European point-of-sale provider SumUp has acquired loyalty startup Fivestars for $317 million as part of its plans to permeate the US market. SumUp, based in London, United Kingdom, competes with businesses like Square, PayPal, etc. and provides card readers and associated technology to small businesses.
The company’s latest acquisition Fivestars provides loyalty, marketing, payments and other associated services to small businesses. The company is based in San Francisco, USA and has 70 million individuals and at least 12,000 businesses using its service. The deal will be completed in a combination of cash and stock. With Fivestar, SumUp plans to expand its services and permeate the US market.
Fivestars was originally incubated in Y Combinator and later got backing from venture capitals like Salt Partners, Light speed, Menlo Ventures, HarbourVest Partners, etc., After its Series D funding round of $52.5 million last year October, it has a post-money valuation of $285 million.
SumUp started out in 2017 and was one of the many “small” competitors of Square. The company has grown from when it first started out and expanded its business into what it is today. It provides services such as online payments, invoicing, etc., that small businesses require to thrive. The company boasts of 3 million merchant users in 34 markets and this figure is expected to continue to grow.
Acquiring Fivestars will help SumUp achieve its goals of penetrating the US market with full force. SumUp plans to leverage Fivestars which is a popular product in the US to launch its presence in the country. SumUp is not entirely new in the US, it just isn’t popular in the US and this is what the company is trying to change with Fivestars. Fivestars drives more than $3 billion in sales and 100 million transactions per year. SumUp’s acquisition will see Fivestar signing its existing customer base to SumUp’s own card readers and other sales technology. Fivestars’ brand will be kept for now with SumUp working to integrate its Fivestar’s products with its platform.
The acquisition entails Fivestars’ co-founder and CEO Victor Ho, staying on, along with the rest of the company’s SF-based team. “We founded Fivestars to give small businesses the opportunity to thrive in the digital economy and over the years, we’ve achieved just that. Understanding that SumUp shares this mission, it was an easy decision to partner, and together, we look forward to supporting a retail market that champions small business success”, he said.