SumUp paid $317M for Fivestars to turn card readers into a US SMB platform

Mobile card readers and merchant services for small businesses — a European-based competitor to Square and PayPal/iZettle.

That buying Fivestars' loyalty network could turn SumUp's card-reader business into a US small-business commerce platform

Founded in London in 2012 as one of the many Square clones emerging in Europe while Square was still US-only; since diversified into online payments, invoicing and other merchant services, reaching more than 3 million merchants across 34 markets.

In October 2021 SumUp acquired Fivestars — a Y Combinator-incubated loyalty, marketing and payments startup backed by Lightspeed, DCM, Menlo Ventures and HarbourVest — for $317 million in cash and stock, above its $285 million Series D valuation from October 2020. Fivestars served about 12,000 businesses and some 70 million consumers, driving more than $3 billion in sales and 100 million transactions a year.

SumUp's organic US presence was thin, and a homegrown loyalty-and-marketing stack would have taken years to build.

Fivestars' 12,000-merchant base was a ready-made distribution channel for SumUp's readers and sales technology.

Timing played offense: merchants were reopening after the pandemic, and SumUp had nearly $900 million of fresh debt capital to deploy.

The $317 million price was only modestly above Fivestars' last private valuation, reflecting a pandemic-squeaked seller.

Buying the local customer base beats building it: an entrant with a thin US footprint paid about 1.1x book for 12,000 merchants and a loyalty network to sell into.

As of the October 2021 announcement, SumUp planned to retain Fivestars' branding while integrating its loyalty, marketing and payments products more closely with SumUp's own card readers and merchant services across its 34 markets.