Form3, a quiet giant in UK fintech, raises $60M at a $570M valuation

The global economy remains in a sticky spot, in the words of the International Monetary Fund. Understandably, banks and other financial players are therefore looking to do what they can to bring down operating costs while spurring more financial activity.

Today, Form3, one of the startups building tools to do just that by connecting financial players with each other to enable account payments, said it raised $60 million to continue expanding its business.

British Patient Capital is making the investment, which closes out Form3’s Series C at $220 million. Others in the round include a mix of notable strategic and financial investors such as Visa, Goldman Sachs, Mastercard, Barclays, Molten Ventures and 83North. Sources familiar with the matter told TechCrunch that the startup is valued in the region of $570 million post-money.

A lot of fintechs wade into the market with disruptive mentalities — they are outsiders who see what is broken and are inspired to fix it. Form3 has slightly different DNA.

Mike Walters, the startup’s CEO and co-founder, told TechCrunch that the company got its start in 2016 when he and another co-founder, Michael Mueller, were both working at Barclays and found themselves frustrated with the many inefficiencies of building new services.

“From a product perspective, every time you wanted to do anything to make your business better for your customers, you would crash into a payment estate that would require you to spend many millions of dollars to test and enhance basic infrastructure,” Walters said.

The two puzzled out that if they could apply modern technology to solve that problem, would they build the same solutions that already existed? “The answer was no,” Walters joked.

Neither Walters nor Mueller have a technical background, instead specializing in the strategic and product sides of the business. Tapping their networks, they linked up with Steve Cook, an expert in building SaaS for financial transactions, who went on to become Form3's third co-founder and CTO.

Over the years, Form3 has grown into a quiet giant in the fintech space. The company works not just with heavyweights like its investors but also a wide swathe of neobanks like Klarna, N26 and SumUp, as well as banking-as-a-service providers like Thought Machine. All of those customers tap Form3’s APIs to create faster and more efficient payment services for their customers.

The startup offers services like instant transfers, payment orchestration, fraud protection, direct debit, credit transfers and more. In the U.K., it already handles more than 50% of all the country’s non-cash payment volume. Walters would not disclose total revenues or payment volume, but he said the company doubled its processing volume globally in the last six to nine months and expects to double it again in the next 12.

The U.S. is its newest market, and the hope (and plan) is to have newer geographies like the U.S. and Europe generate that planned increase in volume.

Interestingly, this funding round has been a long time in the making: The first investment in the Series C dates back to September 2021.

That is partly a consequence of the tight state of the market today. Growth rounds for anything other than buzzy AI companies remain sparse, and it is much easier to close a smaller round as an extension than start a new, larger round. That's especially true if the round helps bring in significant backers, and the startup in question does not need the big pile of cash that might come with a growth round.

“Form3 has built a leading solution for a challenge that banks worldwide are facing: how to transition to a modern, future-proof payments infrastructure,” said Tom Haywood, managing director of direct investments at British Patient Capital, in a statement. “We are delighted to support them as they take the next steps in their growth journey.”