Venture

After $4B Honey Acquisition, A Dip Into PayPal’s Buying History

To help customers get a discount, PayPal doled out $4 billion for its latest acquisition: Honey Science Corp.

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The Los Angeles startup, founded in 2012 by Ryan Hudson and George Ruan, makes technology that helps users discover rewards and deals while shopping. In light of this acquisition, Honey is set to adopt PayPal and Venmo’s 275 million active consumer accounts. Additionally, Honey will tap into PayPal’s 24 million merchant accounts, per the press release announcing the deal.

Think of Honey as an add-on extension to user browsers. After the deal closes, Honey will remain in its Los Angeles headquarters and operate under its own brand.

There’s no doubt that a $4 billion deal is a big one, for both Honey and the overall Los Angeles ecosystem. Per Crunchbase data, this is the fifth biggest acquisition deal – and the biggest tech acquisition deal – in Los Angeles history.

“Honey is amongst the most transformative acquisitions in PayPal’s history,” said Dan Schulman, president and CEO of PayPal, in a statement. Looking a bit deeper into Schulman’s statement, let’s look at the previous acquisitions by one of the world’s largest online payments systems, owned by eBay. In other words, let’s fact check him.

Dipping Into The Past

PayPal has acquired over 20 known companies to date, according to its Crunchbase profile.

Price-wise, based on Crunchbase data, Honey is Paypal’s biggest deal yet, thanks to a $4 billion price tag. In second place is PayPal’s acquisition of iZettle, a payments point-of-sales company, for $2.2 billion in 2018.

Now, is Honey ‘transformative’ beyond a big dollar amount? The startup is PayPal’s second acquisition of 2019, while in 2018 the payments company scooped up four other companies. It signals a slight slowdown from the payment powerhouse.

In its acquisition history, PayPal has scooped up companies that touch all parts of a singular transaction. For example, it put cash into companies that help with payment processing, like its acquisition of gopay, which provides third party payment services for governments and corporations, or Braintree, which has a set of tools to help online businesses process payments. It has also scooped up companies that help its users transfer money easier, like Xoom. And Hyperwallet.

Additionally, it has engaged in data and security, like its buy of Simility, to prevent fraud and abuse in real time, or its acquisition of CyActive, which is a predictive cybersecurity company. Or FraudSciences, which is self explanatory.

So when examining PayPal’s known acquisitions, Honey stands out as unique. It shows that the payment giant is betting big on becoming more involved in its users lives, beyond just the point-of-purchase moment, but throughout the shopping journey as well.  And with every startup and tech company becoming a bank, that might not be a bad idea after all.

Illustration: Li-Anne Dias

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