Ebury nabs £350M for foreign exchange and currency services for SMEs, Santander takes 50.1% stake

As the UK continues on its slow march to leave the European Union, a London-based startup that enables companies to work internationally has raised a huge round of funding from a strategic backer to expand its business. Ebury, which provides foreign exchange, money transfer and other currency services to small and medium businesses and their banking partners, has picked up £350 million (about €400 million, or $452 million) led by Spanish banking giant Santander. With the deal, Madrid-based Santander will become a majority shareholder at 50.1% but notes that Ebury will continue to operate as an independent entity.

Ebury and Santander said that the funding will be used to support Ebury’s growth, and specifically to scale its customer base in Latin America and Asia, while at the same time bolting on more modern services to Santander’s offerings as it seeks both to expand its revenues from existing customers and take on new ones.

Santander said that it has 4 million SME customers globally, and currently more than 200,000 of them do international business, while Ebury is already operating 19 countries and covers 140 currencies, with annual revenue growth of 40% in each of the last three years.

But putting to one side 4 million businesses, even providing services to 200,000 customers would be a big step up for Ebury: the company said that last year it processed £16.7 billion in payments for just 43,000 clients.

Santander said that its investment gives it a 50.1% stake in the company, but it is not disclosing total valuation. On a straight percentage, it would work out to about £700 million, or $902 million, but it sounds like the deal includes both primary and secondary investment — “£70 million will be new primary equity (approximately €80 million) to support Ebury’s plans to enter new markets in Latin America and Asia,” the companies note — and that could change the numbers. Santander is optimistic and said it expects a return on its invested capital in Eubury of higher than 25% in 2024.

Ebury’s existing investors and co-founders and management will also invest in the transaction. Past backers include 83North (formerly Greylock Israel) and Vitruvian Partners, among others. 

Founded in 2009, it has to date raised $134 million.

Services that Ebury currently provides include currency transfer and exchange, but it looks like there will be  more down the line. Just last month, Ebury announced that it had acquired another fintech called Frontierpay, which specialises in international payroll solutions. The deal is still going through regulatory approavals.

Many have lamented the fact that startups out of Europe find it hard to scale and grow and need to look to markets like the US for that kind of funding and support — often relocating in the process. Fintech is one of the big areas that bucks this trend.

Adyen built and still operates its successful online payments business out of the Netherlands; Revolut, Monzo and a wave of other so-called ‘challenger banks’ are revisiting what it means to provide banking services to consumers and businesses; and TransferWise — itself a major player in currency transfer services focusing both on individuals as well as businesses — are among the many that have scaled internationally out of Europe and have valuations in the billions.

Indeed, it’s competition from the likes of TransferWise that may have spurred Santander to invest in Ebury.

If bringing Ebury’s technology to the Santander platform will give the legacy bank a better way of competing in a market that’s seeing a lot of challengers at the moment, it also gives Ebury a stronger underpinning for those skeptical of doing business with a newer startup.

“Combining a big bank with nimble fintech means we can offer our clients the best of both worlds: they can benefit from our technology and high- quality service safe in the knowledge that they are counterparty to one of the world most important financial institutions,” said Juan Lobato and Salvador García, co-founders of Ebury, in a joint statement. “It is an exciting time for Ebury, we have just completed our first acquisition, and the new capital from Santander and our existing shareholders will allow us to invest in new ways to serve SMEs trading internationally and continue the growth in our business while keeping our entrepreneurial culture.”

Santander is not a stranger to making strategic investments in financial technology startups to grow its business, specifically by integrating or co-marketing those services alongside its own. It made an early strategic investment in Sweden’s iZettle, a Square competitor, that brought the startup into Latin America, and specifically as a co-provider of services to Santander’s customers in the region. Although it looked like iZettle could eventually get gobbled up by Santander, in the end, it was acquired by PayPal for $2.2 billion.

As with the iZettle investment, the focus for Santander here is on providing more services for SMEs, a huge sector that is fragmented and often overlooked and underserved against the bookends of mass-market consumer services and high-touch, high-end large enterprise services. The gap in turn becomes an opportunity.

“Small and medium-sized businesses are a major engine of growth around the world, creating new jobs and contributing up to 60% of total employment and up to 40% of national GDP in emerging economies,” said Ana Botín, Group Executive Chairman of Banco Santander, in a statement. “SMEs are becoming increasingly global and Santander is the best positioned bank to play a leading role to help them access global trade finance. By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates.”

Source. TechCrunch, Ingrid Lunden, November 4, 2019 

 

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Brazil’s RD Station Nets $50M In Series D Funding To Scale SaaS With SMBs

Brazilian digital marketing startup RD Station has raised a $50 million Series D led by Silicon Valley-based Riverwood Capital.

RD Station, which is focused on SMBs in emerging markets, claims the round marks the largest funding round raised by a Latin American company in the SaaS (software-as-a-service) space.

TPG Growth, DGF Investimentos, RedPoint Eventures, Astella Investimentos, and Endeavor Catalyst also participated in the round. The new financing brings RD Station’s total venture raised to about $90 million, according to CEO and co-founder Eric Santos. It last round was a $19.2 million Series C led by TPG Growth in 2016.

Founded in 2011, RD Station has more than 700 employees (compared to about 500-550 people at this time last year) and 13,000 customers in 20 countries. Its headquarters (and the majority of its staff) are in Florianópolis, located in the southern part of Brazil, but the company also has offices in Sao Paulo, Bogota, Mexico City, and San Francisco.

“Most SaaS companies in the world ignore the SMBs, especially in emerging markets, due to difficulties with economics,” Santos said. RD Station has worked to be able to provide an AI and machine learning-driven solution that is “affordable” for smaller businesses yet can still help them “grow in a predictable and sustainable manner.”

While the company declined to disclose its annual recurring revenue (ARR), Santos said it has “basically grown [its ARR] by triple digits on average year-over-year in the last four years,” with the exception of last year.

“Of course as you grow, it gets harder to produce triple digit increases,” Santos points out.

In a phone conversation today, Santos told me that the company plans to use the money in part to continue its expansion in Colombia and Mexico. It also plans to invest in R&D to improve its product and naturally, as do most just-funded companies, grow its headcount. Last year, the company acquired another startup, Plug CRM, so that it could incorporate a CRM product into its platform. The startup now has two products: RD Station Marketing and RD Station CRM. It also works with about 100 other SaaS companies which integrate RD Station’s product, Santos said.

“Over the years we have become the leading marketing automation vendor in Brazil by far,” Santos said. “And we believe that we have a very differentiated competitive advantage in a market like Brazil want to replicate that in other emerging markets.”

It seems that investors like what they see.

In a press release, Joaquim Lima, the Sao Paulo-based managing director of Riverwood Capital, said his firm believes RD Station “has enormous growth potential” both in Brazil and globally.

The deal is the latest in a number of Latin American-focused investments for Riverwood Capital.  In April, we covered the news that the firm was the sole investor in a $20 million Series B raised by another Brazilian SaaS and SMB-focused startup, Omie. It’s also previously backed Brazilian ride-sharing startup 99 and Mandic, among others.

Latin America, as a whole, is increasingly attracting global investors. This deal is just the latest example of a growing trend in the global VC market. Just last month, Silicon Valley venture firm TCV confirmed it led a $400 million round for Brazilian fintech startup Nubank, marking that firm’s first “significant” investment in Latin America.

Brazil is by far the largest recipient of funding in the region, according to LAVCA, the Association for Private Capital Investment in Latin America, which found that venture funding in the country exploded in 2018 to $1.3 billion, representing nearly two-thirds of all venture money raised in Latin America as a whole last year. That was 52 percent more than the $859 million invested in 2017, and a staggering 369 percent increase from the $279 million raised in 2016.

Source. Crunchbase News, Mary Ann Azevedo, August 16, 2019

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Nowports raises $5.3 million to become Latin America’s digital shipping answer to Flexport

Nowports, a developer of software and services to track freight shipments from ports to destinations across Latin America, has aims to become the regional answer to Flexport’s billion-dollar digital shipping business.

Almost 54 million containers are imported and exported from Latin America each year, and nearly half of them are either delayed or lost due to mismanagement.

Nowports is pitching shippers on its digital management software to keep track of each container, and has signed on a number of leading venture capital firms to fulfill its mission.

The Monterrey, Mexico-based company raised $5.3 million in its seed round of financing. The round was led by Base10 and Monashees, with participation from Y Combinator and additional investors like Broadhaven, Soma Capital, Partech, Tekton and Paul Buchheit.

“In Nowports we saw a very strong combination: well prepared and ambitious team using technology to help thousands of customers to improve their importing and exporting processes. By adding efficiency, reliability, and transparency to change a multi-billion dollar industry, Nowports has been able to attract many clients that saw significant improvements in their daily routines by using the solution” said Caio Bolognesi, general partner from Monashees, in a statement.

The company said it would use the money to expand into new markets, grow its team and integrate with more companies involved in the (very fragmented) Latin American logistics industry. It’s a market that needs a range of better logistics technologies.

“Even though over 90% of the world’s trade is carried by sea, the most cost-effective way to move goods en masse, there has yet to be a solution that’s able to connect suppliers, customs brokers, carriers and transportation companies to provide an efficient and reliable service,” said Maximiliano Casal, founder and chief executive of Nowports, in a statement. “This is why we launched Nowports, combining our 10 years of industry expertise to fill this void and are currently working with over 40 customers in the region and growing.”

The company now has offices in Chile and Uruguay, and is planning to expand to Brazil, Colombia and Peru.

“With platforms, algorithms with AI and integrations, our platform allows companies to take control of their shipments and plan and predict the best timing to move the freight based on the needs of their own company,” said Alfonso De Los Rios, founder and CTO of Nowports.

As the company looks to expand, it has a strategic road map it can follow in the growth of Flexport, the Silicon Valley startup that has become a billion-dollar business by applying technology to the outdated shipping industry.

The two co-founders of Nowports met at a program at Stanford University, with De Los Rios hailing from a family with deep ties to the shipping industry. He and Casal linked up and the two began plotting a way to make the deeply inefficient industry more modern and transparent. To familiarize himself with the market for which he’d be developing a technology, Casal worked in a freight forwarder in Kansas City that had been operating for more than 30 years.

In all, freight providers are getting paid nearly $40 billion per year to move freight into Latin America.

“Alfonso and Max are the ideal founders we look to invest in as they are industry experts and passionate about evolving the industry using technology and automation,” said Adeyemi Ajao, general partner from Base10. “We are proud to be investors in Nowports alongside our friends at Monashees and look forward to watching the company’s continued growth.”

Source. Techcrunch, Jonathan Schreiber,  June 20, 2019

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