The strong momentum of e-commerce, mainly due to the pandemic, has revved up a demand for simple fast and modern online payment services. The so-called „Buy Now, Pay Later” (BNPL) solution has generated outstanding growth among new generation. Even though its name might imply simple installment payment or a loan, BNPL is significantly more flexible: With a modern User Interface and real-time, fully digitized processes, it provides a unique customer experience, and the repayment is spread over a longer period than traditional loans. This gives users considerable freedom and allows them to shop smoothly and conveniently, wherever and whenever they want.
“There is exceptional growth potential in BNPL, and its regional expansion can also greatly alter online consumer behavior.” Ábel Galácz, CEO of Lead Ventures
„There is exceptional growth potential in BNPL, and its regional expansion can also greatly alter online consumer behavior”– explains Ábel Galácz, CEO of Lead Ventures, why the investment company managing funds from MOL and Eximbank, shows interest in this market segment, whose regional star is Leanpay, offering BNPL solutions in Slovenia and Croatia. The start-up has generated three times the turnover year-over-year in the first half of 2021.
“Leanpay has 3x the average cart value of Klarna thanks to our focus on major consumer purchases. We are committed to enable any customer to buy whatever they need by providing fair and easy financing in any shop.” Misa Zivic, co-founder and CEO
„Leanpay is not like classic BNPL service providers, such as Klarna” – stresses Misa Zivic co-founder and CEO. While the Swedish market player mainly focuses on fashion items, with an average cart value of EUR 150, Leanpay has three times that figure, mainly thanks to focusing on major purchases in consumer electronics, home furnishings, furniture and sports equipment segment. According to CEO and Co-founder Misa Zivic, the other difference is Leanpay’s focus on Central and Eastern Europe, a market that is almost untouched by global players. Currently, only traditional players offer digital credits in these countries.
Leanpay believes that the best solution for financing major purchases for consumers is a coordinated ecosystem in the consumer shopping journey. According to Janko Medja, Leanpay’s co-founder and CSO, the best user experience depending on each player doing what they do best in the value chain: “Leanpay creates tight partnerships with various stakeholders in the consumer shopping journey, online and offline. The shop and Leanpay together manage the user experience with a relentless focus on transparency, simplicity, and speed in their path of browsing, shopping, payment, and post-sales service. To do that properly, we also closely cooperate with banks, delivery agents and others to assure all the necessary information, liquidity and additional services, needed for the best user experience”.
Lending practices of BNPL Fintechs have lately been under the huge scrutiny of regulators around the globe. Leanpay was built with responsible lending in the center of its strategy, says Tilen Zugwitz, Leanpay’s co-founder and CFO: ”In order to provide a sustainable service to customers and merchants, we need to be a responsible lender. The amount of debt that a single person can take is the most important criteria for us. We integrated into credit bureaus and PSD2 service providers, and in combination with data provided in the platform we assess the risk and level of debt that customer can service.”
„The CEE region is not the number one expansion target of global and Western European players” – adds Ábel Galácz, who believes the reason for that is mainly found in stricter regulations and the smaller and fragmented market structure. “The company’s self-developed risk model, which can further teach itself through machine learning based on the experience and information gained, also adapts and manages the uniqueness of local markets. In addition, Leanpay’s management and team capabilities fit perfectly with the visionary yet regulated and well-defined expansion strategy that Lead Ventures also supports.” – added the CEO of Lead Ventures. Considering the above, Lead Ventures will make a capital investment of EUR 2.5 million in the start-up, whose growth potential is hoped to be one of the most promising in the region and which has already raised EUR 1.8 million from recognized financial investors in recent years.
One of them is South Central Ventures, which joins the Lead Ventures in the Series A round.
“Leanpay has made fantastic progress in recent months and we are confident that this transaction can further accelerate this outstanding performance”, – stated Jure Mikuz, a managing partner at South Central Ventures,
and added: “the nearly threefold increase in revenue and the trust of nearly 400 online web shops have encouraged us to continue to support the team in achieving common goals. Leanpay will use the funds to accelerate the growth in existing markets and to continue its CEE expansion.