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Why the latest $2bn fintech valuation checks out

Posted by the Wi5 Team17th May 2019Opinion

Gavin Peters | Chief Strategy Officer, Wi5

Global payments solutions provider Checkout.com has just raised $230m in Europe’s largest ever Series A Fintech funding round – and it could prove fantastic value for investors.

So another week, and another fintech startup raises astronomical funds from investors, and becomes the latest startup to join the Tech Unicorn club. This time, UK based payments company Checkout.com raised $230m off the back of a $2bn valuation, to much fanfare and a few raised eyebrows. For a company that only started in 2012, it’s an impressive return; to put the valuation into perspective, in seven years, a company with just over 300 employees is now over a quarter as valuable as Asda, with less than 0.2% of its staff headcount. For those more accustomed to more traditional industries, you can see why such fintech valuations seem surprising, to say the least.

But dig deeper (as the investors undoubtedly have) and things become a little clearer.

Firstly, Checkout.com, is not just A.N.Other payments company.

As seen with major tech brands in other sectors, the company has managed to truly capitalise on the complexity of an emerging digital disruption to a traditional industry. The online payments industry has followed the normal tech evolution curve: initially, a small number of early innovators disrupt a traditional market with an online/mobile solutions that improve the customer journey; next, a number of emerging technologies piggyback on that initial success, with an explosion in innovation, but ultimately faster than customers can keep up, introducing complexity to the market; and finally an aggregator appears to simplify and become the go-to solution that brings things together, in a way that just works.

With Checkout.com’s end-to-end payment solution “helping companies accept more payments around the world through one integration”, its customers are confident they are getting the best in digital innovation, within just one relationship.

And the company’s growth has been startling – named #1 fastest growing fintech and placed 2nd overall in the Deloitte UK Technology Fast 50, its UK growth has been over 15,000% in four years, picking up global clients such as Samsung, Deliveroo and Adidas.

But alongside the high growth, multiple international locations, blue-chip clients and great product feedback that investors love, there’s one thing that outweighs all others behind the valuation: the online payments industry – particularly regarding mobile payments – is still in its infancy.

By 2022 it is anticipated that the transaction value from mobile payments will reach $14 trillion, an increase of over 100% in the next three years. The impact of the “millennial” generation’s preference for mobile engagement over anything physical is only just starting to be seen. Companies offering secure, simple mobile payments solutions will see exponential growth, as merchants dealing in both on and off-line locations will need to offer frictionless mobile payment options to respond to the growing market demands.

In the near future, Checkout.com’s current valuation may still raise eyebrows – but not for being over-priced.

Wi5 is a mobile Order & Pay solution that allows consumers to make fast and convenient in-venue transactions on immediate connection to guest Wi-Fi – without any need to download an app.