PayPal is making its biggest purchase yet.
The digital payments company said Wednesday that it has agreed to pay roughly $4 billion to acquire Honey Science, the developer of a discovery tool designed to help online shoppers find discount offers.
The deal represents a massive return for Honey's backers, which include BAM Ventures, Mucker Capital, Ludlow Ventures, Anthos Capital, SXE Ventures and RTA Capital, among others. Since its founding in 2012, Honey has reportedly raised around $40 million in total VC financing; the Los Angeles-based company was also in talks to secure an additional $100 million round in February 2018, according to a report by Recode.
To drive more sales to its platform, PayPal has made a series of acquisitions of late. The company agreed to buy Swedish ecommerce operator iZettle in a $2.2 billion deal in May 2018, marking its biggest acquisition prior to Honey, according to the PitchBook Platform. Other notable acquisitions during 2018 include fraud prevention and risk management platform Simility and payments business Hyperwallet.
Acquiring Honey is a key part of PayPal's plan to expand its business focus by reaching consumers before they start shopping rather than solely at the time of completing a transaction. Honey says it has more than 17 million members worldwide and has worked with some 30,000 consumer brands, such as Macy's, Walmart, Expedia and Dell. It was profitable in 2018, PayPal reported.
The Honey deal marks the biggest acquisition of a VC-backed company in the Los Angeles area and the second-largest VC exit, following Snap's IPO, according to the PitchBook Platform. Honey’s co-founders, George Ruan and Ryan Hudson, will continue to operate the company after the deal closes, which is expected to be in 1Q 2020.