It’s a big day for Italy today, as payments platform Scalapay’s $497m Series B gives the country its first unicorn since the dotcom boom.
Scalapay’s Series B comes just five months after its Tiger-led Series A last September, which pushed up its valuation after its seed round in January 2021. It launched in 2019.
Scalapay says its payment volumes have increased 3x since its Series A, and although the startup won’t confirm its exact new valuation a source familiar with the matter tells Sifted that the new raise “puts them well into unicorn status”.
The fresh cash will fuel the startup’s plans to double its headcount by the end of the year, mainly with tech and engineering roles in Italy, and to finance potential acquisitions.
In another unusual case for Italian startups, Scalapay’s latest round was backed by an all-star group of foreign investors, seemingly unperturbed by BNPL stocks' current turmoil.
“Despite all the valuations turning down in the public markets for BNPL, our investors were quite bullish because we were really able to hold through that period,” CEO and cofounder Simone Mancini tells Sifted.
Tencent, no stranger to the European BNPL sector, co-led the round. The Chinese tech giant has previously backed French rival Alma, as well as Afterpay and Berlin’s Billie.
Also co-leading was New York’s Willoughby Capital, which has previously invested in Bolt. The round also included previous backers Tiger Global and Fasanara, plus new investors Gangwal, Moore Capital and Deimos.
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Did Mancini and his cofounder have much time to catch their breath between Scalapay’s Series A and B?
“In my view, the best time to do a fundraising is just after you've done your last, because you’ve raised your profile, there's a lot of exposure, and more investors get interested for the next round,” Mancini says.
They kicked off the fundraise in November and landed a term sheet in early December.
In other words, precisely when Australia’s listed BNPL stocks began to plummet by up to 96%. Since then, they’ve barely recovered — the likes of Laybuy and OpenPay are still down by over 90% from their 2020 peaks.
So what did investors see in Scalapay that gave them confidence?
“When you look at BNPL across Europe, there's only like one or two players that can do BNPL for the bigger brands — so in that regard, we don’t see much competition,” Mancini says.
The company works with slightly higher order values than other BNPL rivals, up to a potential €1,500.
And its grip on southern Europe — it has offices and works with merchants in Italy, France, Germany, Spain and Portugal — is another differentiator, according to Mancini.
When questioned whether the choice of Tencent and Willoughby was guided by a desire to move into Asia and the US, Mancini says Scalapay is focusing on “going deeper” in its current markets rather than “going broader” by expanding into new ones for now.
Focusing on checkout products — but also inventory and M&A
Scalapay doesn’t want to follow in Klarna and Afterpay’s footsteps by building out banking infrastructure for consumers. Instead, it intends to focus on building more checkout products for merchants.
It took its first step in this direction in October when it launched Magic Checkout, which provides infrastructure for SMEs to help speed up transactions. It currently has 100 merchants on board.
Mancini says the company is in talks with enterprise merchants for developing a checkout product for larger companies. Scalapay is also looking into sourcing inventory from secondary markets, so if Company A doesn’t have your size, it can still get a commission for redirecting customers to another business.
Although Mancini is keen to differentiate the startup from Klarna, they do have one big strategic priority in common. Scalapay will also use the new raise to implement its M&A strategy, something that has helped the Swedish giant increase its market share recently.
Mancini hints that there’s already an acquisition on the cards in the coming months.
“There are adjacent providers in our sector, either doing payments or other BNPL providers, so if it makes sense to acquire them to expand our reach, speed things up, and launch a new product, we absolutely will do so,” he says.