Klarna-rival Zilch strikes $110m deal with Goldman Sachs and Daily Mail owners

London-based buy now pay later FinTech Zilch secured $110m of debt and equity funding from Goldman Sachs Asset Management and DMG Ventures – the venture capital arm of the Daily Mail and General Trust plc.

The funding brings the overall size of Zilch’s Series B funding round to $200m – just three months after the round was announced in April.

This investment will enable the FinTech to further accelerate its growth with media campaigns in the UK and launch its services in the US.  It now plans to hire 100 new employees in the UK and US, bringing its workforce to 250.

It comes after the sector’s largest player Klarna raised a record $1bn earlier this year, and another $639m just three months later in a round that valued it at $45.6bn – the second most valuable FinTech startup in the world. The firm said it saw a “phenomenal demand” for its BNPL product and is currently adding more than 150,000 customers a month.

The firm allows its customers to shop wherever MasterCard is accepted and spread their payment over six weeks for zero interest and zero fees. It is not hampered by conventional obstacles relating to merchant acquirers, and contributes to what it says its high rating on the reviews platform Trustpilot, it said.

Zilch CEO Philip Belamant said, “As our customer numbers continue to grow, we’ve taken the decision to raise additional capital to service this phenomenal demand. As Zilch continues to scale at pace, we’re delighted that well-respected institutions such as Goldman Sachs and DMG Ventures share our vision of what credit should be in today’s world and how that can be delivered directly to customers in the most responsible way. By putting our customers first and building direct relationships with each of them, we are doing something no one else in the industry has done before.”

This funding round follows a series of announcements from Zilch, including its latest feature, Tap and Pay-over-time. The FinTech aims to become the largest BNPL player in-store in the UK without the need for its customers to use annoying bar / QR codes. Zilch is an over-the-top (OTT) BNPL product that allows its customers to shop wherever MasterCard is accepted and spread their payment over six weeks for zero interest and zero fees.

The London-based startup became the first company in the UK’s BNPL market to become fully licensed by the Financial Conduct Authority (FCA) in November last year – a considerable achievement given the regulatory questions that have been posed about the market.

Goldman Sachs Asset Management Executive Director Pankaj Soni added, “We’ve been tracking Zilch’s progress over the last 12 months and are impressed with the differentiated and direct to consumer approach that the company has taken to build its offering. We are delighted to be supporting their growth and look forward to build on our relationship in the coming years.”

However, the BNPL sector has been under strict scrutiny amid concerns it would leave vulnerable customers in debt and encourage people to live beyond their means. The debt charity Stepchange has called on the FCA to stop firms using the term ‘buy now pay later’ to market credit products. It has also pushed for firms not to backdate any interest during the offer period.

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