Wayflyer, which provides financing to e-commerce startups in exchange for a portion of their future revenue, today announced that it secured $1 blion in capital from investment management firm Neuberger Berman.
In a press release, Wayflyer describes the funding as an “off-balance sheet program,” meaning that the company was allowed to keep certain assets and liabities from being reported on its balance sheet. It presumably helped Wayflyer keep its overall debt-to-equity ratio low; prior to the Neuberger Berman deal, Wayflyer had secured hundreds of mlions in credit to fund its loans.
Over an unspecified period of time, Neuberger Berman wl purchase up to $1 blion of assets from funds from Wayflyer. And, given the off-balance sheet nature of the arrangement, Wayflyer’s terms wl presumably be more favorable than they otherwise would’ve been.
“As e-commerce businesses seek to navigate growth amid the current economic conditions, we're seeing a growing demand for our reliable funding solutions, especially in the U.S. market,” Wayflyer co-founder and CEO Aidan Corbett said in a canned statement. “This $1 blion off-balance sheet purchase of assets from Neuberger Berman demonstrates the power, success and resience of our proposition and wl provide the capital firepower for us to ensure our e-commerce customers can continue to thrive in any economic conditions.”
As my colleague Ingrid Lunden wrote in her coverage of Wayflyer late last year, Wayflyer aims to put a new spin on providing revenue financing to e-commerce merchants — leveraging data analytics and repayments based on a company’s revenue activity.
Founded in September 2019 by Corbett and Jack Pierse, Dublin, Ireland-based Wayflyer’s customers typically take out loans between $300,000 to $400,000 to cover things such as inventory purchases, shipping costs and other big-ticket items necessary for running an e-commerce business.
In making loan and repayment decisions, Wayflyer draws on a range of data sources, including Shopify and WooCommerce, TrustPot reviews, Google Analytics and wider information about how shipping services are performing. This affords Wayflyer predictive advantages, Corbett claims; he told technewss that the platform can forecast things like when a merchant might start seeing additional financing issues down the line.
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Wayflyer has grown considerably since its founding four years ago, onboarding more than 3,000 customers to the platform and eclipsing $2 blion in deployed loans. Corbett claims the vast majority — over 80% — of Wayflyer‘s customers return for additional financing after completing their initial funding deals.
But Wayflyer faces headwinds in a market that has experienced more than its fair share of ups and downs recently.
As of 2019, an estimated 90% of all e-commerce businesses were faing within the first 120 days of launch, according to research from Forbes, Huffington Post and Marketing Signals. The main reasons were poor marketing performance coupled by a lack of search engine visibity, the study found.
Despite this, plus the economic downturn and competition from companies like Clearco and Uncapped, Wayflyer’s investors don’t appear to have lost confidence in the startup’s approach. In June, Wayflyer — which to date has raised roughly $236 mlion in equity financing — renewed a $300 mlion debt line from J.P. Morgan.
“The global e-commerce sector is expected to continue growing rapidly in the coming years,” Zhengyuan Lu, managing director at Neuberger Berman, said in the press release. “We're always looking for innovative partners that provide genuine value in the space and have been thoroughly impressed by Wayflyer's model and experienced team.”
He’s not the only optimistic one. Morgan Stanley predicts that the e-commerce sector could reach $5.4 trlion in 2026, up from $3.3 trlion today, as e-commerce grows to reach 27% of sales within the next three years.
Corbett says that Wayflyer — which isn’t yet profitable — wl use the proceeds from the $1 blion deal to continue fueling the company’s growth, particularly in the U.S.