On the back of the pandemic-fuelled ecommerce boom, Wayflyer, a fintech startup which provides loans to ecommerce businesses, has raised a $76m Series A round.
Led by Left Lane Capital with support from DST Global, QED Investors, Speedinvest and Zinal Growth, it's another signal that investors are betting the impact of Covid-19 on consumer habits is here to stay — even as restrictions are lifted.
The Dublin-based company, launched in April 2020, has now raised $86.2m in total — after a $10.2m raise in September last year.
Zinal Growth is the family office of Guillaume Pousaz, the founder of British fintech Checkout.com and the 33rd richest person in the UK.
“People who never shopped online before the pandemic have shifted their behaviour,” says Aiden Corbett, founder and CEO of Wayflyer.
“The behavioural shift is permanent.” While things like clothing, which people enjoy shopping for in person, will see a dip as the high street opens, Corbett predicts, he also believes the majority of ecommerce growth is here to stay.
In the UK, the proportion of retail done online was 4.5 times higher in 2020 compared to the average across the preceding four years. In France and Germany, it was 2 and 2.3 times higher respectively.
It's predicted that, across 2021, global ecommerce sales will reach $4.2tn in value.
The amount of deals Wayflyer’s making has increased dramatically across the last six months — up 290%. Corbett says that’s largely due to expansion into the US, which started last May and now accounts for 65% of deals.
A capital problem
Ecommerce businesses have a “uniquely complicated” capital problem, Corbett says, because they pay for inventories a long time before they receive the goods.
For example, if an ecommerce business wants to stock up for Christmas, they’d need to make orders in August or September. On the day they make the order, they pay around 30% of the bill, and then 70% on the day it’s shipped.
Shipping can take a long time, particularly as a lot of European businesses source goods from Asia. Then there’s marketing spend. It’s only after all that, a process which can take a few months, that they’d see revenue returns.
“Banks don’t like ecommerce businesses,” says Corbett, so a lot of people rely on family and friends to finance the initial costs.
How Wayflyer helps
Wayflyer works by giving a business a loan that’s then paid back by the retailer as a percentage of sales made by the business each day. Wayflyer also charges a fee on top of the loan.
If the business does well, it pays the loan back quickly, meaning there’s an “alignment”, Corbett says, between the goals of Wayflyer and the goals of the businesses.
The default rate is very low, he says, because Wayflyer analyses both the revenue streams and advertising platforms of businesses before taking them on.
If a company does default, Wayflyer offers them support on boosting their marketing and advertising capabilities. “There’s no personal guarantee and no lean on assets,” Corbett says, “so if your sales drop off, my repayments drop off too.”
The company’s currently launching in the Netherlands and Spain, with France and Germany planned for the coming months.
Wayflyer’s biggest competitors, he says, are Clearco, based in the US, and Uncapped, a British startup that’s smaller than Wayflyer and provides capital to a more diverse range of small businesses. According to Dealroom data, Clearco has raised €199m in VC funding, and Uncapped has raised €107m.
