Paddle, the Company That Wants To Take On Apple in IAP, Raises $200M at A $1.4B Valuation to Supercharge Saas Payments

Paddle, the Company That Wants To Take On Apple in IAP, Raises $200M at A $1.4B Valuation to Supercharge Saas Payments

Thanks to developments in cloud computing and networking, as well as the adaptability of pay-per-use business models, software as a service has already established itself as the standard for how companies deploy and utilize apps today. Today, Paddle, a startup that has made a sizable profit by serving as the billing backend for those SaaS businesses, announced a sizable investment round of $200 million as it prepares for its own subsequent stage of expansion. Paddle, a company located in London, is valued at $1.4 billion thanks to the Series D investment, which was headed by KKR and included previous backers FTV Capital, 83North, Notion Capital, and Kindred Capital as well as loans from Silicon Valley Bank. The business has raised $293 million in total with this round.

Paddle now collaborates with over 3,000 software clients throughout 200 markets, offering a platform for them to establish and sell their SaaS solutions there, largely in a B2B model. Its plans, though, include a big expansion of that to areas like in-app payments given how many consumer services are now now supplied through SaaS models. “Over the past two years, we have experienced significant growth. After the COVID-19 high, we anticipated a decline, but that wasn’t the case, according to CEO and co-founder Christian Owens.

In fact, this includes more regular people using videoconferencing, setting up “Zoom dinners,” as well as the massive growth of streaming media and other virtual consumer services. “Over the years, the lines between B2C and what is considered B2B have blurred. Everyone at once need our B2B tools. In the digital era, payments have long been a difficult and fragmented industry. Depending on the market, different banking procedures, preferred payment methods, and rules apply, and each step of accepting and processing payments often entails putting together a chain of suppliers. 

With services for checkout, payment, subscription management, invoicing, foreign taxes, and financial compliance procedures, Paddle promotes itself as a merchant of record and caters to the unique needs of companies who sell software online. Paddle is marketed as a SaaS, and its standard fee is 5 percent plus 50 cents per transaction. Its concept is similar to that of many other business tools in that payments are often not a company’s main competencies, such as video conferencing or security (one of its customers is BlueJeans, now owned by Verizon, which used to own TechCrunch; another is Fortinet).

To be fair, there are dozens (possibly hundreds) of “merchants of record” in the market for payment services, ranging from PayPal and Stripe to Amazon and many more. This is not surprising given how complicated it is and how eventually just about any company selling online will turn to these to manage that flow. The various intricate components of offering a billing and payments service may be combined into a single, specially designed solution for software enterprises, according to Paddle’s belief (and evidence). 

It does not provide particular use statistics or real income figures, but it does highlight that revenue growth—not necessarily revenue—has quadrupled over the previous 18 months. The firm name Paddle has no particular connotation. Owens, a Thiel Fellow himself, explained that the moniker was just chosen because he liked it. And that tendency to make choices based on a sneaking suspicion that they would be memorable seems to have followed him and the business for a long.