Scalapay Raises $155M at $700M Valuation - BNPL Growth

Scalapay Secures $155 Million to Expand Buy Now, Pay Later Services

Scalapay, a leading buy now, pay later (BNPL) technology provider, has successfully completed a funding round to accelerate its growth plans. The company, which has gained traction across Europe, particularly within the fashion sector, has raised $155 million, achieving a valuation of $700 million.

Funding Details and Investors

This funding round was spearheaded by Tiger Global, with participation from new investors Baleen Capital and Woodson Capital. Existing backers, Fasanara Capital and Ithaca Investments, who previously invested $48 million earlier this year, also contributed to this round. Scalapay’s total funding now amounts to $203 million.

Rapid Growth and Market Position

The substantial size of this Series A funding, considering Scalapay’s young age of only two years, highlights the current dynamism of the BNPL market. It also reflects the startup’s strong performance within this competitive landscape.

How Scalapay Works

Scalapay integrates seamlessly into online retailers’ checkout processes. It offers customers an interest-free payment option, allowing them to split purchases into three installments. Currently, Scalapay collaborates with 3,000 merchants across Europe, including Italy, France, Germany, Spain, Portugal, Finland, Belgium, Netherlands and Austria.

Increasing Transaction Volume

According to CEO Simone Mancini, Scalapay is experiencing significant growth in transaction volume. Initially, between 5% and 10% of customer transactions utilized Scalapay. This figure has now risen to 15%-20%, with even higher rates – 30%-50% – observed in the luxury fashion segment.

Boosting Conversions and Average Order Value

Scalapay’s presence demonstrably impacts online retail performance. The company reports an 11% increase in conversion rates for its merchant partners. Furthermore, consumers using Scalapay tend to spend, on average, 48% more per transaction.

The Rise of BNPL During the Pandemic

The growth of buy now, pay later services has been a defining trend in e-commerce during the pandemic. While installment payment options existed prior to COVID-19, the shift to online shopping and economic uncertainties fueled a surge in BNPL adoption.

Advanced Risk Analysis and Data Utilization

Leading BNPL providers are now employing sophisticated data analytics and risk assessment techniques. This allows for a more comprehensive understanding of a customer’s financial situation, leading to more informed transaction decisions. The algorithms driving these services are becoming increasingly crucial.

BNPL Market Consolidation

The BNPL sector is witnessing significant consolidation, with major players expanding through investment and acquisition. Klarna achieved a valuation of nearly $46 billion in June. Affirm went public with a current valuation of around $23 billion. PayPal acquired Paidy in Japan for almost $3 billion, and Square acquired Afterpay for $29 billion.

Other Notable BNPL Companies

Beyond the industry giants, numerous smaller BNPL companies are also attracting investment. Zilch is currently valued at over $500 million, and Resolve, a spinout from Affirm, has raised $60 million.

Scalapay’s Valuation and Potential Acquisition

Considering the broader market trends, Scalapay’s $700 million valuation appears reasonable. The company was even approached for acquisition by two major players, attracted by its technological advancements and market penetration, particularly in Europe and the fashion industry.

Strategic Focus on Core BNPL Services

Scalapay ultimately declined acquisition offers, opting to pursue independent growth. This decision was supported by interest from Tiger Global. The company intends to concentrate on enhancing its core BNPL offerings rather than diversifying into broader fintech or payment solutions.

Investment in Growth and Talent

Securing substantial investment will be vital for Scalapay’s future success. Building strong relationships and attracting top talent are key priorities for continued expansion and meeting evolving market demands.

Industry Perspective

Alex Cook, partner at Tiger Global, stated, “Scalapay has quickly become an important player in European payments and the BNPL sector. We are impressed by their product development pipeline and strong focus on merchant success. We are excited to support Scalapay in the next phase of its growth.”

Differentiating Scalapay’s Approach

Francesco Filia, CEO of Fasanara Capital, highlighted Scalapay’s unique approach, stating, “They’re leveraging BNPL in an entirely new way,” emphasizing the company’s focus on enhancing customer experiences and driving conversions for merchants.