How did Payl8r use due diligence to their advantage? Lack of funding is the cause for 16% of all startup failures (via failory.com), yet many startup founders still neglect to do their due diligence when seeking funding from investors. Due diligence is crucial to a startup’s growth as it can vastly increase your chances of securing investments by making your business look more attractive to investors such as VCs or Angels. Take, for example, Payl8r, a ‘buy now, pay later’ alternative to credit cards that has just announced it is set to become a £1bn fintech business after a year and a half of due diligence.
What is Payl8r?
The fintech darling is based in Altrincham, Manchester and was created in 2016. Chief executive Louis Alexander, managing director Samantha Palmer, and finance director Tim Slinger created this modern method of payment with young, British consumers in mind. And now, Payl8r is a major rival to finance’s famous Swedish player Klarna. It has become one of the most well-known success stories in the UK’s fintech business industry.
Both fintech companies are popular alternatives to credit cards. Payl8r provides a range of funding options targeting 18-24 year olds. As a responsible payments company, Payl8r offers a range of financing options, such as weekly payments. All options depend on the user’s credit history. For example, if a person has a weak credit score, this impacts the amount they can borrow and their repayment time. Applicants may even be rejected due to a bad credit rating.
The interest-free, buy-now-pay-later alternative to credit cards is now available in a variety of sectors. These include Payl8r Beauty, Payl8r Fashion, Payl8r Retail, and Payl8r Travel.
How successful is Payl8r?
This fintech darling just keeps going from strength to strength and has expanded at a gargantuan momentum since its creation. Payl8r boasts over 1,000 retail partners, which include a wide range of lifestyle brands. They accept five times more customers than their rival players (via payl8r.com). The millennial finance firm has tripled its lending and had a 334% growth increase since 2020. Furthermore, since 2016 they have doubled their workforce each year (via uktech.news). They have also just secured a new office space and their very own in-house creative team.
Buy Now, Pay Later grows 39% in the UK every year (via Worldpay.com). And in 2021, Payl8r received the fantastic news that they secured £40 million from Conister Bank. This places the finance company firmly as competitors on the billion-pound industry’s playing ground, alongside other startup companies such as London-based Zilch.
How Payl8r performed due diligence to secure investment
In order to secure this massive funding, the fintech company had to undertake 18 months of due diligence as part of their funding initiative. This involved meticulous analysis and scrutiny of their company over a very long period of time. Additionally, it made their company appear responsible and incited potential investors. In turn, this increased their chances of securing investment funding. And ultimately taking the time to do their due diligence was what scored Payl8r their multi-million-pound investment from Conister Bank.
Speaking on this, University of Manchester graduate and managing director Samantha Palmer said:
And the effort was certainly worth it. Thanks to their hard work during the 18-month due diligence process, this fresh raise has put them on track for a £1 billion revenue within five years.
Performing due diligence to secure investment for your startup
So, if you have ambitious plans for your startup and are also looking to seek capital from investors like VCs and Angels, then you should take the time to perform a thorough due diligence just like Payl8r did. Help and guidance to do this can be sought from a due diligence consulting company, startup advisors, or startup consultants,, such as our startup experts at 7startup. We personalise our equity funding service to your business to help you design a due diligence report backed by science and data.
Amit has 18 years of experience in the industry and an MBA. He supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, and fundraising.
Tags: Startup funding, venture capital, scaleups, fundraising, pitch deck review, OKRs, why do startups fail, equity research, term sheets, UK startups, Payl8r, case study