Tranch, a London-based buy now pay later (BNPL) platform for SaaS sellers and professional services providers, has raised £3.5 million in pre-seed equity and debt funding.
The financing round was led by Flash Ventures, the pre-seed investor that backed companies, including Spenmo, Everstox and Voly, and Global Founders Capital. The round included a debt facility from Columbia Lake Partners that invested in Goodlord.
Gears up for US launch
Tranch will use the proceeds of the investment 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.
It is 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.
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.”
Philip Kelvin, Co-founder & CEO of Tranch, commented: “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.”
Eduardo Silva, Chief Revenue Officer at Patchworks, an e-commerce integration platform that has started offering Tranch to customers, concluded: “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.”
What issue does Tranch tackle?
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 tackle.
Reportedly, 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.
The BNPL startup is embedded into the sales journeys of SaaS sellers and other service providers ranging from legal firms to recruitment. The company combines traditional credit reports with open banking, thereby enabling it to lend against much larger expenses (up to £250,000) and for longer durations (up to 12 months). This makes B2B BNPL more accessible to a far wider pool of businesses.