Venture firm Accel has a pattern of investing in profitable, previously bootstrapped businesses. Last November, it led 1Password’s $200 million Series A, that company’s first external raise in its then 14-year history. Previously, Accel also backed the likes of Atlassian, Webflow, Qualtrics and Tenable–all profitable and previously bootstrapped companies.
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And last October, it led a $77 million Series A for Galileo, a Utah-based financial services API and payments platform, that also included participation from Qualtrics CEO and co-founder Ryan Smith. Also profitable and previously bootstrapped (for 19 years).
Now, just six months later, Accel is seeing a nice exit from that investment. SoFi (one of Galileo’s customers) announced today it has acquired Galileo for $1.2 billion in a cash and stock deal. Sources familiar with the transaction say the transaction represents an impressive “4x” return for Accel.
Galileo’s digital payments platform enables checking- and savings account-like functionality via its open APIs, providing companies with a way to create consumer and B2B financial services. The company’s offerings are accessible via mobile, desktop and a physical debit card. Essentially, Galileo provides the underlying infrastructure for fintech companies. Via its APIs, companies can launch debit cards, credit cards, savings products, money transfer and a number of financial products more quickly.
At the time of the Series A, Accel noted that Galileo had reached a larger scale than any payments business it had seen without raising capital ($26 billion in processing volume with over 130 percent year-over-year growth) “by prioritizing product innovation and profit over press mentions.” It also pointed out that Galileo was the operating system for a number of digital banks globally including Chime, Robinhood, TransferWise, Varo, Revolut and Monzo (also Accel-backed). Galileo crossed the $100 million ARR (annual recurring revenue) in March, which represents a more than doubling year over year.
In a press release issued this morning, SoFi noted that Galielo processed over $53 billion in annualized payments in March 2020, up from $26 billion in September 2019. The company said SoFi Money is already tightly integrated with Galileo’s payment platform including several of its leading accounts and events API functionalities.
“Galileo and SoFi will work together to accelerate the pace of technology innovation to offer Galileo’s partners, and subsequently consumers everywhere, even more value,” SoFi said in a statement. “These new functionalities and services will further help Galileo’s current and new partners capture the secular shift of financial transactions from the physical-only to a multi-channel digital and physical platform.”
Galileo will continue to operate as an independent subsidiary of Social Finance Inc. (SoFi), with Galileo co-founder Clay Wilkes serving as its CEO. Galileo will collaborate with SoFi to accelerate the technology roadmap needs for consumer financial offerings, as well as offering the full SoFi suite of products and services to some of its partners.
“SoFi has established itself as a leader in the fintech sector, providing our more than 1 million members a full array of financial products to help them get their money right,” said Anthony Noto, CEO of SoFi, in a written statement. “The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation.”
Culture and values
Accel’s John Locke, who led the firm’s investment in Galileo, wrote in a blog post today that he was not only impressed with the company’s financial growth, but also its “family-like” culture and values.
Wilkes and his wife Marie founded The Galileo Foundation in 2005 “with the vision of assisting people in the U.S. and around the world build skills and businesses to escape poverty and achieve economic empowerment.” The company’s focus on service extended to its team taking regular trips to build schools and encourage entrepreneurship in places such as rural Nepal and Peru.
Locke also noted that SoFi CEO Noto (clearly) shares Accel’s vision that Galileo is the “most interesting financial infrastructure company globally, describing it as the “AWS (Amazon Web Services) of fintech.” He adds that going forward, SoFi will have “the unique combination of a thriving consumer brand and a set of API tools in Galileo that allow the rest of the industry to build ambitious fintech projects.”
For its part, SoFi has raised $2.5 billion across a number of private equity and venture funding rounds since its 2011 inception, according to Crunchbase data. Last May, it secured $500 million in a round led by Qatar Investment Authority at a pre-money valuation of $4.3 billion.
Illustration: Li-Anne Dias