VCs Cashing In On Payments Companies

Thanks to a convergence of trends–smartphone penetration, growing virtual goods transactions, short-range wireless technology and a heightened demand for electronic payments worldwide–it is becoming easier for consumers to part with their cash.

And VCs are noticing.

In the last year, venture firms have invested more than $440 million in companies developing technologies and services tied to payments, billing and consumer lending, according to Thomson Reuters (publisher of this blog) and as reported in the latest issue of Venture Capital Journal by Senior Reporter Joanna Glasner.

Subscribers can click here to read the VCJ story: “There’s Money in Payments.”

What’s more, deal flow shows no signs of slowing.

“On the transaction side, there are almost endless opportunities and challenges involving mobile payment, and the integration of loyalty and rewards programs and virtual gift cards,” Lewis Gersh, managing partner at Metamorphic Ventures, tells Joanna.

And for those with money to put to work, he says, “the quality and quantity of seed stage deal flow is like nothing that’s ever existed.”

Among some notable transactions in the ecommerce space:

Aria Systems, which provides a software service for billing and subscription management and has raised $53 million since 2007 from Hummer Winblad Venture Partners, InterWest Associates and Venrock.

Bill.com, which develops online payment systems for electronic invoices. In 2009 and 2010, the company raised $18 million from DCM, August Capital, Emergence Capital Partners, JAFCO Ventures and Total Technology Ventures.

Lending Club, which operates a person-to-person lending network, has raised $54 million since 2007 from Bay Partners, Canaan Partners, Foundation Capital, Morgenthaler Ventures and Norwest Venture Partners.

PlaySpan, which provides payment system for the gaming industry, raised $46 million from Menlo Ventures, Easton Hunt Capital Partners, Novel TMT Ventures, STIC Investments and Vodafone Ventures. Visa bought the company in February for $190 million.

Wonga, which provides short-term loans online, raised a $117 million round in February from Accel Partners, Balderton Capital, Dawn Capital, Greylock Parners, Meritech Capital Partners and Oak Investment Partners.

A full table of startups in the space are in the story.

Not a VCJ subscriber? Click here for a free trial.

And if you want to chat more about the ecommerce space or another hot sector of interest, contact VCJ Editor-in-Charge Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com.

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