iZettle Didn't Settle: Have the Floodgates Opened?

 Sarah Kocianski photo
Sarah Kocianski Head of Competitor Strategy
5min read

Hot on the heels of Revolut’s mega funding round and newly minted unicorn status two weeks ago comes another piece of good news for the European fintech industry — Swedish commerce platform iZettle is set to IPO.

iZettle is an eight year old fintech, which offers small businesses in Europe and Latin America payment acceptance tools and business software. The company plans to raise around 2 billion Swedish Krona ($230 million) on Nasdaq Stockholm, according to a release seen by 11:FS.

Hoping to Hold Firm

iZettle hopes to attain a valuation of around 10 billion Swedish Krona ($1.1 billion). Up from an estimated $950 million when it last raised private funding in December 2017. The European fintech industry will watch how iZettle’s IPO plays out with avid interest for a number of reasons. If it garners its predicted sum, it will be the largest fintech IPO ever seen in the region. To be considered a true success by the market, iZettle’s shares will also need to hold their price in the weeks after it goes public. Doing so would be a validation of the huge private valuations we continue to see in the fintech industry, something that has been lacking in many other high profile fintech IPOs to date — including Square. Comparisons to Square’s IPO are somewhat inevitable given the similar product sets of both companies. Such comparisons are probably not entirely comforting for the Swedish firm given Square’s somewhat wobbly first few years as a public company.

iZettle Under Pressure

Square ended up pricing its shares at $9 each when it IPO’d in 2015 giving it a market cap of $2.9 billion. That was well below the $15 per share required for its market cap to equal that of its $6 billion private valuation. It’s worth noting Square has since bounced back, but it took around 15 months before its market cap reached the $6 billion figure. It should be noted that while Square’s history is another reason why iZettle’s IPO is under such scrutiny, it’s far from certain it will perform in the same way. Square’s IPO occurred at a different time in a different market environment. Additionally, Square’s revenue growth was slowing when it went public and there were concerns around Jack Dorsey’s ability to steer two ships at once. iZettle, on the other hand, has healthy revenue growth, along with ambitions to expand into highly underserved markets in Mexico and Brazil.

Dominos to Fall

So, to sum up, iZettle’s IPO is considered by many to be a landmark moment for European fintech. If it can achieve success as measured by the above, and there’s every sign it will, the public markets’ appetite for fintech IPOs will be confirmed and it will signal sea change in the attitudes of investors. That will likely set off a domino effect with other European fintechs following iZettle’s example. Those watching particularly closely will likely include two other VC-backed European fintech unicorns Adyen and Funding Circle, both of which are rumoured to be circling IPOs of their own. All that’s left to do now, is wait and see. Sarah is a Principal Analyst at 11:FS and regularly hosts Fintech Insider and Insurtech Insideras well as guest-hosting on Blockchain Insider. You can follow her on Twitter @SarahKocianski or email her at sarah.kocianski@11fs.com