Checkout.com’s Crypto Bet: How Europe’s Most Valuable Startup Lost Its Crown

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Guillaume Pousaz ran Europe’s most valuable start-up.

But this year, and after a failed crypto bet, the 41-year-old chief executive had to watch Checkout.com’s valuation plummet.

A fierce competitor, from his days as a young snowboarder to that October Iron Man contest in Utah, Pousaz must now fight if he wants his company to regain its crown.

Pousaz founded Checkout in 2012 as a technology-driven payment processing company. The London-based startup has grown rapidly on the back of a boom in e-commerce transactions, generating a $40 billion valuation in January after raising funds from investors including Tiger Global and Qatar Investment Authority.

However, last month Checkout told its employees that it was reducing its internal valuation separate from the price paid by investors to just $11 billion. It slashed the strike price of employee stock options by 74%, reflecting a broader drop in tech markets over the past year.

Investors in the company, attracted by the $2 billion payments market, still back Pousaz as a competitor determined enough to disrupt both established rivals such as Worldpay and Fiserv, as well as take on new entrants such as Stripe and Adyen.

Fund revenues rose from $46.8 million in 2017 to $252.7 million in 2020, the most recent year for which accounts are publicly available in the UK Eva Marie Uzcategui/Bloomberg

I can’t keep up with him skiing, I can’t keep up with him running, I can’t keep up with him in any sporting endeavor, said Deven Parekh, managing director of Insight Partners and board member from Checkout. There are probably very few CEOs who work as hard as he does.

Raised in Geneva, Pousaz was raised by his mother after his parents separated in the late 1990s. The separation left his family in dire financial straits, an experience that people who work with Pousaz say motivates him. always.

In 2005, he dropped out of college in his final year and moved to California to go surfing. It was in the United States that he began working in the payments industry, before embarking on an entrepreneurial journey via Mauritius and Singapore which led to the creation of Checkout in London.

With the company already profitable, Pousaz for years fended off venture capitalists and even multibillion-dollar takeover bids. This has left him with much tighter control of the business than most start-up founders: his stake is around 60%, according to registration documents from Jersey-based parent company Checkouts.

Pousaz first raised venture capital in 2019. Ophelia Brown, founder of tech investor Blossom Capital, offered to invest in the initial deal after tracking the company through filings on the registry of UK Companies House for several years. The performance was nothing short of outstanding, she said, describing Pousaz as slightly intense but in a good way.

That’s all he does, 18 hours a day, added another person who worked closely with Pousaz. Investors love it, but employees might not. He pushes people very hard.

Pousaz was fortunate for Checkout to grow amid a growing need for payment processing, but it also made the strategic choice to partner with new, fast-growing sectors, such as neobanks like Revolut.

A key factor in Checkouts’ success has been creating the right products at the right time, said Tom Stafford, another board member and managing partner of DST Global. He identified relatively early on that fintech was going to be an important sector.

However, Pousaz’s bet on digital assets proved less successful. As recently as last year, Binance was the company’s top merchant by net revenue, while Crypto.com was another top customer, according to people familiar with the matter. Checkout would not comment on specific customers, but said crypto and fintech customers made up up to half of its payment volumes last year.

However, crypto exchanges, including Binance, saw significant investor outflows after FTX collapsed in November.

We’ve been a long-time partner in the crypto industry, so we’ve had our ups and downs before, Cline Duftel, CFO of Checkouts, told the Financial Times. I wouldn’t say that we anticipated how much volatility has occurred over the course of this year.

Alongside more established customers such as J Sainsbury, Sony Electronics and Frasers Group, Checkout has done business with types of customers that other payment processors do not, including MindGeek, owner of Pornhubs. OnlyFans was among its top 10 accounts as recently as this year, according to people familiar with the business.

Adult content made up less than 15% of Checkouts’ revenue when it closed its 2020 funding round, an investor said. The company said the category’s volumes and revenue were still intangible, and it cut any remaining ties to the adult business earlier this year.

The willingness of the credit union’s employees to go where its rivals have not gone continues to test ethical boundaries. At the start of Russia’s invasion of Ukraine, a senior business executive urged employees to contact potential customers with major Russian companies because other payment companies cut those lines, according to an internal message. seen by the FT.

Pousaz, third from left, with other executives including CFO Cline Duftel, fourth from left

Checkout said it condemned the post but added that it could not control each employee’s actions. Payment completed Visa and Mastercard processing [in Russian roubles] even before Visa and Mastercard cut ties themselves, the company said. He added that he respected international sanctions.

Duftel, who is also chief operating officer, joined in 2021 after working in the C-suite of 85-year-old asset manager T Rowe Price. She said part of her role at Checkout has been to put in place the structure and processes you need when you start reaching that scale.

The company’s compliance processes were scrutinized by French regulator ACPR as part of a routine investigation this year, according to people familiar with the matter. The agency has raised concerns about the staffing of its compliance department. The ACPR declined to comment. Checkout said it has proactively and comprehensively engaged with all relevant regulators.

Working in a highly regulated industry hasn’t stopped Checkout from scaling quickly. Its earnings rose from $46.8 million in 2017 to $252.7 million in 2020, the most recent year for which accounts are publicly available in the UK. Checkout said Companies House’s figures were not representative of its entire business.

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This year, fundraising has fueled a push into the US market, which could help Checkout ahead of a contemplated initial public offering. Duftel insisted the company was not rushing to go public let alone in current markets. Pousaz ran the business for a very long time, she added.

Pousaz also began setting up a family office to make his own technology investments called Zinal, named after a mountain village in Switzerland that marks the finish line of a 31km mountain running race.

This is on top of raising three children aged 2 to 14 and a demanding travel schedule that can involve spending weeks flying between various offices and home in Dubai.

I don’t know anyone who works as hard as Guillaume, this guy, said Philippe Laffont, founder of Coatue Management and investor in Checkout. When you go to a meeting with Guillaume, it is better to be prepared.

Additional reporting by Sarah White

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