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VC investment in payments sector reaches all-time high

09 December 2014  |  8406 views  |  0 Digital Arrow chart

Venture capital investment in European payment companies is at an all-time high, as a shift in consumer behaviour to online and mobile channels blows the market wide open for smart startups.

Nascent payments and transaction processing companies in Europe raised $417.9 million through 26 deals in the nine months to September, more than seven times what was raised during the same period last year, according to figures from data provider Dow Jones VentureSource, reported by the Wall Street Journal.

The figure is the highest annual amount raised since VentureSource started recording data in 2000, surpassing the dotcom boom high water mark of $250.2 million raised in 2000.

In the first quarter alone companies raised $216.8 million through 12 deals, compared with $2.97 million through two deals the same quarter a year earlier. Among the biggest beneficiaries are Swedish online payments company Klarna, Powa Technologies and iZettle, which between them raised $266.2 million between May and November this year.

Investment in payments companies grew at a faster pace in Europe than globally in the nine months to the end of September, according to the data. Payments and transaction companies raised $1.18 billion through 75 deals globally in the first three quarters of the year, compared with $533 million through 75 deals in the same period last year.

The boom in startup investments is being matched in M&A activity, according to figures released by investment bank Berkery Noyse in October, with the number of deals in the payments segment undergoing a 23% quarter-to-quarter increase.

Investment levels in the sector are expected to continue the upward trend into the foreseeable future, as consumer shifts to online and mobile accelerate.

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