Challenge

Susquehanna empowers software and information services entrepreneurs by offering flexible equity financing with no fixed time horizons. In addition to providing capital, Susquehanna is a collaborative investor, offering strategic guidance to help its portfolio companies grow and enhance their operations to build long-term value.

Susquehanna employs a Portfolio Value Creation team focused on 25 core themes such as payments strategy, pricing and packaging, go-to-market optimization, and executive recruiting. The team uses its knowledge and experience gained across its entire portfolio to help each entrepreneur evaluate opportunities and leverage proven techniques to create significant incremental equity value.

“Our goal is to track and memorialize what works and what doesn’t to accelerate growth and create incremental equity value on our portfolio companies’ terms, not ours,” said David Badler, Susquehanna’s head of portfolio value creation. “Our focus is on low-frequency, high-impact projects that we see multiple times a year across 60+ portfolio companies, but that an individual founder might see only once every 5 or 6 years.”

As part of its collaborative investment strategy, Susquehanna aims to connect its portfolio companies with top partners in all areas. For payments, Susquehanna pursues partners that offer more than just modern payment technology; it seeks partners who share its values of collaboration, support, and education.

Solution

Three years ago, Susquehanna found a partner in the Stripe Private Equity Partnerships team. Together, they established a strong collaboration to ensure that Susquehanna’s portfolio companies are well-positioned to take advantage of payment opportunities. The teams from Susquehanna and Stripe meet weekly to discuss portfolio companies’ needs, ensuring they receive top-tier service to help achieve their goals.

Susquehanna and Stripe also collaborate to educate entrepreneurs and their teams on payments trends and technology via dinners, product webinars, and multiday payment summits cohosted by Susquehanna and Stripe. “Payments are super siloed. At times, it can be a lonely role to be leading, especially in companies that didn’t start as payment companies,” said Amir Goldman, founder and managing director at Susquehanna. “Creating opportunities for our portfolio companies to collaborate and share ideas with their peers can make a big impact.”

While Susquehanna and the Stripe PE team collaborate to ensure that the portfolio companies receive the support and resources needed to achieve their goals, Susquehanna helps entrepreneurs understand and build the business case for embedded payments. “It’s crucial to grasp why a portfolio company is positioned to win their customers’ payment volume from the outset,” said Aaron Flack, director at Susquehanna. “Without that insight, you risk investing significant resources without achieving results.”

For embedded payment use cases, Susquehanna often recommends Stripe Connect to streamline multiparty payments and payouts, thanks to its code-friendly, API-first approach. “Stripe understands what we’re looking for,” said Michael Lyons, Susquehanna’s head of payments. “Our portfolio companies take advantage of best-in-class embeddable products, individualized support, and go-live resources to ensure they successfully launch their payment offerings efficiently and effectively.”

For example, Susquehanna portfolio company Tekmetric, an automotive repair shop management platform powered by Connect, wanted to allow customers to pay for auto repair services over time since a lack of funds is the most common reason people don’t complete a recommended repair. Adding buy now, pay later (BNPL) payment methods with the Payment Element, part of Stripe’s Optimized Checkout Suite, was simple, with no application, onboarding, or underwriting process. Tekmetric also integrated Stripe Terminal, a point-of-sale solution, to unify online and in-person payments, simplifying reconciliation and tracking orders.

When it’s time for implementation, Stripe handles the payment technology while the portfolio company and Susquehanna focus on operational readiness: helping ensure that a company’s finance and risk teams have the personnel, controls, and processes to manage a payment business. For example, to increase payment volume, OrderMyGear, a platform for businesses that sell branded merchandise to groups, adopted Link, Stripe’s secure, accelerated checkout solution that auto-fills customers’ payment information. Susquehanna supported OrderMyGear’s user experience research and helped with product marketing around the launch, among other support tasks. Meanwhile, Phorest, another Susquehanna portfolio company, expanded its platform for hair, beauty, barber, and spa businesses globally with Stripe Payments and Connect. Susquehanna provided wide-ranging assistance with this transition, including supporting Phorest’s migration from the legacy payment processor and advising on issues, including merchant pricing and marketing.

Susquehanna companies also use Stripe to help increase authorization rates and manage network costs. Companies with payment flows that share zip or postal codes and CVC numbers can improve authorization rates while decreasing network costs by up to 1.45% of the transaction amount. Stripe’s Adaptive Acceptance uses machine learning to optimize authorization requests and recover false declines. Stripe makes it easy for businesses like Tekmetric and OrderMyGear, which also support B2B volume, to reduce network costs further by passing Level II and Level III data, including sales tax and other detailed information about a transaction, to card issuers. Susquehanna and Stripe helped Phorest optimize network costs with least-cost routing for their unregulated debit card volume.

Results

4x payment processing growth across Susquehanna’s portfolio

Stripe’s comprehensive suite of payment technology and support has helped several Susquehanna companies expand their businesses to include payments as a revenue line item. Today, Susquehanna companies process billions of dollars in payments annually across their vertical SaaS and marketplace portfolio companies, representing 4–5x growth over the last 3 years.

Stripe grows to become Susquehanna’s top payments partner

Twenty Susquehanna portfolio companies now use Stripe’s technology to power their payment businesses, up from just one a few years ago.

New payments revenue stream represents more than 40% of a portfolio company’s revenue

For one Susquehanna portfolio company, payments revenue has gone from nonexistent to representing over 40% of its revenue in just a few years, through the support of Susquehanna and Stripe. “This partnership has truly elevated our ability to support entrepreneurs and create lasting value,” said Lyons.

Link drives 50% of OrderMyGear transaction volume

OrderMyGear adopted Link to provide a fast, modern checkout experience to consumers buying promotional and team sports products. Today, Link drives nearly half of OrderMyGear’s total transaction volume.

Phorest’s global expansion fuels an 866% increase in its user base

Phorest tapped into a vast new customer base for its payment solution by using Stripe to bring PhorestPay to all its customers around the globe, thereby enhancing the consumer’s salon experience. Since October 2020, PhorestPay’s user base has increased by 866%, and revenue has grown by 335%.

Tekmetric increases average customer order by 3x

Tekmetric adopted Stripe Terminal, Stripe’s point-of-sale solution, allowing auto shops to accept in-person payments through the Tekmetric platform. Adding BNPL options Affirm, Klarna, and Sunbit through Stripe’s Optimized Checkout Suite has dramatically increased customers’ ability to pay for car repairs. With BNPL, the average repair order at Tekmetric shops has increased 3x, while adopting Terminal has reduced shops’ off-platform payments.