Zooz’ Acquisition and Why Israel’s Global Thinking is its’ Ecosystem’s Superpower
Last week, PayU, announced that it agreed to acquire Zooz, a leading player in the global payments space. PayU is known as a leading financial services provider, operating in global growth markets. It’s also the fintech and e-payments division of Naspers, a global internet and entertainment group and one of the largest technology investors in the world, most notably, a very early investor in Chinese internet behemoth, Tencent.
When we first invested in Zooz, their product offering was very different. Back then, the payments industry rallied behind NFC (e.g. contactless payment), which was considered to be the holy grail for pretty much everything. Zooz’s approach was counter-NFC, with a pure software-only solution. Since then Zooz listened carefully to its customers, and their feedback helped Zooz evolve into a full stack best of breed Payments OS.
Zooz set out on a mission to solve one of the most complex problems for merchants, large and small in the world of payments: removing the friction point for any transaction by processing payments faster, better, cheaper, in multiple currencies and markets, without having to deal with a multitude of intermediaries, commercially and technically. Zooz has excelled at this mission, serving large global customers like WeWork, Wix, Gett and Burberry along with many more mid-market and small business merchants.
Fintech is an area that has seen a lot of innovation come from outside of the US, particularly in the area of cross border payments and where multiple currencies are involved. As PayU CEO, Laurent le Moal recently put it, “Fintech does not necessarily travel too well…a fintech company from the US will find it much more difficult to move into other markets.” This is one of the few downsides of being a large market with a single currency, which has largely insulated the US from these complexities. Conversely, Israel and Europe have punched well above their weight here, seeing the likes of iZettle (Sweden), Payoneer (Israel), Ayden (UK), Transferwise (UK) and Revolut (UK) amongst others, becoming global category leaders in their domain.
The need to think globally from day one is not without its’ challenges — transcending geographical and cultural distances to understand and define customer needs and then effectively execute a sales and marketing strategy from Israel is no mean feat. But this challenge is the Israeli startup ecosystems’ ultimate superpower. Global thinking from inception is a key differentiator between Israeli and US startups and in Zooz’ case, this played an important role in the company’s success. PayU’s acquisition of Zooz is another milestone that will serve to propel this momentum forward for the Israeli startup ecosystem. In that regard, there are similarities with Facebook’s acquisition of Onavo in 2013, which became the cornerstone of Facebook’s Israel operations and saw the team leading the development of Facebook’s product suite for emerging markets.
Zooz intends to expand its team of 70 in hiring 50 additional employees within a year. With PayU’s local operations in 17 markets across Asia, Central and Eastern Europe, Latin America, the Middle East and Africa, almost overnight, 200,000 new merchants will be working with Zooz’ technology platform. The team will be working on products that support millions of transactions daily, which will require the product management discipline and smarts to identify, prioritise and solve for customer needs across a multitude of cases at huge scale.
There’s no question that as Zooz’ earliest investor, we were rooting for the business to go “all the way”. We’ve had the privilege to work with and get to know Oren and Ronen from the very start of their journey and at PayU, we know they’ve found a great home that will accelerate their vision. So we’re incredibly excited for the entire Zooz team for this next chapter. Being part of PayU presents a huge opportunity for the Zooz team to contribute to our vibrant ecosystem in Israel, nurturing and developing a new generation of experienced global product leaders who will build, ship and manage products that serve millions of customers globally.
And we’ll be watching, closely and proudly from the sidelines.
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