it is now the fourth largest fintech company globally.
Checkout.com had 440 employees in January 2020. It finished 2020 with 940 employees. And this year, the company plans to hire an additional 700 people.
While Checkout.com didn’t actually need to raise to stay alive, Pousaz says VC firms are a form of validation. Suddenly, you can talk with big prospects if you’re backed by Insight, DST, Coatue, Tiger Global Management, etc.
And yet, the company needs a lot of money on its bank account to expand to more countries. “Today, we process billions every week,” Pousaz told me in December. “And when you process over a billion euros per week, your cash flow on your bank account increases significantly. So you need to be well capitalized for regulators.”
Technically, there isn’t a single bank account that holds the company’s cash. Checkout.com is regulated in the U.K., but also in France, Brazil, Singapore, Hong Kong, etc. And the company is working on adding India, the Philippines. And it turns out you need cash on your balance sheet in the Philippines if you want to get a license from the local regulator — it doesn’t matter if you have a ton of money sitting in your bank account in London. That’s why raising capital can be helpful.
But why do investors want to hand over more and more money? “At any point you have a lot of visibility on what your next year is going to look like,” Pousaz told me. “It’s something that investors like because you can show them your pipeline and all your customers in your pipeline. If you forecast on the pipeline, it gives you a good idea of how much you’re going to generate in the coming year.
“For instance, I could tell you right now that we’ll grow by at least 80% in 2021,” he added. And that’s only based on clients who are currently in the process of integrating Checkout.com. The company already tripled its payment processing volume in 2020 compared to 2019.
In many ways, Checkout.com tries to forecast like a public company. It isn’t focused on runway as it is EBITDA profitable. Instead, it tries to reinvest a lot of its revenue in the company. “We don’t generate $50 million in EBITDA, far from it. But we generate double-digit million dollars,” Pousaz told me.
With today’s funding round, the company will open two new offices in the U.S. In addition to San Francisco, Checkout.com will have offices in New York and Denver.
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