Speedinvest Blog

Financing the Internet Entrepreneur of Tomorrow: Our investment in Wayflyer

October 22, 2020

The Rise of E-Commerce

It is no secret that e-commerce has rapidly exploded over the past 25 years. Not only that, macroeconomic changes, such as COVID-19 and subsequent social distancing, have only accelerated its preeminence. Putting things into perspective: Online retail sales have surpassed the $3.5 trillion threshold and are projected to reach over $6.5 trillion by 2023.

Going online is not an option anymore, but a necessity! This stands true for both large retailers as well as for mom and pop shops. Actually, over 90% of the over 3 million online shops in the world (excluding China) are SMEs. But one question remains.

How do e-commerce businesses finance themselves?

Good question. Let’s have a quick look at the financing options available to e-commerce businesses today:

  1. Banks? Traditional banks currently lend money using tangible assets as collateral. In other words, asset-light e-commerce businesses struggle to access credit. This means that over 2.7m SMEs (globally, excluding China) are not able to finance themselves because they don’t fit the banks’ old-school underwriting models.
  2. Venture Capital? Unfortunately, VC money is not the right type of financing for every business. Only a small cohort of business models, with the potential to disrupt entire industries, are well suited to financing from venture capital. Also, VCs are often scared of e-commerce businesses, especially if there is a strong inventory component.
  3. That’s it…?

Enter Wayflyer, the revenue-based financing option for e-commerce brands. By using innovative data sources via API integrations with payment providers (Adyen, Stripe, etc.) and ad metrics (FB, Adwords, etc.), Wayflyer is able to merge performance marketing with financial performance to provide capital. The analytics are free of charge and are continuously adjusted in order to help e-commerce shops improve their return on advertising spend (ROAS). Businesses with financing needs are able to finance up to USD 2M on their marketing spending.

What exactly does revenue-based financing mean?

Revenue-based financing unites the best features of equity and debt financing into one. Revenue-based lenders understand that ROAS is predictable for many e-commerce companies. Many brands know that if they spend €1 on Adwords, then they expect to generate €3 in revenue. Revenue-based lenders provide funding for predictable marketing spend and then use the revenues generated by that marketing spend to repay the funding. Below is a comparison of the different financing options that make the revenue-based option a no-brainer:

Image for post

For e-commerce companies, this is an extraordinarily compelling value proposition: no interest, no dilution, no warrants, no fixed repayment schedule, no covenants and no long-term commitment. This all translates to an easy process with fast applications and payout.

For online shops the financing is frictionless. Think of Wayflyer as a partner who helps them grow more quickly by improving their ROAS and advancing their marketing spend when it is needed.

What excited us about Wayflyer?

Aligning interests with customers is crucial in any business, especially if all parties want to create a healthy and long-lasting business relationship. This is why Wayflyer is not solely focused on offering revenue-based financing, which oftentimes results in a short-term relationship.

Wayflyer is focused on creating a fundamentally new product category that goes beyond just financing. With Wayflyer’s free analytics tools, Wayflyer provides e-commerce businesses with personalized data that can help them (i) improve their marketing spendings, (ii) create a relationship of trust with customers, and (iii) get the client to a critical size to enable them to be approved for a loan.

Behind all of this sits a diverse, energetic and united team led by repeat founders Aidan Corbett (CEO) and Jack Pierse (CFO). Corbett and Pierse complement each other perfectly and have attracted high-caliber talent from all over the world. It is precisely this mission-driven team, sustainable embedded model, and long-lasting relationships with a growing customer segment that got us excited about this opportunity.

What is next for Wayflyer?

After this seed round, Wayflyer will continue to execute on their global ambitions. This means growing the team with senior sales and AE specialists, as well as product and credit experts. As they continue to expand into key e-commerce geographies, we at Speedinvest only grow more excited to join Wayflyer in this venture with QED Investors and MiddleGame Ventures. Upwards and onwards!

Read More at the Irish Times.

Learn more about the Speedinvest Fintech team and sign up for our newsletters to get our exclusive content delivered straight to your inbox.

From The Blog

Emerging Markets Outlook | A New Generation of Unicorns

Speedinvest's Irene Gentili and Philip Specht share their emerging markets thesis and why they believe that empowering the flow of capital towards network effects-focused businesses in those regions can deliver outstanding returns.

Employee Equity | Everything You Need To Know for Your Startup

Speedinvest's Tom Lesche, Nora Frizberg, and Miriam Feyer discuss the benefits of offering employee equity with tips from Ledgy's Joe Brennan and HROS' Lukas Rippitsch.

How To Build a B2B Marketplace: 10 Tips To Kickstart Your Startup

Speedinvest's Mathias Ockenfels and Maximilian Wilhelm share how to build a B2B marketplace with 10 tips and insights from B2B founders in our portfolio.