Melio, a leading accounts payable and receivable platform for small and medium businesses, has announced a Series E funding round led by Fiserv Inc., the mobile payments giant. The funding round raised $150 million, with Shopify Ventures and Capital One Ventures joining Fiserv. The round also saw the company valued at $2 billion and brought the total raised by the company to an impressive $654 million.
It is three years since Melio raised its $250 million Series D round, which Thrive Capital and General Catalyst led. However, that round saw it reach an even more impressive and perhaps optimistic valuation of $4 billion. Since then, despite it increasing revenue tenfold the valuation has halved.
According to Fintech Global, the drop in valuation followed a failed sale and layoffs. With several new senior hires, the firm has recovered well and has surged in revenue, enabling this latest round of funding.
Other participants in the round included existing investors such as Accel, Bessemer, Coatue, Frontline Ventures, General Catalyst, Latitude and Thrive Capital.
Fiserv strengthens existing partnership
The investment by Fiserv follows the launch of an exclusive and successful partnership between the two firms a year ago. The partnership saw CashFlow Central from Fiserv combine its market-leading biller and merchant network and payment capabilities with Melio’s easy-to-use accounts payable and receivable workflows. CashFlow Central allows the more than 3,500 financial institution clients of Fiserv to better meet the payment operations and cash flow needs of their small and medium-sized business clients and members.
Melio CEO and Co-Founder Matan Bar said, “We’re proud to witness our embedded solution helping our partners better service their business clients, leading to increased deposits, higher engagement and creating new revenue streams.”
John Gibbons, Head of the Financial Institutions Group at Fiserv, commented, “Through our partnership with Melio, CashFlow Central is designed to create significant value for financial institutions and their business clients or members.
“We are excited to leverage our unique position at the intersection of financial institutions and businesses to deliver a comprehensive, integrated experience that enables our clients to compete and grow their portfolios with this important segment of their communities.”
Enterprise Times: What does this mean
Fiserv has a market cap of around $112.59 billion. Does this investment in Melio bring it a step closer to making an acquisition? There seems to be synergy between the two firms. But Fiserv must be concerned by the fall in valuation from three years ago.
However, if the existing partnership with Melio is working and continues to work moving forward, this maybe the first step of an acquisition strategy. The only thing that argues against that is the number of other investors that have participated in the round. Clearly, the partnership strategy is working for Melio. It will look to create additional partnerships, though presumably not ones that compete with Fiserv.
In recent months, it has announced a collaboration with Amazon Business and launched advanced Accounts Payable capabilities for accountants and mid sized businesses. It also has partnerships with Capital One, Shopify and Clover, with integrations to QuickBooks and Xero. It will be interesting to see whether it adds further integrations to mid-market ERP solutions in the near future.
