Friday 23 July 2021 9:04 am

Klarna-challenger Zilch strikes $110m deal with Goldman Sachs and Daily Mail owner

‘Buy now pay later’ (BNPL) company Zilch today announced it has cut a deal to raise $110m (£80m) in debt and equity from Goldman Sachs and the investment arm of the Daily Mail group.

The deal with Goldman Sach’s asset management and private credit division and DMG Ventures, part of the Daily Mail & General Trust (DMGT), brings the overall size of Zilch’s Series B funding round to $200m – just three months after the round was announced in April.

Zilch’s influx of capital helps confirm the BNPL market is booming, despite the scrutiny it has come under from the FCA. BNPL products’ considerable growth in the last year was boosted by the shift to online shopping during the pandemic.

It comes after the sector’s largest player Klarna raised a record $1bn earlier this year, and another $639m just three months later in a round that valued it at $45.6bn – the second most valuable fintech startup in the world.

The firm said it had seen “phenomenal demand” for its BNPL product, and is currently adding more than 150,000 customers a month.

Zilch plans to use the latest investments to accelerate its plans to launch in the US and continue growth in the UK. It now plans to hire 100 new employees in the UK and US, bringing its workforce to 250.

Its sizeable funding round extension also brings a potential IPO closer on the horizon, but Zilch has not yet confirmed any timeframe for listing plans.

“As our customer numbers continue to grow, we’ve taken the decision to raise additional capital to service this phenomenal demand,” said Zilch CEO and founder Philip Belamant.

“We’re delighted that well-respected institutions such as Goldman Sachs and DMG Ventures share our vision of what credit should be in today’s world and how that can be delivered directly to customers in the most responsible way,” he added.

The London-based startup became the first company in the UK’s BNPL market to become fully licensed by the Financial Conduct Authority (FCA) in November last year – a considerable achievement given the regulatory questions that have been posed about the market.

Campaigners have called for tighter rules in the sector amid concerns it would leave vulnerable customers in debt and encourage people to live beyond their means.

The debt charity Stepchange has called on the FCA to stop firms using the term ‘buy now pay later’ to market credit products. It has also pushed for firms not to backdate any interest during the offer period.