Wayflyer, which provides financing to e-commerce startups in exchange for a portion of their future revenue, today announced that it secured $1 billion 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 liabilities 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 millions in credit to fund its loans.
Over an unspecified period of time, Wayflyer will purchase up to $1 billion of assets from funds managed by Neuberger Berman. And, given the off-balance sheet nature of the arrangement, Wayflyer’s terms will 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 billion off-balance sheet purchase of assets from Neuberger Berman demonstrates the power, success and resilience of our proposition and will 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, TrustPilot reviews, Google Analytics and wider information about how shipping services are performing. This affords Wayflyer predictive advantages, Corbett claims; he told Bobbys Brane that the platform can forecast things like when a merchant might start seeing additional financing issues down the line.
Wayflyer has grown considerably since its founding four years ago, onboarding more than 3,000 customers to the platform and eclipsing $2 billion 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’s experienced more than its fair share of ups and downs recently.
As of 2019, an estimated 90% of all e-commerce businesses were failing 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 visibility, 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 million in equity financing — renewed a $300 million 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 trillion in 2026, up from $3.3 trillion today, as e-commerce grows to reach 27% of sales within the next three years.
Corbett says that Wayflyer — which isn’t yet profitable — will use the proceeds from the $1 billion deal to continuing fueling the company’s growth, particularly in the U.S.