Wayflyer, which funds e-commerce startups in exchange for a portion of their future revenue, today announced it has raised $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 the company was permitted to prevent certain assets and liabilities from being shown on its balance sheet. This likely helped Wayflyer keep its overall debt ratio low; prior to the deal with Neuberger Berman, Wayflyer had secured hundreds of millions of dollars in credit to fund its loans.
Over an indefinite period of time, Wayflyer will purchase up to $1 billion in assets from funds managed by Neuberger Berman. And, given the off-balance sheet nature of the deal, Wayflyer’s terms are likely to be more favorable than they otherwise would have been.
“As e-commerce businesses seek to navigate growth in the current economic environment, we are seeing growing demand for our trusted financing solutions, especially in the US market,” said Aidan Corbett, Co-Founder and CEO. of Wayflyer, in a statement. “This off-balance sheet purchase of $1 billion in assets from Neuberger Berman demonstrates the power, success and resilience of our proposition and will provide us with the capital firepower to ensure that our e-commerce customers can continue to thrive under all economic conditions.
As my colleague Ingrid Lunden wrote in her coverage of Wayflyer late last year, Wayflyer aims to put a new spin on revenue funding for e-commerce merchants, leveraging data analytics and reimbursements based on a company’s income.
Founded in September 2019 by Corbett and Jack Pierse, Dublin, Ireland-based Wayflyer customers typically take out loans 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.
To make lending and repayment decisions, Wayflyer relies on a range of data sources, including Shopify and Woocommerce, TrustPilot reviews, Google Analytics, and broader information about shipping service performance. This gives Wayflyer predictive advantages, Corbett claims; he told TechCrunch that the platform can forecast things like when a trader might start seeing additional funding issues down the line.
Wayflyer has grown significantly since its inception four years ago, welcoming more than 3,000 customers to the platform and eclipsing $2 billion in loans deployed. Corbett claims the vast majority – more than 80% – of TravelerCustomers come back for additional financing after they have entered into their initial financing agreements.
But Wayflyer is facing headwinds in a market that has recently seen more than its fair share of ups and downs.
In 2019, an estimated 90% of all e-commerce businesses failed within the first 120 days of launching, according to research by Forbes, Huffington Post, and Marketing Signals. The main reasons were poor marketing performance coupled with a lack of search engine visibility, according to the study.
Even so, coupled with the economic downturn and competition from companies like Clearco and Uncapped, Wayflyer investors don’t seem to have lost faith in the startup’s approach. In June, Wayflyer – which has raised around $236 million in equity so far – renewed a $300 million line of debt with JP Morgan.
“The global e-commerce industry is expected to continue to grow rapidly in the coming years,” Zhengyuan Lu, CEO of Neuberger Berman, said in the press release. “We are always looking for innovative partners who bring real value to the space and have been deeply impressed with the model and experienced team at Wayflyer.”
He is not the only one to be optimistic. Morgan Stanley predicts that the e-commerce industry could grow to $5.4 trillion in 2026, from $3.3 trillion today, as e-commerce grows to 27% of sales over the next three years.
Corbett says Wayflyer – which is not yet profitable – will use proceeds from the billion-dollar transaction to continue fueling the company’s growth, particularly in the United States.