Offering a pioneering buy now pay later (BNPL) platform for SaaS sellers and professional services providers, UK-based Tranch has just picked up about €4 million to launch out of stealth. Supporting the mission to take B2B BNPL mainstream, the funding was led by Flash Ventures and Global Founders Capital.
Founded in 2021 by Philip Kelvin and Beau Allison, Tranch is shaking up the market. While a lot of interest is currently gaining momentum in the BNPL space, it’s an area that has tended to rely on standard credit scoring which keeps loan sizes low and durations short. This London-based fintech is aiming to change that. By combining traditional credit reports with open banking, Tranch is able to lend against much larger expenses and for longer durations.
The result? It means that B2B BNPL will be more accessible to a far wider pool of businesses. More SMEs can start to rely on B2B BNPL for the first time to pay their annual (and expensive) Saas subscriptions, consultancy and professional fees in a way that doesn’t suck up vast amounts of cash flow leaving them without the liquidity they need to keep growing.
Philip Kelvin, Co-founder & CEO of Tranch, explained: “Tranch was born out of 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.”
It’s reported that companies waste about $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.
The solution 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, while they themselves get paid upfront, faster.
Further, 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, the young fintech startup 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.
Yash Zaveri, Partner & MD at Flash Ventures who will join Tranch’s board commented: “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.”
The fresh investment will be used to now 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.
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.
