From Go4Venture’s Monthly European Technology Venture Capital Bulletin. http://www.go4venture.com/research/vcbulletin.htm
iZettle (Sweden), the developer of a system for taking credit and debit card payments using an iPhone or iPad, raised €10mn in a Series A round led by Index Ventures with support from Creandum and former Carphone Warehouse CEO Charles Dunstone. The money will be used for expansion into the rest of Europe outside Sweden and ongoing development.
iZettle was founded in April 2010 by serial entrepreneurs Jacob de Geer (who founded movie sharing service Ameibo in 2007 and sold it to Bonver Entertainment in 2010) and Magnus Nilsson (probably best known for his involvement with Wayfinder Systems which was acquired by Vodafone in 2009). The company has developed technology for taking payments from chip-enabled cards using an iPhone or iPad application and card reader. This is both EMV-approved (Europay, Mastercard and Visa) and complies with PCI-DSS (Payment Card Industry Data Security Standards) regulations. Launched in August 2011 in Sweden, it immediately rocketed to number four in the App Store overall and number one in the finance category. There are several competitors – notably Adelante and Square as well as incumbents Ingenico and Verifone. US-based Square raised $100mn in June at a valuation reported at $1bn and has a board which includes former Treasury Secretary Lawrence Summers. Although Square is already processing $2bn per annum for over three quarters of a million SMEs, it would be difficult for Square to enter Europe owing to the chip-and- pin system which is rare in the US.
The application and hardware are free and iZettle does not charge a monthly fee. It makes its money from charging transaction fees of a €0.11 plus 2.75% per transaction. Obviously, for the vast majority of SMEs this is far more cost-effective than buying point of sale (POS) systems from traditional operators Verifone and Ingenico which both require up-front investment for hardware as well as charging a monthly fee.
Long-hyped in the media, mobile payments may finally be here. According to Gartner, the number of users of mobile payment systems worldwide has grown by about 40% in the last year. Blue chip incumbents have also begun to get involved as exemplified by the licensing of Visa’s payWave technology to Google, Ingenico starting work on an iPad attachment and Verifone working with Google Wallet.
This is the second investment by Index Ventures (€320mn (2009); AUM: €1.8bn) this month. It is also Index’s second investment in a mobile payments company, having supported a $2mn Series A round for former SeedCamp winner and POS and inventory management company Erply back in March 2010. In addition, Index invested £2.5mn in online peer-to-peer lending marketplace Funding Circle back in April. Perhaps Sweden’s best known venture firm, Creandum (€80mn (2005); AUM: €120mn) invests in technology companies at any stage and has an active portfolio of 18 companies. Creandum has not featured in our bulletin since last year, with investments in Nanoradio and Cint, but has significantly expanded its team of investment professionals this year, as well as developing its portfolio companies. Index and Creandum are joined by former Carphone Warehouse CEO Charles Dunstone, who also invested in Funding Circle. Mr Dunstone also invested in Mobile Money Network – a home payment system for consumers – alongside mobile banking provider Monitise. The EU’s ‘passport’ system for financial services means that clearance from the Swedish authorities obviates the need for further regulatory approval and iZettle could be in the UK as early as Q1 2012.
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