Similar to a venture capitalist, smaller startups are continuously entering the market to capture additional payments business, while the highly anticipated IPO of Stripe, a $65 billion payments tech giant, is awaited by the world. Flatpay, a Danish company specializing in payment solutions for small and medium-sized physical merchants such as shops, restaurants, and salons, recently secured €45 million ($47 million) in funding. Dawn Capital led the funding round.
Flatpay had previously secured nearly $21 million in funding, but with the recent Series B round, its valuation has soared to over $100 million. The company intends to utilize the funds to expand its presence in European markets and enhance its product portfolio, which includes point-of-sale and card terminals. According to Flatpay’s CEO, Sander Janca-Jensen, some of these products may incorporate AI, but it will primarily serve as a tool to enhance specific features rather than being the main focus.
“We have successfully secured funding without explicitly referencing AI,” he stated. In today’s times, it appears to be quite uncommon.
The €45 million funding round is quite impressive, particularly given the size of the startup and the current market conditions in Europe. Established in 2022, Flatpay currently serves a modest customer base of 7,000 across Denmark, Finland, and Germany.
Despite experiencing a monthly growth rate of 15% in both revenues and customer base, Flatpay’s business is relatively small compared to the vast merchant ocean.
Europe is home to more than 24 million SMBs, with more than 17 million point-of-sale terminals in the region. Additionally, there is a wide range of payment services available, such as Stripe, Adyen, SumUp, PayPal, and smaller players like SilkPay. These services all cater to the same customer base as FlatPay.
Investors see great potential in the startup, enough to make an early and confident investment, despite the current economic climate.
Janca-Jensen, along with co-founders Rasmus Busk, Rasmus Hellmund Carlsen, and Peter Lüth, identified a gap in the market. They noticed that merchants needed simple solutions that would provide the convenience of technology without the complexities of troubleshooting, understanding charges, and integrating products into their business flow.
According to him, the startup implements three different methods to address that gap. Flatpay exclusively partners with a specific type of customer: merchants who have an annual processing volume of over €100,000. However, it is important to note that FlatPay does not work with multiple-location chains or franchises. Janca-Jensen stated that it frequently rejects customers who do not meet those criteria.
With a keen eye for business opportunities, this startup has carefully aligned its payment solutions with the needs of its target customers. It offers straightforward and affordable pricing, charging only 0.99% for terminal transactions and 1.49% for POS purchases. Flatpay does not impose a minimum charge for single transactions, and it also waives fees for customers using international cards. Janca-Jensen acknowledged that its model may result in occasional losses on transactions, but it ultimately simplifies usage and promotes increased spending and overall revenue for the company.
What’s particularly intriguing is that, when it comes to sales, Flatpay exclusively relies on in-person visits to close deals, despite its emphasis on efficient technology. We do not offer online sales at this time. However, we have dedicated specialists who can assist with arranging in-person sales visits and providing support. We currently do not have any plans to introduce virtual visits.
Janca-Jensen mentioned that he and his co-founders developed a strong preference for direct field sales during their previous time selling home alarm systems.
Similar to an investor, convincing customers about the importance of security can be quite challenging. Flatpay discovered that face-to-face sales were the most effective method for closing deals. To effectively sell in person, salespeople must possess a deep understanding of the products. It is crucial to ensure that salespeople have a deep understanding of the product so that they can effectively communicate its value to potential buyers. Janca-Jensen emphasized the importance of maintaining high standards for your product’s simplicity. “We are intrigued by that challenge.”
Approximately half of Flatpay’s workforce consists of sales personnel, divided between individuals who facilitate sales visits and provide support and those who personally meet with customers. Typically, Flatpay hires individuals from various retail positions instead of software sales.
“We avoid individuals in the SaaS account executive and fintech industries,” he stated. Individuals working in the SaaS sales industry may lack the drive and ambition required for field sales, according to his perspective.
Up until now, Flatpay has focused on hiring salespeople who have a deep understanding of the specific markets they operate in. The local expertise has been critical to their success in these three markets. That raises some questions about its long-term scalability, but Janca-Jensen dismisses those concerns, and investors are equally optimistic.
The field sales model, when executed effectively, can yield positive results. According to Josh Bell, a general partner at Dawn Capital who specializes in fintech, it is possible to efficiently establish and deploy teams in different locations to effectively communicate the value of a product on a local level.
He emphasized that iZettle, a Dawn-supported company, pioneered the use of field sales to promote its innovative technology to non-technical customers. “They were successful, but no one has achieved the level of success that Flatpay has.” Payments are a massive industry, and Flatplay has only scratched the surface of its potential.
Denmark’s Seed Capital, along with other undisclosed investors, also took part in this funding round.
