Flatpay Secures $47M for Small Merchants Payment Solutions

Flatpay secures €45M, led by Dawn Capital, for expansion, tech, sales, and market potential.

In an attempt to gain additional payments business, a slew of smaller businesses are entering the market while everyone waits for the $65 billion payments tech giant Stripe to go public. In a recent development, Dawn Capital led the €45 million ($47 million) fundraising for Danish startup Flatpay, which develops payment solutions for small and medium-sized physical retailers like restaurants, hairdressers, and shops.

Prior to this most recent Series B, Flatpay had raised just under $21 million; with this additional funding, its valuation has increased to far over $100 million. Along with expanding into new European markets, the company intends to use the funds to develop further products in addition to its current line of point-of-sale and card terminals. According to Sander Janca-Jensen, CEO of Flatpay, some of these solutions may use AI, but solely as a means of enabling specific features rather than as a primary service.

He declared, “We have raised money without using the buzzword AI.” “It appears to be uncommon these days.”

Given the size of the firm and the current European market, €45 million represents a solid Series B investment. Just 7,000 people use Flatpay today, mostly in Germany, Finland, and Denmark. The company was founded in 2022.

Despite experiencing a 15% monthly growth in both its income and customer base, Flatpay’s business remains minuscule in comparison to other merchant platforms.

In Europe, there are over 24 million small and medium-sized businesses (SMBs); over 17 million point-of-sale terminals; and hundreds, if not thousands, of additional payment services catering to the same clientele as Flatpay, such as Stripe, Adyen, Sumup, and PayPal, in addition to smaller players like SilkPay.

Despite the current economic climate, investors believe the firm has a lot of potential and are willing to take an early and substantial stake.

Janca-Jensen, who co-founded the business with Rasmus Busk, Rasmus Hellmund Carlsen, and Peter Lüth, stated that the lack of incredibly straightforward solutions for retailers seeking the convenience of technology without having to deal with its more complex aspects—like troubleshooting, comprehending intricate charge structures, and incorporating products into daily operations—was the gap that Flatpay identified in the market. 

According to him, the business plans to close that gap in three ways. Flatpay only accepts merchants that handle more than €100,000 per year from the customer’s perspective; additionally, clients cannot be franchises or chains with multiple locations. Janca-Jensen reports that customers who do not meet these requirements often face rejection.

Regarding technology, the business has developed very simple, flat fees (thus the name) of 0.99% for terminal transactions and 1.49% for POS purchases by matching the unit economics of its payment solutions with the intended client size. Therefore, Flatpay doesn’t impose a minimum charge for lone transactions and doesn’t impose costs when clients use foreign credit cards to make payments. Although Janca-Jensen acknowledged that Flatpay’s business strategy results in occasional transaction losses, it generally lowers the bar for usage and promotes more spending and total income for the company.

The most intriguing thing about Flatpay’s sales strategy may be that, although it emphasizes efficient technology, it solely conducts in-person sales appointments. There are no plans to introduce, no virtual visits, and no internet sales (though there are experts who will help coordinate those in-person sales visits and handle support).

In a previous life, Janca-Jensen and his co-founders sold home alarm systems, which is how they became fond of direct field sales.

Similar to payment hardware and software, clients may find it difficult to offer security. Flatpay discovered that closing deals in person was the only method the company could rely on. Furthermore, a thorough comprehension of the products is the only way for salespeople to close deals in person. “You need to train salespeople so they can adequately describe the product to consumers. It establishes strict guidelines for how basic your offering has to be, according to Janca-Jensen. “We enjoy the challenge,”

He estimated that about half of Flatpay’s 200 employees are in sales, split between those who assist in setting up in-person customer visits and provide support. Usually, they hire them from other retail positions instead of software sales.

“We avoid fintech and SaaS account executives,” he remarked. He believes that because SaaS sales are so simple, those who work in the industry are “too lazy and complacent” to be successful in field sales.

Thus far, the objective in the three regions where FlatPay functions has been to appoint highly localized sales representatives who are aware of the subtleties unique to their markets. Longer-term scalability seems to raise a lot of problems, but Janca-Jensen dismisses that worry, and investors are equally optimistic.

In the right hands, the field sales model is effective. Fintech expert Josh Bell, a general partner at Dawn, stated, “You can localize and roll out teams in a cost-efficient way to explain on a local basis why a product makes sense.”

He made the point that another business that Dawn supported, iZettle, was also a pioneer in the use of field sales to introduce its high-tech products to non-technical consumers. “They were successful, but even so, they could never match Flatpay’s level of performance.” The potential for payments is enormous, and Flatplay has only scratched the surface.

Other unidentified investors in this round included Seed Capital from Denmark.