London fintech Paddle has struck a $200m deal to buy US firm ProfitWell today in its first acquisition since being founded ten years ago.
Paddle, founded in 2012 by then 18-year-old Christian Owens, bagged a $200m funding round earlier this month led by private equity powerhouse KKR, which it said it was now channelling into expanding its payment services for software-as-a-service (SaaS) firms.
The acquisition of ProfitWell will add subscription-metrics software to its arsenal, and Owens told City A.M. Paddle had been sizing up the firm as an acquisition target for a number of years.
“The two services are very complimentary, and we started off by doing kind of some co-marketing and partnerships. And then, over time, it became increasingly obvious that sort of we thought in the same way, we were trying to sell to the same people, and the two two things were very complementary to each other,” he said.
“Paddle and ProfitWell share a common goal; maximising our software customers’ revenue by taking care of the operational and financial obstacles that cost unnecessary time and manpower,” he said today.
Owens told City A.M. the acquisition was set to expand the firm’s customer bases by 30,000.
“In terms of number of customers, it’s a huge expansion for us,” he added.
The new deal has been funded by the cash injection earlier this month – which valued the firm at $1.4bn – and will now see ProfitWell operate under its existing brand as the two companies merge their products through 2022.
ProfitWell’s CEO Patrick Campbell will join the Paddle leadership team as chief strategy officer while the firm’s staff across its Boston, Salt Lake City, and Rosario office will be kept on to work in the newly merged firm, swelling total staff numbers to around 330.
Revenues at Paddle more than doubled in 2021 and the firm scaled its team from 140 to 275, with senior hires including a new CMO.
Paddle’s acquisition of ProfitWell follows a boom in growth in the SaaS sector last year as firms ramped up up their digital operations through the pandemic, with the sector set to balloon to $692m by 2025.
Growth at Paddle comes on the back of a surge in investment into SaaS firms as top venture capital (VC) firms plough cash into the space.
An emerging tech indicator released by investment analysis firm Pitchbook found that a group of 15 top global VCs poured $577m into SaaS firms in the first three months of the year, up from under $500m in the final three months of 2021.
Pitchbook analysts found that large deal sizes in the sector and valuations were also on an upward trend as interest in the space grows.