Tranch, a startup providing buy now pay later (BNPL) services for software sellers, has emerged from stealth and raised £3.5m in a pre-seed round led by Flash Ventures.
London-based Tranch will also join the prestigious US tech accelerator Y Combinator’s Summer 2022 cohort.
Tranch will use the capital – which came as combination of debt and equity funding – for hiring, onboarding suppliers and international expansion. The startup is planning to launch in the US later this year.
While BNPL has exploded in popularity among consumers thanks to the likes of Klarna and Zilch, Tranch is aiming its service at businesses.
Specifically, Tranch is providing a BNPL platform for software as a service (SaaS) sellers and professional service providers. It aims to remove the additional cost associated with paying for a subscription monthly, compared to paying upfront.
Sellers can use Tranch as an upfront payment method for contracts between £10,000 to £250,000. Buyers can spread their payments over a period as long as 12 months.
“My time as a scaleup CFO made me realise just how inflexible payment options can be for crucial SaaS tools and other business services, and how detrimental this lack of choice and payment ownership can be on thousands of companies,” said Philip Kelvin, co-founder and CEO of Tranch.
Funding also came from Y Combinator and includes a debt facility from Columbia Lake Partners.
Tranch was founded in 2021 by Philip Kelvin and Beau Allison. Previously Kelvin was the CFO and Allison the head of engineering of UK proptech Trussle.
“We’re excited to see Tranch making B2B BNPL accessible to more complex lending demands involving larger volumes and longer durations, all of which creates a hugely scalable international market opportunity through their full lending tech stack,” said Yash Zaveri, partner and MD, Flash Ventures, who joins Tranch’s board.
Tranch is one of a growing number of BNPL firms catering for businesses. The startup joins Swedish B2B BNPL firm Treyd, which exclusively shared its plans for a UK launch with UKTN earlier this month.
Competition in the consumer-facing BNPL space has been heating up, while UK regulators are in the process of developing new rules aimed at protecting consumers. Earlier this year, the FCA told some BNPL firms to change ‘unclear’ terms.