×

Square rival iZettle raises $63 million to fund acquisition and expand

European financial technology firm iZettle has raised 60 million euros ($63.4 million) to help fund a recent acquisition and fuel expansion of its new lending product.

The Swedish start-up is a rival to U.S. firm Square, which is run by Twitter CEO Jack Dorsey.

It provides small point-of-sale terminals that connect to apps on a smartphone or tablet allowing small businesses to accept debit and credit cards. But the company has also been growing new areas of revenue and last year introduced Advance – a small business loan service. It allows companies to get access to capital from iZettle which is paid back as a percentage of the firm's daily card payments.


The 60 million euro round is made of up of equity from existing investors as well as debt funding from U.S.-based Victory Park Capital. Jacob de Geer, founder and CEO of iZettle, said the debt portion of the funding was to fuel the Advance lending product it offers.

"IZettle is moving more into becoming a one-stop-shop for commerce," de Geer told CNBC via telephone, explaining how the start-up moved from point-of-sale terminals into new products.

Advance has seen "astronomical" growth, de Geer said, after launching the product last August, but added that the company was not releasing figures as it was still a young product.


IPO ahead?

IZettle also announced the appointment of new Chief Financial Office Maria Hedengren.

"We have been going for over five years, but the company is at a stage where it's time to grow up even more, to strengthen the core management of the company, to facilitate and enable us to - in 18 to 24 months - to decide on the next step," de Geer said.

"You see consolidation going on, you see incumbents looking for ways to update their organization, the IPO market is heating up. There are so many different options we need to prepare for."

When CNBC asked if the hiring of a CFO meant iZettle was preparing to go public or be acquired, de Geer said he had not decided on the direction of the company in that sense.


Johan Jeppsson | Bloomberg | Getty Images

"There are a couple of opportunities, one could be to go public or continue to standalone, or another one could be to merge with another company. We don't have a set agenda where we want to take the company from that perspective," de Geer told CNBC.

The Swedish firm has begun to become acquisitive too. In September, iZettle bought Intelligentpos, a start-up that turns iPads into sales terminals, which targets more medium-sized enterprises. De Geer said he could not comment on any planned acquisitions but is "constantly scaling the market for complimentary services."


US entrance to rival Square?

De Geer said that iZettle hit its financial targets in 2016, without giving specific numbers as the books have not been closed. The company's main region is Europe while it also has operations in Brazil and Mexico.

Its closest rival is Square in the U.S. which offers very similar services. For now, iZettle is focused on Europe but is not ruling out expanding to the U.S. if it can meet the right requirements.

"We are keeping our eyes on the U.S. and given the pretty big change that's ongoing in terms of exchanging the old swipe terminals for chip card terminals, it would make sense to make a move into the U.S.," De Geer told CNBC.

"We have also said however, going into that market with strong competitors like Square would require significant amounts of funding but also, I think, you would need a strong distribution partner or general partner in the U.S. If we can tick those boxes we are definitely up for the U.S., but until we do that I wouldn't say it's our primary focus. We have a much smoother expansion path in Europe."