Mobile PoS startups which enable merchants to conduct transactions and sometimes manage their businesses through mobile devices such as smartphones and tablets have raised $340M across 34 deals in the last 4 quarters. Deal growth at the seed and Series B stages suggests increased competition at the early stage and a healthy follow-on investment market for those with early traction.
Overall, deal activity has remained flat YoY and funding was actually down 7.5% as a result of the Q3 2012 $200m series D financing for Square, led by Citi Ventures, Rizvi Traverse Management, and Starbucks.
Series B Leads Funding Growth
The sector saw series B financings soar 200% YoY with the likes of iZettle, Vend and Flint Mobile getting funded. In the same time period, seed-stage financings grew 80% YoY. The mobile PoS space remains in its early days as evidenced by the fact that 95% of deals are occurring in Series B or prior. Interestingly, when companies get past the Series B, the round sizes step up materially as evidenced by the average and median deal sizes below in the hundreds of millions of dollars.
Corporate Investors Active in Mobile PoS Investing
Over the past two years, a diverse array of corporate investors have been actively investing in mobile PoS companies. Notable corporate investors include Ebay, Starbucks, Verizon Ventures, Citi Ventures, Mastercard, and American Express Ventures. The diversity of the players is notable. While the expected credit card companies and payment networks are represented, there are also telecoms, tech and retail companies all attacking the space. As we’ve highlighted before, the payments landscape is becoming increasingly messy and the mobile PoS investors underscore that.
21% of deals in the last year have involved corporations. Some of the notable mobile PoS deals in which they’ve participated include:
Square (Citi Ventures, Starbucks Corporation) – Facilitates transactions between buyers and sellers with its free credit card reader, while also using Square Register to serve as a full point-of-sale system for businesses.
iZettle (American Express Ventures, Mastercard Worldwide) – Provides a free mobile app and mini chip-card reader that lets anyone make or take payments anytime, anywhere.
SumUp (American Express Ventures) – Provides merchants with a free card reader connected to a mobile device and an app to enter the amount to be transferred.
Flint Mobile (Verizon Ventures) – Develops an app that enables users to process payments using only their phone without any additional card readers or dongles, through patented technology.
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