At a time when the ever growing e-commerce sector and the ongoing innovations promised by the internet of things have led some of the larger corporate venturing investors, such as Google and SoftBank, to further diversify their investments into transport, food and drink and healthcare, it can be refreshing to see a corporate investor seeing success from a more tightly concentrated investment strategy.
Payment services provider Visa is not the most active investor and, unlike rival American Express, does not even boast a dedicated corporate venturing unit, but it has gone about its business in the startup space with a laser focus, making early-stage investments in the online and mobile payment sector with a brief to harness the technology and expertise necessary to compete in the sector.
Much of its earlier dealflow was in the form of acquisitions but, apart from an investment in the $24m round raised by mobile commerce company Ecrio in 2007, Visa’s first direct CVC investment was in mobile payment Square’s $27.5m series B round in 2011, raised at a $200m valuation.
Four years later Square has filed confidentially to go public, and although the details of Visa’s stake are not yet publicly disclosed, Square’s last round, in December 2014, valued it at $6bn, pretty much guaranteeing the payment services firm a considerable exit.
Nor will Square be Visa’s first exit. It invested an undisclosed sum in mobile wallet developer LoopPay in July 2014 and exited just seven months later when Samsung acquired it for $250m. Visa also participated in offer-based payment platform TrialPay’s $40m series C round in 2012, before agreeing in February this year to itself acquire the company.
Visa’s latest corporate venturing investment is in another large-sized mobile payment company, Stripe, in which it invested last week at a $5bn valuation. Stripe is the third unicorn, after Square and e-signature technology provider, Docusign, in which Visa is an investor and its interest is explicitly strategic.
Stripe and Visa are looking to jointly work on mobile payment technology, leveraging Visa’s resources and Stripe’s enthusiastic developer community in much the same way as it partnered with DocuSign on payment security technology following its July 2014 investment.
Practically every corporate venture capital investor will mention the need to make the company’s money back, and Visa is generating exit cash, but the links it has forged in the sector may well prove to be more lucrative in the long run, as more and more transactions gravitate online.