Posted on Monday, Mar 30th 2015
Analysts expect the global e-commerce market to grow from $1.5 trillion in 2014 to $2.4 trillion by the year 2018. The growth in e-commerce is also leading to a bigger demand for safe and capable payment processing solutions like the one offered by Billion Dollar Unicorn club member Adyen.
Amsterdam-based Adyen was founded in 2006 by Pieter van der Does and Arnout Schuijff. Arnout had founded the Dutch company Bibit earlier and Pieter had worked there before it was sold to the Royal Bank of Scotland. During the course of their careers, both Pieter and Arnout realized that while e-commerce was growing, the customers were still looking for more flexibility and transparency in their e-commerce transactions. They were looking for better business terms. Once the two realized its market opportunity, they got together to create an e-commerce payment provider that would invest in the front-end experience and provide unbeatable business terms.
By September 2007, the team had written the code to create their e-commerce platform. They processed their first transaction that month and have never looked back since.
Today, Adyen offers an online payment service that allows businesses to use either hosted payment pages, encrypted solution on their website or direct APIs to process payments from their customers. Businesses can offer up to 250 payment methods on their site. They have also successfully delivered these solutions for mobile devices. For physical stores, Adyen has also created point of sales (POS) systems which include countertop terminals, in-store kiosks, unattended terminals, and mobile POS systems. The POS allows for multiple payment methods and cross-currency transactions and can even process loyalty and gift cards for the retailer. Adyen also makes their offering attractive by providing services such as analytics and risk management.
Adyen processes more than 2 million transaction daily. Their payment processing system has helped them attract customers including names like Groupon, Evernote, and AirBnB. Their product has also received positive reviews from the likes of Barclays who selected their solution as their e-commerce solution and white labeled it to roll it out.
Adyen earns revenues by charging their clients a fixed fee on every transaction along with a markup on top of the fee charged by the card issuer. That markup starts at 60 basis points and scales down to 40 basis points depending on the volume of transactions.
They have seen strong revenue growth since inception. They were expecting revenues of more than $163 million in 2014 compared with $95 million in 2013 and $65 million in 2012. The company has been profitable since 2010. They attribute their success to targeting large enterprise accounts instead of consumers and have also focused less on marketing and more on developing their technology and closing deals.
Adyen had been bootstrapped till 2014 when they raised $266 million from investors including Temasek Holdings, Felicis Ventures, and General Atlantic. The latest round of funding was held in December 2014 when they raised $250 million from these investors at a valuation of $1.5 billion.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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