BNPL providers across Europe raise investment rounds to expand and compete in the crowded but growing market PayNXT360

BNPL providers across Europe raise investment rounds to expand and compete in the crowded but growing market

Over the last few years, investors have increasingly invested in buy now pay later companies. With the industry recording robust growth and is expected to continue its upward trajectory over the next three to four years. The trend is not slowing down anytime soon. Across Europe, many BNPL firms have aggressively raised funding rounds to expand and compete in the crowded but growing market. For instance,

In February 2022, Scalapay became the first Italian unicorn after raising US$497 million in its Series B funding round, which was led by Tencent and Willoughby Capital. The investment round also saw participation from Tiger Global, Moore Capital, Fasanara Capital, Deimos, and Gangwal. As of February 2022, the firm had raised a total of US$700 million since its inception in 2019.
Scalapay, which offers a BNPL service for e-commerce firms globally, also launched a new platform, Magic, which focuses on customer checkout experiences. The platform is expected to address the key reasons for cart abandonment on digital checkout pages, such as shipping, privacy consent, sign-up details, and payment selection. Through this platform, the firm is targeting to onboard more merchants by transforming the checkout experience of their shoppers.

B2B BNPL startups are raising investment to launch their product offering

Along with existing BNPL providers, startups are raising funding rounds to come out of stealth mode and launch their deferred payment products for the B2B sector. For instance,

In May 2022, Tranch, a United Kingdom-based BNPL startup, announced that the firm had raised a fresh funding round of €4 million to take its B2B BNPL product mainstream. Notably, the funding round was led by Flash Ventures and Global Founders Capital.
While there is much momentum in the BNPL space currently, the market has traditionally relied on standard scoring models that keep loan sizes low and duration short. Tranch is looking to change this by combining traditional credit reports with open banking, thereby allowing the firm to lend against much larger expenses and for longer durations.

In the United Kingdom, the B2B BNPL space has seen increased competition as more and more players are entering the segment. For instance,

In March 2022, similar to Tranch, Playter, another UK-based BNPL provider, announced that the firm had raised US$1.7 million in its seed funding round to bring the deferred payment service to the B2B space. The investment round was led by Fin Capital and 1818 Ventures.
The B2B BNPL service provider allows businesses to unlock up to £300,000 at zero interest. The firm is planning to use the funding round to sustain its growth. According to the firm, it has grown over 1,000% in size and revenue in the recent months, leading to March 2022.

Along with funding rounds, BNPL firms are also opting for a differentiated strategy to boost growth

While most of the BNPL providers across the European region are betting big on fundraising rounds to sustain growth and remain competitive in the crowded segment, few players are looking to differentiate their business model to grow and compete. For instance,

in3, a Dutch BNPL lender, adopted a differentiated customer acquisition strategy. Most of the BNPL players look to onboard retailers to increase the adoption among consumers. However, in3 focuses on deals with payment service providers (PSP), which then take responsibility for pushing adoption across their retail customer bases.
This business model has resulted in a rapid growth rate for in3, which has experienced a 300% year-on-year revenue increase since 2018. In March 2022, in3 entered into a strategic collaboration with global payments firm, Worldline, which serves 11 times as many retailers as any of the in3’s existing PSP partners. Consequently, in3 is expected to experience an accelerated growth trajectory through its partnership with Worldline.
Along with the announcement of its partnership with Worldline, in3 also announced that the firm had raised US$11.1 million in its Series A funding round.

BNPL firms are eyeing fresh capital at a reduced valuation

With the market surging significantly over the last two to three years, early entrants to the sector have enjoyed huge valuations. However, with the market becoming overly crowded, some of the early players in the sector are now eyeing fresh capital infusion at a reduced valuation. For instance,

In May 2022, Klarna is eyeing a new fundraise of US$1 billion, which could put its post-money valuation in the low range of US$30 billion, according to Bloomberg. This valuation of the BNPL giant is significantly less compared to the US$46 billion that the firm attained less than a year ago.
As of May 2022, the firm has its presence across 20 markets; however, it has experienced operating losses of US$487 million in 2021., Klarna processed US$80 billion worth of transactions in 2021, which is up 42% from 2020. It also entered into various mergers and acquisition deals to further diversify its product portfolio.

As the competition in the BNPL space continues to grow across the European region, PayNXT360 expects more players to enter the market and raise funding rounds from the short to medium-term perspective. This will create more opportunities for global and regional investors looking to capitalize on the growing BNPL trend across Europe.

To know more and gain a deeper understanding of the BNPL market in Europe, click here.