Buy Now, Pay Later (BNPL) startup Scalapay has today announced it's raised a $155m Series A led by Tiger Global.
The round marks the first time the American VC firm has ventured into the European BNPL market, which is already dominated by huge players like Klarna (Europe’s most valuable private company).
It’s already been a big week for BNPL — Revolut announced it was dipping its feet into the instalment payment space, while Japanese BNPL solution Paidy was bought by PayPal yesterday for a cool $2.7bn.
ScalaPay’s $48m seed round in January was led by London-based Fasanara Capital. Yet it started thinking globally almost immediately, with its funding talks with Tiger known to have begun as early as March.
When questioned why the company went with Tiger Global over European investors, cofounder Simone Mancini admitted that its plans in the US were a key factor in tapping the New York-based VC firm.
“We were talking to various investors from both Europe and in the US, but in the end we [went] with Tiger,” says cofounder Simone Mancini.
The payment solution did also consider the possibility of acquisition, but the founders decided it was far too early. The $700m valuation offered by Tiger was another key decider for the company’s founders.
Scalapay’s new valuation means that it is also one of the most valuable VC-backed startups in Italy according to Dealroom.
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The funding will not only be used to finance its expansion plans but also to top up its C-suite. It's poached Pingki Houang from omnichannel retailer Fashion Cube and Arlene Reynolds is joining from Just Eat to oversee global expansion.
Follow the money but not the banks
Scalapay currently operates in continental Europe, with a focus on financing the luxury fashion sector.
But the Italian BNPL fintech is now eyeing expansion into the competitive UK market. It will join a throng of other players, including Klarna and newcomer Zilch.
Its planned entry into the UK comes despite threats from the regulator to tighten scrutiny of the BNPL sector.
BNPL providers have faced criticism for fuelling unsustainable retail therapy and 'debt traps' for its millennial and Gen Z customer base. The UK government is currently deciding on what regulation to implement.
Interestingly though, Scalapay isn't keen on following its peers by building out banking infrastructure. When questioned whether the company will join the likes of Klarna and Afterpay in creating its own consumer bank accounts, cofounder and CTO Johnny Mitrevski snubbed the idea.
Mitrevski likened heading further into the banking space with a dedicated app as “treat[ing] the merchants as a kind of drop shipping partner”.
Instead, the fintech will focus on payment solutions that allow for increased interaction between the consumer and merchant and, in the process, increase basket size, he says.
“We know if we do a good job there, then we're going to be a much more valued partner with merchants, than if we were just to be delivering a payment service and taking customers off their platform,” he says.
Scalapay is also looking at jet setting into the travel sector. This has already proven a hot new area of attack, with London-based startup Fly Now Pay Later, which procured a £10m Series A earlier this year.
Don’t expect to 'Scalapay' your gap-year trip, however, as the product will target shorter stays — “small pleasures like a romantic weekend” — with accommodation, transport and experiences all in the mix.
Speaking on the decision to support the startup, Alex Cook, partner at Tiger Global said: "Scalapay has quickly become an important player in European payments and the BNPL sector."