Alternative buy-now-pay-later startup Payright has raised $27 million in debt and equity funding, as it cashes in on the flexible payments boom and its own 650% revenue growth.
The round was led by corporate advisory firm Henslow, in partnership with wealth manager Escala Partners, and also included a range of professional, sophisticated and institutional investors.
Founded in 2016 by brothers Myles and Piers Redward, Payright offers a buy-now-pay-later solution for big-ticket items of $1,000 to $20,000. The average purchase size is about $2,500.
The recent funding — $22 million in debt funding and $5 million in equity — follows a similar $30 million debt and equity round in March this year.
Since then, the startup has been focusing on maintaining its growth trajectory and developing new products, Myles Redward tells StartupSmart.
Currently, Payright has about 1,500 merchants on board, and a customer base of approximately 20,000.
It has also launched a web-based plugin, allowing customers to use the platform for goods sold online.
“We’re seeing really good continued growth across the business, and the expectation is that we will continue to grow over the coming months and years,” Redward says.
In the past financial year, Payright saw revenue growth of 650%, compared to the previous 12 months. It also saw a 400% increase in customer numbers.
“Every month seems to outpace the previous, which is a really good position to be in,” he says.
And this is particularly true when you’re seeking investment.
“It certainly made the journey a lot easier,” he adds.
“If you continue to show good growth in volume as well as revenue, it does make it an easy sell to a prospective investor.
This latest round saw several existing investors following on, as well as new investors contributing. The mix of investor type was a little different, however.
While previously, investors were mainly high-net-worth individuals and family offices, now the startup’s growth figures mean it’s “on the radar of some of the more institutional-type investor”, Redward says.
“A lot of these sophisticated or institutional investors only really start to take interest when you start to get to a point where you’re around those numbers,” he says.
“Equally, it was all quite targeted, of course, because some of these investors have quite deep pockets.”
There is, however, high demand for investment into buy-now-pay-later products, Redward adds.
Usage of these payment platforms is doubling every six months, he says, and the big-name players Zip and Afterpay have seen high-profile IPOs and subsequent success.
“There’s a fair bit of excitement in the sector at the moment, and we’re seeing ongoing growth in the sector more broadly,” Redward explains.
“There’s really good awareness, not just from a merchant and customer perspective, but also from an investor perspective.”
And the co-founder doesn’t expect the buy-now-pay-later boom to taper off anytime soon.
“If it does plateau, it’s still a fair way off yet. We’re still very much in the infancy of the sector,” he explains.
Currently, about 10% of the retail sector is utilising these products, and both usage and awareness are only going up.
“We’re seeing more and more people looking to adopt it across different platforms.”
Time will tell
The $27 million in funding is mainly pegged for growing the loan book and fuelling Payright’s next phase of growth.
However, the startup is also moving into the New Zealand market, following demand from merchants who want to offer the product to their Kiwi customers.
“They want to be able to offer the product across their global customer base,” Redward says.
The equity funding, in particular, will be used for growing the Payright team, with a focus on tech and development, as well as in sales, business development and internal support.
It will also be investing in its legal team.
“With increasing regulatory focus on the sector, we want to make sure we’re well covered from that perspective,” Redward says.
As Payright grows, the founder says he isn’t necessarily in a hurry to join his peers in going down the IPO route.
Although he admits the decision seems to have been a fruitful one for Zip and Afterpay, “whether we go down that path, time will tell”, he says.
He does, however, expect to see a need for additional investment as Payright continues to grow, and he hasn’t written off the idea of an IPO.
“These are conversations we’re having fairly regularly internally,” he adds.
A product of good timing
Although Payright is kicking goals and racking up revenue, Redward says it’s “really fortunate” to be in a sector that’s seeing a wild phase of growth and attention.
“There’s a number of other players out there that have created not just an awareness, but almost an expectation, that you can go into any shop of any type and make a purchase today and pay for it over time,” he explains.
However, good timing and a nose for a space that is about to take off isn’t quite enough, he says.
“It is a product of good timing, but it’s also having the right people on board to help enable that journey,” Redward explains.
“We’ve been really fortunate from day one to have a number of good people on the journey with us.”
Whether it’s advisors, partners or those crucial first key hires, “surround yourself with really good people”, he advises.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.