Investors pile into a new buy-now, pay-later strategy

What does Slope do that has investors banging down its door? It’s part of the increasingly crowded buy-now, pay-later sector, but unlike most such companies, it’s focused on the less frequently targeted business-to-business market. 

The buy-now, pay-later space—which lets customers pay off purchases in set increments through installment loans—has exploded in recent years, with investors pouring money into multiple players. Swedish Klarna has raised more than $3.7 billion and is valued at more than $45 billion. San Francisco-based Affirm raised $1.5 billion in venture funding before its 2021 IPO at a $11.9 billion valuation. Afterpay raised nearly half a billion dollars before being acquired by Block for $29 billion. The buy-now, pay-later market was valued at $15.9 billion last year, according to Fortune Business Insights, and is predicted to grow to more than $90 billion by 2029.

So far the majority of the early winners are focused on the business-to-consumer market. But B2B is starting to catch up. Like other buy-now, pay-later companies, Slope pays the retailer the customer’s purchase amount in full, while the customer pays off their dues in increments—but unlike its B2C counterparts, Slope’s business model isn’t credit card-based, instead letting companies pay using methods including bank transfers, checks or cash, Slope cofounder and CEO Lawrence Murata tells Forbes. It’s also designed to handle a range of transaction sizes and order volumes. 

Murata says Slope and arguably other B2B providers let small businesses with razor-thin margins adjust their inventory to better match the ebbs and flow of demand for their product. He points to his parents, who own a toy store—naturally busier around the holidays. Something like Slope would allow them to order more inventory when they need it and pay it off as they sell through it, as opposed to before their sales jump. “So much of the cash is stuck in inventory,” he says. “It really gives them a lot more wiggle room to be able to grow.”

Other startups have caught onto the B2B-side potential as well. Biller—which was founded by Klarna and payment startup Mollie alumni—was snapped up by Luxembourg-based Banking Circle less than a year after it was founded. San Francisco-based Resolve has raised more than $85 million since its 2019 founding. 

It may still be early for wider B2B adoption. Many of the largest industries that all kinds of companies source from, including chemicals and materials, still do business largely offline, with plenty of startups—including Knowde and Novi—working hard to just get them to progress past pen and paper transactions and three-week ordering lags. 

Then there are the challenges the wider buy-now, pay-later sector faces. The big B2C players have gobbled up billions of dollars in funding without turning a profit. Affirm’s market cap was $10 billion at the close of trading Monday, down nearly $2 billion from its IPO valuation. Afterpay posted massive losses in the latter half of last year, thanks in part to a jump in bad debts. And calls are growing from states, banks and consumer advocates for tougher regulatory oversight of the industry. (Murata says Slope is trying to get ahead of such changes by keeping its offerings conservative.)

But investors seem bullish, the buy-now, pay-later companies are seeing traction, and I’m never mad if a trend proves my skepticism wrong. We’ll see if investors buy now and get burned later. —B.S.

That’s after Didi’s shares fell 18.5% on Monday alone, the first trading day after the delisting was announced, lopping more than $2 billion off its market cap. The delisting wasn’t the only negative news: The company also reported a 12.7% decline in its fourth-quarter revenue, down to $6.4 billion. It also reported a $27 million net loss in the fourth quarter. Didi said late last year that it would list in Hong Kong, but Bloomberg reported last month that the company had suspended those plans. —K.D.

— Canadian crypto companies keep consolidating. Publicly-traded decentralized finance company WonderFi just announced plans to buy crypto exchange Coinberry, less than a month after acquiring crypto exchange Bitbuy Technologies. These acquisitions would put two of the six Canada-based crypto exchanges under one roof. 

— The latest electric vehicle maker to line up a SPAC deal is Iconiq, a Chinese company that agreed over the weekend to merge with East Stone Acquisition Corp. at a $2.5 billion valuation. The SPAC, led by private equity investor Xiaoma Lu, had been searching for a merger target for more than two years now; its initial plan was to combine with a fintech company.

— Imagine a meeting that could have been an email taking place in the metaverse. Miami-based Mytaverse raised a $7.6 million seed round for its virtual- and augmented-reality meeting platform. The round was led by Blumberg Capital with participation from Baselayer Ventures, Correlation Ventures and Accelerator Ventures. 

— Bain Capital struck a deal to buy French IT company Inetum from Qatari investor Mannai at an enterprise valuation of €1.85 billion ($2 billion). Based in Paris, Inetum claims more than 27,000 employees and 2020 revenue of €1.96 billion.

— Clipboard Health raised a $30 million Series C round for its app that connects contract nurses and other healthcare workers with open shifts. The round was led by Sequoia and pegs the healthtech company at a $1.3 billion valuation. Other investors in the company include IVP, Caffeinated Capital and Initialized Capital. 

— A SPAC backed by the family office of timber and luxury goods baron Francois Pinault announced plans to merge with music streaming company Deezer in a deal worth nearly $1.2 billion. Deezer aims to compete with Spotify, but it’s much smaller, with a reported €400 million ($431 million) in 2021 revenue compared to Spotify’s €9.7 billion. Deezer was previously acquired in 2016 by Access Industries, the majority shareholder of Warner Music Group.

— San Francisco-based Nowadays raised $7 million for its faux chicken nuggets in a round led by Stray Dog Capital with participation from Tenacious Ventures, Good Protein Fund, Selva Ventures and others. Nowadays will have to see if its nuggets stack up to the morsels from SIMULATE, the maker of NUGGs, which has raised $57 million in venture funding. 

Correction: Friday's newsletter incorrectly stated that Welcome Tech had just raised its Series B round. The startup actually raised a bridge round from existing investors.

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