Veem, Melio and Grab get capital injections
One of the most notable recipients was global business to business (B2B) payments network provider Veem, which in September received US$31m of further funding (previous rounds raised US$37m) from investors including Kleiner Perkins, GV (Google Ventures) and Truist Ventures. Founded in 2014 the San Francisco headquartered firm formerly known as Align Commerce offers its estimated 225k users multiple ways to send and receive payments, one of which is a digital wallet that can store funds and does not require the customer to link any bank account.
Another US B2B payments start-up Melio, received US$80m of Series C funding from Bessemer Venture Partners, Accel, General Catalyst and Coatue Management amongst others. The company focuses on helping small businesses manage their payments remotely to optimise cashflow within a challenging economic environment
Singapore-headquartered mobile payments and ride-hailing firm Grab received another US$200m of funding from backers including STIC Investments, taking its total funding to date to almost US$10bn going back across 29 reported rounds since 2013. That total could rise even further very soon, with Chinese e-commerce, retail and internet giant Alibaba reputedly in talks to invest a further US$3bn in the company.
Grab currently lets users book rides, meals and hotels and make payments across South East Asia, including Indonesia, Malaysia, Cambodia, Myanmar, Thailand, Vietnam and the Philippines. While its ride-hailing business was hard hit by Coronavirus travel restrictions, the opposite was true for GrabPay electronic wallet. Payment volumes are estimated to have almost doubled in Malaysia during 2020 after the Malaysian government implemented a movement control order in March to combat the threat from the Coronavirus pandemic for example. Filippo Giachi, DOCOMO Digital vice president for APAC, the Middle East and Africa, analyses Grab in more detail in his blog “Government Incentives Boosting Malaysian eWallet Adoption” published last September.
Big backing for Stripe emulators
CB Insights also noted a trend which sees international payments players emulating the API-focussed business models targeting online businesses which have already proved so successful for the likes of Stripe and Square. That includes dLocal, an Uruguayan global payments platform which serves customers in Latin America (Argentina, Brazil, Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru and Uruguay itself) as well as countries in Asia (Bangladesh, China, India and Indonesia), the Middle East and North Africa (Egypt, Morocco, Nigeria, South Africa and Turkey).
Founded in 2016 dLocal achieved the unicorn status attributed to privately held firms valued at over US$1bn after it received US$200m of growth equity from investors including General Atlantic and Addition in Q320. Specifically designed to handle online payments in emerging markets, it facilitates payments through multiple sources. It not only integrates online banking and credit/debit cards apps but also eWallets from telcos including Airtel, Millicom (Tigo), MTN, Safaricom and Vodacom (M-Pesa) as well as mobile payments in Nigeria. The company also handles country-specific cash collection payment methods through partnerships with local acquirers and does not need its merchant customers to have a bank account.
Another unicorn is Netherlands payment services provider Mollie, last valued at US$1bn and recently in receipt of US$106m in Series B funding. Founded in 2004 Mollie initially bootstrapped its product development and subsequent growth, with its first round of funding (US$29m) only surfacing in 2019. It offers an API-based method of integrating payments options into a website or app for small to medium-size businesses (SMBs), counting around 100k merchants as customers predominantly in the adjacent territories of the Netherlands, Belgium and Germany.
In a recent media interview with TechCrunch, founder Adrian Mol suggested the company is on course to process almost US$12bn of transactions in 2020, double the same amount in 2019, with its market in Germany growing 1,000%.
Digital payment volumes will persist post-pandemic
That investment in payments companies specifically has held up whilst backing for other categories of fintechs has declined may stem from the surge in online shopping during pandemic lockdown restrictions that saw many physical stores temporarily closed. The same trend has also precipitated a decline in the use of cash, and a parallel increase in contactless transactions for goods and services which has boosted the volume and value of purchases that digital and mobile payments companies have processed this year.
While the rate of that growth may tail off once lockdowns across the world are lifted, and economies return to something resembling a sense of normalcy, some consumers inevitably forced to change their behaviours this year will continue to use mobile payments and online shopping post-pandemic. VCs anticipate that long term shift in consumer behaviour and are happy to subsidise payments companies accordingly.
[i] Alibaba in talks to invest $3 billion in Grab – Bloomberg, Reuters, 14th September 2020
[ii] Dutch payments startup Mollie raises $106M at $1B+ valuation, TechCrunch, 7th September 2020.