Powa Raises $80 Million to Launch Its Mobile, E-Commerce Payments in U.S.

In another large late-stage play from a public-markets investor, Wellington Management has put $80 million into Powa Technologies

Wellington, which last year invested $76 million in the mobile payments and e-commerce company, valued Powa around $2.7 billion in the fresh round
The infusion is the latest in a string of moves plays by traditional public-markets investors backing private companies on the cusp of going public. During the past seven months, hedge funds and mutual fund managers including Wellington, BlackRock, Fidelity Investments, T. Rowe Price TROW -0.32% and Tiger Global Management have backed ride service company Uber Technologies, lodging rental company Airbnb, Indian e-commerce site Flipkart Internet Pvt., enterprise storage company Pure Storage and others at valuations ranging from $3 billion to $18 billion
For Wellington, which has made more than a dozen such private investments so far this year, Powa represents its first such foray into the mobile payments space
Wellington didn’t respond to a request for comment
“It’s a huge injection of capital and vote of confidence,” said Powa founder and Chief Executive Dan Wagner, who confirmed the round. “We want to become the ubiquitous platform for mobile commerce and payments.”
Powa will use the money to power its U.S. launch during the holiday season and better compete against Square, Shopify, Big Commerce and others in wooing merchants to adopt its platform for selling. Powa’s move comes as Wal-Mart WMT +0.10%, Target and other merchants in the MCX consortium build their own payments platform, and GoogleWallet, Apple AAPL +0.33% Pay, PayPal and dozens of startups continue jockeying for position in the large and growing mobile payments market
Thanks to the increase of Apple’s iBeacons and other proximity payment technology, consumers will increase the amount they spend on physical goods using their smartphones from $3 billion in 2013 to $53 billion in 2019, according to a report this month by Javelin Strategy and Research.
“There will be multiple forms of (mobile) payments,” said Javelin Mobile Director Mary Monahan, adding that like the current mix of credit and debit cards and cash, smartphones will likely support multiple payment methods depending on the use case. “The trouble is in getting consumers to adopt it. It takes a lot to change habits.”
Wagner says he isn’t concerned about the competition. He believes that his “merchants-first’ strategy will enable him to trump other players
“If you get the engagement with the merchants, then consumers will follow,” Wagner said. “We’re about selling, we’re not about payments.”
Wagner said his company’s traction with merchants and new products piqued Wellington’s interest in doing another round. Powa has signed 970 merchants including Adidas, Nicole Miller, Unilever ULVR.LN -0.43%, Carrefour and Cort Ingles to its platform during the past year and is signing another 150 or so every month, he said
Merchants typically use Powa as part of traditional marketing and advertising programs which enable customers to make more spontaneous purchases. Merchants prompt consumers to download Powa’s free app and input their payment information. Once they are registered, they are able to purchase items that have a “Powa Tag” by taking a picture of ads in print and online, or have an audio watermark embedded in TV and radio broadcasts. Wagner said other such “triggers” are planned but declined to provide details
H Best Ltd. owns high-end men’s underwear brand 2(x)ist and is among the U.S.- based companies launching on Powa in the next month or so. The company is trying the service as an experiment
“Our core consumer is the millennial guy. He’s tech savvy and looking for opportunities to buy,” said H Best President and Chief Executive Tom Speight. Speight said his company will be embedding Pow Tags in outdoor advertising in midtown Manhattan and audio watermarks to be broadcast in city taxicabs. Along with enabling merchants to court customers by offering special promotions and enabling purchases directly from ads in magazines and other media, Powa also collects and analyzes purchasing data on behalf of merchants. This service, which Wagner said he expects to provide “significant revenue” in coming years, attracted Speight to try Powa
“We’re looking to get geoanalytics to figure out where and which (street) corners are the most effective ways to maximize our marketing initiatives,” he said. “We want to respond to how consumers are shopping.”
Powa receives 40 cents or 10 basis points from the merchant, depending on which is greater, on every transaction.
Powa was founded in 2007 and launched last year. It is now generating in the tens of millions in revenue–a number Wagner said he expects to reach “hundreds of millions of dollars next year and into the billions within two more years
He said he is planning an IPO for 2016
With offices in London, Hong Kong and New York, Powa employs 500
Wellington’s investment includes a second, previously undisclosed tranche of $20.7 million to the $76 million Series A round it invested last year at a valuation around $400 million. Wellington has committed $60 million in fresh funds to Powa in a still open Series B round, which Wagner says valued his company around $2.7 billion
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