As the world waits for the $65 billion payments tech giant Stripe to go public, a wave of smaller startups continues to enter the market to acquire more payments businesses. In one of the latest developments, a Danish company Flatpaywhich creates payment solutions for small and medium-sized physical merchants such as stores, restaurants and salons, has raised €45 million ($47 million), led by Dawn Capital.
Flatpay had raised just under $21 million before this latest Series B, and with this new funding, it’s now valued at over $100 million. The company plans to use the money to expand into new markets in Europe and create more products alongside the points of sale and card terminals it sells today. Some of these products may include artificial intelligence, but only as an enabler of certain features, rather than as a core service, said Flatpay CEO Sander Janca-Jensen.
“We were able to raise money without mentioning the buzz word of AI,” he said. “Seems to be rare these days.”
This €45 million is a strong Series B in the current market in Europe, especially considering the size of the startup. Founded in 2022, Flatpay currently has just 7,000 customers in Denmark, Finland and Germany.
Even with its revenue and customer base growing at a monthly rate of 15%, Flatpay’s business is just a drop in the commercial ocean.
There are more than 24 million SMEs in Europe; terminal points of sale in the area exceed 17 million; and there are hundreds of other payment services — including Stripe, Adyen, SumUp and PayPal, as well as smaller players like SilkPay — all targeting the same customers as Flatpay.
But investors believe there’s plenty of potential in the startup, enough to bet early and big, even in the current economic climate.
Janca-Jensen, who co-founded the company with Rasmus Busk, Rasmus Hellmund Carlsen and Peter Lüth, said the gap identified in the market was a lack of very simple solutions for marketers who want the convenience that technology can provide , without the more difficult aspects that come with it, such as troubleshooting, understanding the intricacies of billing, and integrating products into their business flow.
The startup’s approach to addressing that gap comes in three ways, he said. On the customer side, Flatpay works with a set customer size: only merchants processing over €100,000 per year, and customers cannot be multi-location chains or franchises. Janca-Jensen said she routinely turns away clients if they don’t meet those parameters.
On the technology side, it has matched the size of its target customer with the economics of its payment solutions to arrive at very basic, flat fees (hence the startup’s name) of 0.99% for terminal transactions and 1 .49% on POS purchases. Next, Flatpay does not set a minimum fee for individual transactions and does not charge fees if customers pay with international cards. Janca-Jensen admitted that her model means Flatpay sometimes loses money on transactions, but overall it lowers the bar for use and encourages more spending and overall revenue for the company.
Perhaps most interestingly, on the sales side, despite its focus on improved technology, Flatpay only sells through live sales visits. No online sales (although there are experts to help arrange these in-person sales visits and manage support), no virtual visits and no onboarding plan.
Janca-Jensen said he and his co-founders developed a love for direct sales in the field when selling home alarm systems in a previous life.
As with payment hardware and software, security can be a tough sell to customers. Flatpay found that the only way it could reliably close deals was to sell in person. And the only way salespeople can sell personally is to understand the products very well. “You have to get salespeople to understand the product well enough to explain it well to buyers. It sets a high standard for how simple your product should be,” said Janca-Jensen. “We like this challenge.”
About half of Flatpay’s 200 employees are on the sales side, he said, split between those who help arrange sales visits and manage support and those who visit customers in person. Typically, they are recruited from other retail roles rather than software sales.
“We’re moving away from SaaS account executives and fintech people,” he said. In his opinion, SaaS sales are so easy that people working in this field are “too lazy and complacent” to make the grade for field sales.
So far, in the three markets where Flatpay operates, the goal has been to hire very local sellers who understand the nuances of their respective markets. That seems to raise a lot of questions about how well it can scale over the long term, but Janca-Jensen brushes those concerns aside and investors are just as bullish.
“The field sales model, when done well, works. You can locate and deploy teams in a cost-effective way to explain on a local basis why a product makes sense,” said Josh Bell, general partner at fintech-focused Dawn Capital.
He pointed out that iZettle – another Dawn-backed company – was also one of the first movers to use field sales to sell its fancy new technology to non-technical customers. “They were winners, but even they never did as well as Flatpay does. The payouts are huge and Flatplay has barely touched on the opportunities.”
Denmark’s Seed Capital also participated in this round, along with other unnamed investors.
