Instant-refunds startup Refundid has secured $3 million in equity and debt funding just six months after launching, as it gears up to eliminate a lingering point of friction in e-commerce.
The round was led by AP Ventures, the venture capital fund backed by Aussie buy-now, pay-later giant Afterpay. E-commerce veteran Paul Greenberg, who also founded the National Online Retailers Association, also invested and will join Refundid’s advisory board.
Founded in July 2020 and launched in February 2021, Refundid is a fintech tool designed to cut, or essentially eliminate, waiting times for refunds for products bought online.
According to co-founder and chief product officer Joel Aaron, refunded cash can be in the customer’s account within as little as 30 seconds.
It means consumers don’t have to wait for the seller to receive the returned product and approve the refund before they get their cash — a process that can take weeks or more.
Refundid acts as an intermediary, taking on the cost of paying the customer immediately. When the retailer approves the refund, they pay Refundid.
If they reject the refund for any reason, “we bear the risk,” Aaron says.
The time is now
Over the past five or six years we’ve seen huge strides in payments technology, co-founder and chief Brad Karney adds.
We’ve seen the emergence and huge growth of platforms like Afterpay, Zip and Klarna, offering alternative ways for consumers to manage their payments.
“Historically, there have been no refund options.”
It’s almost an Afterpay-style product, but offering short-term loans to the merchant rather than the customer.
And while it may seem counterintuitive for businesses to make it easier to return money, the founders say it’s actually all about building trust and positive relationships, encouraging repeat custom.
Aaron previously ran an e-commerce store himself, so is intimately familiar with the pain points that come with online sales. One of those was friction in the refund process, he explains.
As the COVID-19 pandemic led to an uptick in online shopping, those pain points only became more evident and more problematic.
The time is just right for a product like Refundid, Aaron says.
“It’s so important for merchants to be able to facilitate the perfect customer experience.”
“At the forefront”
It’s relatively early days yet, but six national retail chains have already signed on, and they’re reporting that between 50% and 60% of customers looking for refunds are choosing the Refundid option.
With some cash in their pockets, the co-founders are now gearing up for expansion, with plans to onboard another 14 retailers in a matter of weeks.
The plan is to have 100 top-tier retailers on board within the next 12 months, Karney says.
The funding will be used, primarily, to build out the team.
“Talent acquisition is the most important part of making this business successful,” Karney says.
“We know we’ve got a great product, we just need to execute well.”
That means hiring across the partnership development, customer service and software engineering teams, he explains.
The startup will also be investing in marketing and brand awareness.
Ultimately, the plan is to expand overseas, starting with New Zealand and the US.
While Karney dismisses any notion of Refundid being the ‘next Afterpay’, he says the startup certainly has global ambitions.
The goal is to be “at the forefront of refunds around the world”, he says.