Online payments firm PayPal bought Swedish startup iZettle for $2.2 billion, the companies announced on Thursday.
Stockholm-based iZettle is one of Europe's best known fintech companies. Serving nine countries in Western Europe, as well as Brazil and Mexico, iZettle offers financial products for small businesses, including payments through smartphones.
The acquisition (the largest in PayPal’s history) comes only two weeks after iZettle announced its upcoming plans to IPO. This eleventh-hour change prompted iZettle’s CEO and cofounder Jacob de Geer to pen an explanation. “Late in the IPO process, PayPal got in touch and showed a serious interest in iZettle,” he wrote. “By joining the PayPal family we’ll become iZettle with superpowers and jump on a fast track to realise our vision.” iZettle expects to generate $165 million in revenue in 2018, with approximately $6 billion processed on its platform. Zouk Capital, Index Ventures and 83North are the company’s largest shareholders.
Jacob de Geer and Magnus Nilsson launched iZettle in 2010. The name is a combination of the words "I" and "Settle," positioning the company as a fixer in settling debts. Its five venture rounds raised investments from companies including American Express, MasterCard and Intel Capital.
News of PayPal’s acquisition prompted shares of one of iZettle’s largest competitors Square (founded by billionaire Twitter founder Jack Dorsey) to slip by 5% on Thursday.
Stockholm is emerging as Europe’s hottest startup hub: Only a month ago Spotify had one of the 10 largest IPOs in history, and another Swedish fintech company, Klarna, was recently valued at $2.5 billion.