Stories of successful “bootstrapped” startups, which take no external funding, are rare in the tech world. It’s why UK payments firm Checkout.com seems to have come from nowhere.
Founded by college dropout Guillaume Pousaz in 2012, Checkout.com raised Europe’s biggest ever Series A round of $230 million in May, at a valuation of $2 billion.
The round was led by growth investors DST Global and Insight Ventures. Other backers include Singapore’s sovereign wealth fund and UK venture capital fund Blossom Capital.
Checkout.com handles payments for big firms like UK takeaway startup Deliveroo, TransferWise, Adidas, and Virgin. It’s invisible to the consumer, but the promise to companies is that Checkout.com’s technology handles the payment gateway, processing, risk and fraud assessment, and other services under one roof. Its competitors include Stripe, last valued at $23 billion, and Dutch payment firm Adyen, which went public in 2018.
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According to Checkout’s most recent financial filings, the company reported $47 million in revenue in 2017, EBITDA of $8.4 million, and a gross profit margin of 54%. These are the kinds of numbers venture capitalists dream of — but it was all done without external investment.
How has it managed to keep under the radar?
Avoiding the hype has been intentional, CEO Pousaz tells Business Insider. He says he prefers to control the growth of his business to avoid overreach.
“If you want to build a big house, you better start with a good foundation,” he says precisely. “And I think that we’ve been building the foundation for years.”
He adds: “It’s well-documented that some fintechs in Europe have grown too quickly and then have processes that don’t match how they should be.”
He won’t namecheck a company, but foreign exchange startup Revolut has been in the news for potential compliance lapses. “It doesn’t make them bad people, but I’m very Swiss. Maybe it’s the discipline of bootstrapping, I like to do things in a controlled way.”
He adds that he didn’t want to raise the full amount of $230 million, but that he was swayed by the quality of investors such as DST and Insight, neither of whom tend to write small checks. He will use the cash to boost expansion, make hires, and keep the rest on Checkout’s balance sheet.
Asked if Checkout spoke to Japanese investing giant SoftBank about investment, Pousaz confirms that he did but declines to go into further detail.
Control and discipline are evident elsewhere in Pousaz’s character. He regularly commutes to Checkout’s headquarters in London from Dubai, returning every weekend to spend time with his wife and two children.
“I see my children only on Saturdays,” he says wryly. “I’m emotionally attached to my business to the point where I don’t see the difficult side of it. My wife would probably tell you it’s very difficult.”
His life is so packed in part because of proximity to family tragedy, he says. He dropped out of college in Lausanne, Switzerland, failing to take his final exams after his father was diagnosed with pancreatic cancer. He describes that time as “foundational” and says it made he and his wife determine to live a full life and live in different places.
Checkout has taken a roundabout route to become a $2 billion company
Pousaz made his foray into payments and entrepreneurship by setting up NetMerchant in 2007, a payment firm built on white-labelled tech. This, Pousaz said, was profitable but the firm didn’t own any of its own technology. Running NetMerchant gave him the funds to pursue what would become Checkout.com, which would offer the full payments stack.
In 2009, he discovered and bought a payment firm in Mauritius which had built a payment gateway. It was a good deal — salaries for engineers on Mauritius were much cheaper than in the UK, and Pousaz began building his firm, then called Opus Payments, on a shoestring.
A change in EU regulation to encourage non-banks to get into the payments industry was a turning point for Opus. The firm doubled down in the UK, and rebranded to Checkout.com in 2012.
“In 2012 we started making a bit of money and we began hiring in the UK one by one,” Pousaz said. It would, he added, have been impossible to have built the startup from scratch in the UK, thanks to the higher average salaries.
It was around this time that Checkout.com caught the eye of venture capitalists.
Investor Ophelia Brown was a principal at Index Ventures in 2013, and sent Pousaz a cold email introducing herself. It would be another six years before Pousaz would accept a check from her.
“The people who are in venture capital obviously follow companies like ours, and have an uncanny ability to track us down,” Pousaz said. “But I have a long-term view of my business, and at the time, it didn’t make sense to raise money. That’s the reality.”
He added: “I won’t rewrite history, if we had had more money we could have grown much faster and things could have been different. But I happen to be 37, I’ll probably be doing this my entire life. The mission of the company is to build the future of banking, it’s not just payments.”
Brown, having completely forgotten her cold email of 2013, was reintroduced to Pousaz more recently by Taavet Hinrikus, cofounder of TransferWise and was finally able to make her investment.
“Anyone who has built their own business for seven years to that size and is still taking flights back and forth, and working 24 hours a day — the guy is made of something else,” she says.
Finding a mentor in LinkedIn founder Reid Hoffman
Pousaz still plans to spend his money carefully, expanding the business and hiring carefully. Late last year, he found a mentor in LinkedIn founder Reid Hoffman, who told him not to get distracted by big checks.
“He told me, ‘Hey Guillaume, you should focus exclusively on finding the right people. Don’t get impressed by all the shiny stuff, focus on making the decision of people you want to work with,'” Pousaz says.
“When I went through the fundraising process, all I was looking for was to find people very similar to employees in the company, that I want to work with, and who will get the best of me as an individual.”
He adds: “I joke about this, but I speak more to my investors than I speak to my wife.”
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Checkout’s public explosion onto the global tech scene is certainly a vindication for Europe, which has reputedly struggled to build huge tech startups but is now producing a new generation of globally ambitious entrepreneurs. It is particularly strong in areas such as payments, as demonstrated by TransferWise’s oversubscribed share sale, Adyen’s IPO, and the expansion of Monzo to the US.
For Pousaz though, there’s no time to relax. He is visibly needled when asked if he is now a billionaire after the new funding round, and says that he is in it for the long term.
“I cannot comment on this,” he says. “The truth is, it’s all paper money. That’s the reality. I am a major shareholder, but there’s really nothing you can say about this.
“At this point, we’re very far from an exit both in terms of where we are as a company, and in terms of all the things we want to do as a company.”