Tiger Global Invests in Accrue Savings' 'Save Now, Pay Later' Platform

The Rise of Alternative Payment Methods and a New Savings-Focused Approach

The “buy now, pay later” (BNPL) sector has experienced substantial growth, emerging as a viable alternative to traditional credit cards. Last year alone, this trend facilitated $100 billion in sales, a figure exceeding 2020’s total by a factor of four.

Despite the convenience of installment payments, concerns regarding increasing debt accumulation persist. This has prompted the Consumer Financial Protection Bureau to initiate an investigation into the practice.

Introducing Accrue Savings: A Focus on Saving Before Spending

Founded in June 2021 by CEO Michael Hershfield, Accrue Savings presents a different model, aiming to re-establish a culture of saving among consumers. The company’s approach integrates a savings experience directly within the merchant’s shopping platform.

This integration rewards customers for proactively saving towards desired purchases.

Launching and Initial Traction

Following a $4.7 million funding round, Accrue Savings launched its product in late 2021. The offering provides merchants with the ability to present customers with expanded payment choices.

Hershfield clarified that the company’s intention isn’t to supplant BNPL, but rather to empower brands to assist customers in saving for purchases, simultaneously boosting customer loyalty and acquisition.

Leveraging Brand Influence and Savings Tools

“Brands possess significant influence, and the common perception that Americans do not save is inaccurate,” Hershfield stated. “Our research indicates increased savings rates during the pandemic.”

“The way Americans save can now be directly linked to specific brands. A greater availability of effective savings tools is needed, and these tools should be readily accessible on retailer websites.”

How the Savings Feature Works

Accrue Savings embeds a savings functionality onto a retailer’s website. This allows merchants to incorporate the feature into targeted marketing efforts via email or SMS.

As consumers reach predefined savings milestones, they become eligible to receive FDIC-insured cash contributions directly from the brands they are saving with.

Growth and Future Expansion

Hershfield indicated that disclosing specific growth metrics is premature, given the company’s recent launch. However, he confirmed a growing customer base.

Currently, Accrue Savings partners with brands including Allbirds, Casper, Poly & Bark, Smile Direct Club, and Tire Agent. The company began with 15 customers and anticipates doubling this number in the coming months.

Series A Funding and Strategic Partnerships

Accrue Savings recently announced a $25 million Series A funding round. Tiger Global led the investment, with participation from Aglaé Ventures, Maple VC, and existing investors like Twelve Below and Box Group.

Additional investors included Red Sea Ventures, Ground Up Ventures, Good Friends, Silas Capital Ventures, and prominent individuals such as UPS CEO Carol Tomé and Fanatics CEO Michael Rubin.

Industry Validation

“Accrue Savings provides a mutually beneficial solution, enabling brands to connect with a wider audience while offering consumers a responsible spending alternative,” commented Alex Cook, partner at Tiger Global.

“Michael and the Accrue Savings team are developing a distinctive platform, and we are excited to support their continued growth.”

Looking Ahead: Scaling the Business

This latest funding brings the company’s total raised capital to almost $30 million. Hershfield intends to utilize these funds to expand retail partnerships and bolster the team across all departments.

Currently employing 14 individuals, Accrue Savings aims to reach a headcount of approximately 65 employees by the end of the year, focusing on engineering, sales, and marketing roles.