Because the world waits for $65 billion funds tech big Stripe to go public, a wave of smaller startups continues to roll into the market to select up extra funds enterprise. In one of many newest developments, Danish firm Flatpay, which builds fee options for small and medium bodily retailers like outlets, eating places and salons, has raised €45 million ($47 million) led by Daybreak Capital.
Flatpay had raised just below $21 million earlier than this newest Sequence B, and with this new funding, it’s now valued at nicely over $100 million. The corporate plans to make use of the cash to develop into new markets in Europe and to construct out extra merchandise alongside the point-of-sale and card terminals that it sells right this moment. A few of these merchandise would possibly contain AI however solely as an enabler of sure options, reasonably than a core service, stated Flatpay’s CEO Sander Janca-Jensen.
“We have been able to raise money without mentioning the AI buzz word,” he stated. “It seems to be rare these days.”
That €45 million is a powerful Sequence B within the present market in Europe, particularly when you think about the scale of the startup. Based in 2022, Flatpay at present has simply 7,000 prospects throughout Denmark, Finland and Germany.
Even with its revenues and buyer base each rising at a month-to-month fee of 15%, Flatpay’s enterprise is only a drop within the service provider ocean.
There are greater than 24 million SMBs in Europe; point-of-sale terminals within the area quantity greater than 17 million; and there will not be simply dozens however lots of of different funds providers — together with Stripe, Adyen, Sumup and PayPal, in addition to smaller gamers like SilkPay — all concentrating on the identical prospects as Flatpay.
However buyers suppose there’s numerous potential within the startup, sufficient to wager early and powerful, even within the present financial local weather.
Janca-Jensen, who co-founded the corporate with Rasmus Busk, Rasmus Hellmund Carlsen and Peter Lüth, stated the hole Flatpay noticed available in the market was an absence of actually easy options for retailers that need the comfort that know-how can convey, with out the tougher points that come together with it, comparable to troubleshooting, understanding the intricacies of fees, and integrating merchandise into their enterprise circulation.
The startup’s method to addressing that hole is available in 3 ways, he stated. On the shopper facet, Flatpay works with an outlined dimension of buyer: solely retailers that course of over €100,000 yearly, and the purchasers can’t be multiple-location chains or franchises. Janca-Jensen stated that it commonly rejects prospects in the event that they don’t meet these parameters.
On the know-how facet, it has matched its goal buyer dimension with the unit economics of its fee options to give you very fundamental, flat charges (therefore the startup’s title) of 0.99% for terminal transactions and 1.49% for POS purchases. Flatpay then doesn’t set a minimal cost for single transactions, and it doesn’t cost charges if prospects are paying with worldwide playing cards. Janca-Jensen admitted that its mannequin implies that Flatpay generally loses cash on transactions, however it general lowers the bar for utilization and encourages extra spend and general income for the corporate.
Maybe most apparently, on the gross sales facet, regardless of its concentrate on streamlined know-how, Flatpay solely sells by way of stay gross sales visits. No on-line gross sales (though there are specialists who will assist organize these in-person gross sales visits and deal with help), no digital visits, and no plans to introduce both.
Janca-Jensen stated he and his co-founders developed a passion for direct subject gross sales after they have been promoting house alarm methods in a earlier life.
As with funds {hardware} and software program, safety could be a laborious promote to prospects. Flatpay discovered that the one manner it may reliably seal offers was by promoting in particular person. And the one manner that salespeople can promote in particular person is by understanding the merchandise rather well. “You have to get salespeople to understand the product enough to explain it well to buyers. It sets high standards for how simple your product must be,” stated Janca-Jensen. “We like that challenge.”
Round half of Flatpay’s 200 staff are on the gross sales facet, he stated, break up between those that assist organize gross sales visits and deal with help; and those that go to prospects in particular person. Sometimes, they’re recruited from different retail roles reasonably than software program gross sales.
“We steer clear of SaaS account executives and fintech people,” he stated. In his opinion, SaaS gross sales are really easy that individuals who work in that space are “too lazy and complacent” to make the grade for subject gross sales.
Thus far, within the three markets the place Flatpay operates, the purpose has been to recruit very native salespeople who perceive the nuances of their respective markets. That appears to boost numerous questions on how nicely this could scale long term, however Janca-Jensen brushes that concern apart, and buyers are equally bullish.
“The field sales model, when done well, works. You can localize and roll out teams in a cost-efficient way to explain on a local basis why a product makes sense,” stated Josh Bell, a common associate at Daybreak who focuses on fintech.
He identified that iZettle — one other firm Daybreak backed — was additionally an early mover in utilizing subject gross sales to promote its fancy new tech to non-technical prospects. “They were a winner, but even they never did it as well as Flatpay does this. Payments is huge, and Flatplay has touched just at a fraction of the opportunity.”
Denmark’s Seed Capital additionally participated on this spherical, together with different unnamed buyers.