Ironically or ironically, it was when the split payment (BNPL) B2C sector entered a zone of turmoil that BNPL B2B began to take off. While the first is faced with a growth crisis along with refinancing difficulties in a context of falling stock market valuations and inflation, the second is attracting investors and being structured.
The largest fundraiser in the sector, conducted by Mondu, was only unveiled on Monday 30 May. The Berlin-based start-up closed a $ 43 million Series A funding round, led by American fund Peter Thiel Valar Ventures, with support from Cherry Ventures, FinTech Collective, as well as several business angels from Klarna, Zalando and SumUp. Mondu was able to raise 14 million seeds seven months ago.
emergence of specialized fintech
Last week, British Tranch, which targets companies using SaaS software by allowing them to promote annual subscription payments, which charge less than monthly subscriptions, raised 3.5 million pounds sterling in pre-priming.
Other players in the sector include German Billie, who raised $ 100 million in Series C in October 2021, primarily from BNPL B2C heavyweight Klarna. Or the British Hokodo, and the American Resolve.
In France, one of the major players in split payment for individuals, Alma, intends to develop B2B. Hero, a fintech founded in September 2021, has already entered the market. It raised 1.8 million euros from business angels (Qonto, Stripe, Adyen, etc.), plus a credit line of 5 million euros from Avelinia Capital, which forms a bond debt fund for financing its. By 2022, the start-up will be able to supply 60 million euros in transactions.
Just as installment payment existed before retail fintechs, deferred payment is the basis of customer-supplier relationships in the B2B world. On average, in France, customers pay more than 60 days. And that is a problem. Payment delays are actually caused by repeated difficulties in cash flow for suppliers, who struggle to keep their working capital afloat. In France, where more than half of invoices are paid late, 25% of SME failures are due to late payment.
“BNPL B2B’s interest is to free up money on invoices that companies must pay, in order to get it back to work”, explains L’Usine Digitale Roland Jais Nielsen, founder and CEO of Hero. BNPL platforms allow suppliers to immediately receive amounts due to them. According to Philipp Povel, co-founder of Mondu, the BNPL B2B market represents 200 billion dollars in Europe and the United States.
modernize discount and credit insurance
These new fintechs provide more modern solutions by “consuming” short-term financing methods such as factoring (assigning receivables) or bank banking, which are more difficult to set up. In Hero, for example, invoices are passed through the start-up API to be sent to the debtor (whether the sale takes place online or offline), which receives the payment link. Eventually, the start-up will also offer consumers the opportunity to take advantage of payment facilities. Its business model is based on commissions of 1.5 to 3.9% depending on the due date of invoices, quantity, payment method and sector.
On the other hand, the barriers are heavier than BNPL B2C. First, in terms of checking the solvency of the debtor, which requires more complex marking. Second, because the amounts at stake are higher and require greater funding from the fintech side.
French tech at the rendezvous
Hero has more than 130 clients to date, including the Dessange group and fashion wholesaler eFashion Paris. The 14-year start-up is planning a new fundraiser in 2022, and the recruitment of approximately fifteen new employees. It will soon launch a BNPL solution for in-store purchases.
Other French fintechs are discussing the issue of B2B payment deadlines from other angles. This is the case of Kresus, which has an automated commercial discount solution (the discount is provided according to the payment period), and Defacto, which provides credit to SMEs by paying their invoices, which are returned by consumers later.