There are startups that money can’t buy. For everyone else, there’s Mastercard.
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Founded in 1988, Transfast is hardly a startup. Indeed, the company is older than a portion of the current Crunchbase News staff. Crunchbase data is a bit sparse on the firm, but it does have two recorded rounds, one in 2016 and one in 2017. So we can infer from its fundraising activity that the firm’s pace of activity in recent years was likely high.
Details surrounding its most recent deal aside, the transaction prompted us to take a closer look at the credit card giant’s historical M&A activity. What we found is that the company has announced four acquisitions this year. That’s up from just one in 2018.
That pace of change was worth a closer look. Let’s see what firms MasterCard has bought, and when.
A History of Deals
Since 2009, MasterCard has made 16 known buys, according to its Crunchbase profile. That means one-fourth of its total acquisitions have taken place this year alone.
Here’s a chart of the firm’s deals since 2010, mirroring the time period of our recent look at rival Visa’s own pace of acquisitions:
A few things to discuss. First, we’re intrigued by Mastercard’s description of itself as a “technology company in the global payments industry.” Every company wants to be a tech company in 2019, just as firms wanted to paint themselves with the .com brush back in the 2000-era. The reason why is somewhat pedestrian: tech companies can command price multiples that other industries cannot. And if you are MasterCard, even a slightly higher multiple can mean billions in market cap.
Second, the company did not reveal financial terms of most of the deals. But the uptick in buying is notable nonetheless.
The fact that MasterCard does not disclose prices may be more a function of its own size (a market cap of over $275 billion) than the size of deals; public companies only have to disclose information on deals that are material. It’s hard to reach material deal size when the acquiring company is that large.
Still, we do know some prices. In May, MasterCard picked up Transactis, a New York-based SaaS payments platform, for $57 million. Transactis had raised a known $66.8 million since its inception in 2007, according to its Crunchbase profile. That means that its exit wasn’t a win for its investors or employees, but landing at MasterCard is far from the worst ending for a startup.
And in April, MasterCard acquired Austin fintech startup Vyze for an undisclosed sum. Vyze’s technology, according to the Austin Business Journal, “allows retail consumers to apply for a loan while standing in the checkout line.” Since it was founded in 2008, Vyze had raised a known $47.2 million in venture funding, according to its Crunchbase profile.
(As a general note, when a company has raised several rounds of venture capital, it reaches a scale that implies some sort of material buy; with over $45 million in invested capital, Vyze was probably of decent size. It’s not a hard rule, but the more venture capital a startup has raised, generally speaking the larger the deal is to acquire it.)
What About Investing?
MasterCard has also invested in dozens of companies (across 46 rounds) over the years, leading at least 13 of them, according to its Crunchbase profile. This year alone, it’s put money into five companies, including Bill.com and African ecommerce startup Jumia Group.
Given that we are seeing an increased pace of buying startups by Visa, American Express and MasterCard, it’s not impossible to guess that other related players are going to pick up the pace of buying themselves. This is the sort of mid-sized startup buying that can provide material liquidity when measured in aggregate.
For now, we have the start of a trend. If the trio of credit card companies keep it up, we could have something more.
Illustration: Li-Anne Dias