Flash, Global Founders Capital and YC back UK startup Tranch to launch BNPL across wider B2B market
Tranch, a buy now pay later (BNPL) platform for SaaS sellers and professional services providers, has raised £3.5 million ($4.25 million) in pre-seed equity and debt funding to bring payment flexibility to a wider pool of B2B customers.
The funding round is led by Flash Ventures, the pre-seed investor behind companies including Spenmo, Everstox and Voly, and Global Founders Capital. Tranch is also backed by Y Combinator and will join YC’s Summer 2022 cohort as the London-based startup gears up to launch in the US later this year. The round includes a debt facility from Columbia Lake Partners.
Companies waste $20 billion a year globally* paying premium monthly fees for annual SaaS contracts that they could pay for upfront and in full if it wasn’t for cash flow constraints. Tranch helps eliminate this wastage, enabling companies to pay for SaaS and other business services on terms that work for both them and their suppliers.
Tranch embeds in the sales journeys of SaaS sellers and other service providers (from legal firms to recruitment). By offering a ‘Pay with Tranch’ payment method, these suppliers can offer their end-customers a more flexible way to pay for contracts worth £10,000 to £250,000, while they themselves get paid upfront, faster.
Businesses selecting Tranch to pay their large expenses can achieve greater control over their cash flow and boost their liquidity. Instead of settling invoices in full within a standard 30 to 90 day term, an end-customer that chooses ‘Pay with Tranch’ can spread the cost of their contracts over six to 12 months.
At the same time, Tranch helps suppliers to create a positive sales experience that generates better customer loyalty and retention over the long term. SaaS sellers, in particular, no longer have to offer bespoke payment plans that cause them billing complexity and increase the risk of customer churn.
Following a digital underwriting process that blends advanced credit risk modelling with open banking data, Tranch extends revolving credit lines to businesses against larger expenses and for longer durations than have been previously facilitated by other B2B BNPL platforms. Tranch’s dynamic credit lines can be used against multiple expenses incurred with multiple suppliers. However many expenses a customer brings to Tranch, they are all managed seamlessly across one single dashboard from supplier payments to automated collections.
Yash Zaveri, Partner & MD at Flash Ventures who will join Tranch’s board comments: “B2B BNPL players so far have been largely focused on B2B e-commerce where ticket sizes are small and lenders rely on standard credit data to make limited credit decisions. We’re excited to see Tranch making B2B BNPL accessible to more complex lending demands involving larger volumes and longer durations, all of which creates a hugely scalable international market opportunity through their full lending tech stack.”
Tranch was founded in London in 2021 by Philip Kelvin and Beau Allison, former CFO and Head of Engineering respectively of Trussle, a UK proptech startup, where they experienced the exact problem Tranch is able to solve.
Philip Kelvin, Co-founder & CEO of Tranch, comments: “Tranch was born out of a frustration and desire to fix a broken model. My time as a scaleup CFO made me realise just how inflexible payment options can be for crucial SaaS tools and other business services, and how detrimental this lack of choice and payment ownership can be on thousands of companies. ‘Pay with Tranch’ solves that huge and costly problem, by putting flexibility and choice at the heart of the payments process in a way that works simply and favourably for both suppliers and buyers.”
Proceeds of the investment will be used to grow the team, as well as onboard more suppliers across multiple verticals as the company continues its growth in the UK and then expands to the US later this year.
Eduardo Silva, Chief Revenue Officer at Patchworks, an e-commerce integration platform that has started offering Tranch to customers, concludes: “By offering a ‘Pay with Tranch’ option to our customers we are looking to change the SaaS buying experience for the better. Just as BNPL is transforming consumer e-commerce, Tranch will help us offer a better sales experience to our customers by removing barriers, while increasing the revenue we receive upfront.”