Flatpay rings up $47M to target smaller merchants with simple payment solutions

As the world waits for $65 billion payments technology giant Stripe to go public, a wave of smaller startups continues to flood into the market to grow its payments business. In one of the latest developments, Danish company Flatpay, which creates payment solutions for small and medium-sized brick-and-mortar merchants like stores, restaurants and salons, has raised 45 million euros ($47 million) under the management of Dawn Capital.

Flatpay had raised just under $21 million before this latest Series B, and with this new funding, we understand that its value is now well over $100 million. The company plans to use the money to expand into new markets in Europe and to develop more products alongside the point-of-sale and card terminals it sells today. Some of these products could involve AI, but only as an enabler of certain features, rather than as a core service, said Sander Janca-Jensen, CEO of Flatpay.

“We were able to raise money without mentioning the buzzword of AI,” he said. “That seems to be rare these days.”

45 million euros is a solid Series B in the current market in Europe, especially considering the size of the startup. Founded in 2022, Flatpay currently only has 7,000 customers across its current footprint in Denmark, Finland and Germany.

Even with 15% monthly growth in revenue and customer base, Flatpay’s business is just a drop in the ocean.

There are more than 24 million SMEs in Europe; there are more than 17 million point-of-sale terminals in the region; and there are not just dozens but hundreds of other payment services – they include Stripe, Adyen, Sumup and Paypal down to much 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 hard, even in the current economic climate.

Janca-Jensen, co-founder of the company with Rasmus Busk, Rasmus Hellmund Carlsen and Peter Lüth, said the gap Flatpay saw in the market was the lack of truly simple solutions for merchants who want the convenience that technology can bring, without the difficulties. the aspects that come with it, such as troubleshooting, understanding the intricacies of fees, and integrating products into their commerce flow.

The startup’s approach to solving this problem comes in three ways, he said. On the customer side, Flatpay works with a defined customer size: only merchants that process more than €100,000 per year, and customers cannot be chains or multi-location franchises. Janca-Jensen said she routinely rejects clients if they don’t meet these parameters.

On a technological level, it has adapted the size of its target customer base to the unit economics of its payment solutions to offer a very basic flat fee (hence the name of the startup) of 0.99% for transactions on terminals and 1.49% for purchases at points of sale. Flatpay therefore does not set minimum fees for single transactions and does not charge fees if customers pay with international cards. Janca-Jensen admitted that his model means Flatpay sometimes loses money on transactions, but it lowers the usage bar overall and encourages more spending and overall revenue for the company.

Perhaps most interestingly, on the sales side, despite its focus on streamlined technology, Flatpay only sells via live sales visits. No online sales (although there are specialists who will help set up these in-person sales calls and manage support), no virtual tours, and no introductory plans either.

Janca-Jensen said he and his co-founders developed a penchant for direct field sales when they sold home alarm systems in a previous life.

As with payment hardware and software, security can be a tough sell to customers. They discovered that the only way to reliably close deals was to sell in person. And the only way salespeople could sell in person was if they really understood the products. And the only way they could really understand the products well was if the company simplified them itself.

“You have to get sellers to understand the product well enough to explain it well to buyers. It sets high standards for the simplicity of your product,” Janca-Jensen said. “We like this challenge.”

Currently, about half of Flatpay’s 200 employees work on the sales side, he said, split between those who help organize sales calls and those who manage support; and those who visit customers in person. Typically, they are recruited into other retail roles rather than software sales.

“We avoid SaaS account managers and fintechs,” he said. SaaS sales is so easy, he says, that people who work in the field are “too lazy and complacent” to pass the field sales grade.

So far, in the three markets where Flatpay operates, the goal has been to recruit very local sellers who understand the nuances of their respective markets. This seems to raise many questions about how this may develop in the long term, but Janca-Jensen dismisses this concern and investors are equally optimistic.

“The field sales model, when executed well, works. You can cost-effectively locate and deploy teams to explain at a local level why a product makes sense,” Josh Bell, a general partner at Dawn who focuses on fintech, said in an interview.

He pointed out that iZettle – another Dawn-backed company – was also one of the first to use field sales to sell its sophisticated new technology to non-technical customers. “They were winners, but even they never did it as well as Flatpay. The payouts are huge and Flatplay only received a fraction of the opportunity.

Danish company Seed Capital also participated in this round, alongside other unnamed investors.