GoCardless plans to capitalize on an emerging trend in finance called “open banking” and expand into e-commerce. The firm is the latest in a spate of European start-ups to have raised substantial funding from U.S. investors.
British financial technology start-up GoCardless is one step closer to reaching a $1 billion valuation thanks to accelerated demand for digital payments during the coronavirus pandemic.
GoCardless said on Thursday that, it had raised $95 million in a fresh investment round led by the venture capital arm of Bain Capital. The new funding values the company at $970 million, meaning it’s inches away from so-called “unicorn” status.
GoCardless says it saw revenues climb 46% year-on-year in November, without disclosing an actual revenue number. According to a U.K. Companies House filing, GoCardless’ losses almost doubled in 2019, to £27.3 million ($37 million), while its revenues grew by 31% to £29.3 million.
The firm now has 55,000 customers, including U.K. investment service Nutmeg and peer-to-peer lender Funding Circle, processing $18 billion of payments each year in over 30 countries.
With the additional cash, GoCardless plans to capitalize on an emerging trend in finance called “open banking,” which aims to open up precious banking data and payment services to fintech firms and other approved third parties.
The open banking movement has been propelled forward in the U.K. and EU thanks to a new law known as the Payment Services Directive, or PSD2. Proponents say the rules which require consumers’ consent will ultimately increase competition and transparency in the industry.
Founded in 2011, GoCardless processes direct debit payments recurring transactions withdrawn directly from a customer’s bank account for things like subscriptions, invoices and installments for its business clients.
The London-based company has won backing from top investors including the venture capital investment arms of Alphabet and Salesforce.
GoCardless is also developing open banking technology for payments. It hopes to combine its payments platform with the ability to take money from customers’ bank accounts instantly, bypassing costly credit card networks like Visa and Mastercard and helping the firm expand into e-commerce.
When interviewed, the CEO and co-founder Hiroki Takeuchi said, “It’s been a strange round in some ways because it wasn’t something we’d planned. We thought that we would raise money next year.”
“2020 has been a tumultuous year with a lot going on,” he added. “But we’ve actually been growing through this period quite successfully and showing a lot of business resilience in what we’ve built.”