In fairy tales and ancient myths, a unicorn is most often described as a creature with magical qualities. In the modern investment dictionary, the word has a completely different meaning - a young company valued by investors at over 1 billion dollars. There are not many such businesses in our part of the world. In the Balkans you can count them on the fingers of one hand, and in Bulgaria they have been a myth, just like the animal of the same name, until very recently. Now, Bulgaria already has its first unicorn - the fintech company Payhawk was valued at 1 billion dollars after the latest investment round led by the US-based fund Lightspeed Venture Partners.
The new funding amounts to 100 million dollars, half of which is provided by Lightspeed with the participation of other new funds: Sprints Capital, Endeavor Catalyst, HubSpot Ventures and Jigsaw VC. Earlier investors in company - Greenoaks, QED Partners and Earlybird Digital East, are also participating in the round.
Last year, Payhawk attracted investment twice - 20 million dollars in April, and 112 million dollars in November. Round B was led by another US fund, Greenoaks, known for its investments in a number of fintech companies such as Robinhood, Stripe, Checkout.com, as well as Deliveroo and others. At the time, the Bulgarian company was valued at 570 million dollars.
Founded by Hristo Borissov and Boyko Karadzhov in 2018, the startup which issues corporate debit cards in combination with a cost management platform in dozens of countries, plans to use the raised capital to expand its business in Europe and the largest fintech services market - the United States. Offices will first open in Amsterdam and Paris in March. And in September, Payhawk will be opening an office in New York. For the issuance of cards and services in the United States, the company will work together with the local banking group Cross River Bank, it emerged late last year.
The new partner
Lightspeed Venture Partners is one of the famous names in Silicon Valley. Founded in 2000, the fund has so far invested in more than 1,000 companies and has more than 200 successful unit sales. Lightspeed-funded startups include Snapchat, Affirm, MuleSoft and AppDynamics. The fund is interested in various sectors, but most of all it's investing in software and technology companies. Initially, it mainly targeted companies in the early stages of development, but in recent years it has also been focusing on growing businesses. There are separate investment divisions in India and China.
"After following the Payhawk team for a year, we were extremely impressed with the pace of product development and building the most complete solution on the market in less than four years," Arsham Memarzadeh, a partner in Lightspeed Venture, said in a statement.
According to Hristo Borissov, the reason for choosing Lightspeed is "the extremely experienced team in the United States with more than 400 investments globally."
In recent months, the founders of Payhawk have been negotiating with some of the world's most famous funds, including Tiger Global. ***нещо не е наред с това изречение - So far, in addition to leading the last two rounds of financing, Lightspeed and Greenoaks have invested, as well as another US fund, QED Investors, as well as the Berlin-based Earlybird Venture Capital. The first to support Payhawk in founding the company in 2018 was Bulgarian fund Eleven, as well as business angels such as two of the co-founders of Telerik and Telerik Academy - Vasil Terziev and Svetozar Georgiev, Nedelcho Spasov, Stanimir Vassilev from Easy Asset Management, and others.
The founders of the company, Hristo Borissov and Boyko Karadzhov, are former employees of Telerik. In 2018 they decided to create a platform that would facilitate the management and control of costs in small and medium-sized companies. Among the services offered are the issuance of corporate cards in partnership with Visa, as well as automated cost accounting and real-time reporting.
The software system allows employees to quickly scan and post receipts and make reports. There is also a 3% cashback program for all payments through corporate cards, free transfers for customers in euros and pounds, as well as support for Apple Pay and Google Pay in 30 countries. Payhawk's plans include launching a credit card as well as cheap international transfers as an alternative to SWIFT-mediated payments. Among the company's customers are the Luxembourg carrier LuxAir, the German distributor of car parts ATU, the British Club Freelance, the Bulgarian Gtmhub (which has also embarked on the path to unicorn status) and others.
The company currently has offices in Sofia, Berlin, London and Barcelona, employing nearly 100 people. There are about 50 specialists in the Bulgarian office who develop the technological product, as well as the strategy of Payhawk. Borissov's plans are to use the new funding to hire about 60 highly experienced software engineers to work on developing new features and services on the Payhawk platform. Since the beginning of the year, 14 such specialists have been hired, Borissov told Capital Weekly. The plan is to have more than 300 employees worldwide by the end of this year.
In Bulgaria, the company operates through the company Payhawk, sole proprietorship of the British Payhawk Limited. The company has reported revenues of 1.2 million levs and a loss of 2 million levs for 2020.
"Our plans remain extremely aggressive. Our goal is to attract over 200 new employees, most of whom will be based in our office in Bulgaria. We are already hiring people in Paris and Amsterdam and we hope to have a well-functioning organization of about 300 employees on a global level by the end of the year," Borissov commented.
Some time ago, Borissov announced that the company's team should reach over 100 people in the US by the end of 2023 and 600 globally. Payhawk is also planning to open offices in Sydney and Singapore. In the United States, the company will definitely face its most difficult challenges to date, as the country is one of the most competitive markets in the world. Leading players are the San Francisco-based Brex and the New York-based Ramp. Both have long been unicorns, with the former having attracted nearly 1.5 billion dollars in funding so far, while the latter has received more than 800 million dollars. According to analyst firm Coherent Market Insights, the cost management platform sector will reach 18 billion dollars by 2027, with North America being the largest market with about 31% of global sales.
"The US market is one of the largest in the world and it is an important part of our future growth strategy," said Borissov.