Wayflyerwhich provides financing to e-commerce startups in exchange for a portion of their future revenue, announced today that it has secured $1 billion in capital from investment management firm Neuberger Berman.
In a press release, Wayflyer describes the financing as an “off-balance sheet program,” meaning the company has been allowed to keep certain assets and liabilities from being reported on its balance sheet. It supposedly helped Wayflyer keep its overall debt-to-equity ratio low. Before the Neuberger Berman deal, Wayflyer had access to hundreds of millions in credit to fund its loans.
Over an unspecified period of time, Wayflyer will purchase up to $1 billion in assets from funds managed by Neuberger Berman. Given the nature of the off-balance sheet arrangement, Wayflyer’s terms should be more favorable than they would otherwise be.
“As e-commerce companies seek growth amid current economic conditions, we are seeing increased demand for our reliable financing solutions, especially in the U.S. market,” Aidan Corbett, co-founder and CEO of Wayflyer, said in a statement. “The $1 billion off-balance sheet asset purchase from Neuberger Berman demonstrates the strength, success and resilience of our offering and will provide us with the capital strength to ensure our e-commerce clients 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 reimbursement based on a company’s revenue activity.
Founded in September 2019 by Corbett and Jack Pearce in Dublin, Ireland-based Wayflyer’s clients typically get loans of between $300,000 and $400,000 to cover things like inventory purchases, shipping costs and other big-ticket items needed to run an e-commerce business.
When making loan and repayment decisions, Wayflyer relies on a range of data sources, including Shopify, Woocommerce, TrustPilot reviews, Google Analytics, and broader information about how its shipping services are performing. Corbett claims this provides Wayflyer with predictive advantages; He told TechCrunch that the platform can predict things like when a merchant might start seeing additional funding issues in the future.
Wayflyer has grown significantly since its founding four years ago, onboarding more than 3,000 clients to the platform and surpassing $2 billion in deployed loans. Corbett claims that the vast majority – more than 80% – of Wayflyers clients come back for additional financing after completing their initial financing deals.
But Wayflyer faces headwinds in a market that has seen more than its fair share of ups and downs recently.
As of 2019, an estimated 90% of all e-commerce businesses failed within their first 120 days of launch, According to Search from Forbes, Huffington Post and Marketing Signals. The study found that the main reasons were poor marketing performance and lack of search engine visibility.
However, combined with the economic downturn and competition from companies like Clearco and Uncapped, Wayflyer investors don’t seem to have lost confidence in the startup’s approach. In June, Wayflyer — which has so far raised nearly $236 million in equity financing — renewed a $300 million debt line from JPMorgan.
“The global e-commerce sector is expected to continue to grow rapidly in the coming years,” Zhengyuan Lu, managing director at Neuberger Berman, said in the press release. “We are always looking for innovative partners who deliver real value in this space and were thoroughly impressed with Wayflyer’s model and experienced team.”
And he’s not the only optimist. Morgan Stanley pridect He expected the e-commerce sector to reach $5.4 trillion in 2026, up from $3.3 trillion today, with e-commerce growing to reach 27% of sales over the next three years.
Corbett says Wayflyer — which is not yet profitable — will use the $1 billion proceeds from the deal to continue to fuel the company’s growth, especially in the United States.