The funding from global investment management firm, Davidson Kempner Capital Management LP (“Davidson Kempner”), which also includes a minority equity investment, will be instrumental in driving DivideBuy’s charge as a leading player in the point-of-sale market and further bolster the disruptive fintech’s C-suite, platform investment and retailer network, both in the UK and internationally.
This follows an already successful 12 months for the Newcastle-under-Lyme business, which was ranked first place on Deloitte’s UK Technology Fast 50 2020 list and the only business outside London to break into the top 10 on the list, after reporting an average three-year growth rate of 20,733% to the year 2019/2020.
The interest free credit POS finance market, driven by agile technologies, like DivideBuy’s, was worth nearly £10 billion in 2020, and will be worth £27 billion by 2024. DivideBuy, founded in 2014, has since carved an impressive niche in the sector by adopting a customer-centric solution.
With 500 retailers, including Cloud Nine and Simba Sleep, already using DivideBuy’s technology, the company achieved a milestone £150 million in Gross Merchandise Value (GMV) earlier in the year, and is on track to hit £175 million by the end of 2021.
DivideBuy has also recently announced a brand-new partnership with recommerce experts, musicMagpie, creating a brand new rental platform for the retail giant. The proposition marks another area of growth for the business as it continues to meet growing demand from tech-savvy consumers and remains ahead of market competitors.
The additional firepower and funding flexibility enables DivideBuy to maintain its high levels of growth and keep up with the demand it is experiencing from retailers across many retail verticals. This, coupled with the evolution of DivideBuy’s business model towards a technology-centric offering, leveraging its broad platform capabilities, rich lending data and market leading underwriting engine, positions DivideBuy to emerge as a market leader in its chosen areas of focus.
Rob Flowers, Founder and CEO of DivideBuy, comments: “DivideBuy has one goal - to make buy now pay later transactions easy and accessible to retailers and customers. The sheer scale of this investment underlines the strength of DivideBuy’s business model, and how we’re revolutionising the POS finance sector by owning the full lending journey with assistive technology, automated soft credit checks and transparent lending with no hidden fees.
“The flexibility of our technology treats each customer as an individual, and also gives retailers revenue-boosting strengths such as higher checkout conversions and higher basket sizes. With this backing from Davidson Kempner, we can now make buy now pay later transactions available to even more retailers, and extend the alternate payment method to many more consumers who want greater payment choice at the POS. We’re thrilled to embark on the next stage of our expansion and achieve our ambitious growth plans”
Just two years ago DivideBuy secured over £60 million of equity investment and debt financing from prominent private equity investors, Souter Investments and Jon Moulton’s private investment vehicle, to which Perscitus LLP acts as consultant, together with two UK banks. This was used to develop its pioneering technology and provide leverage to accelerate its lending.
Unlike other POS finance solution providers, DivideBuy offers both the technology platform and the credit facility to the retailer. By cutting out traditional credit suppliers, DivideBuy enables retailers to lower their credit risk and accelerate customer onboarding with market-leading application approval rates.
After switching to DivideBuy from competitors, retailers have experienced vastly improved conversion rates, increased basket value, reduced basket abandonment and typically see an increase of up to 70% on approvals and conversions, which helps to foster customer loyalty.
Unlike other POS finance providers which offer instalment terms up to three months, DivideBuy enables customers to have instalment terms of up to 12 months, which helps consumers purchase larger-value items with affordable, interest free instalments, and helps retailers raise average basket values.
Flowers adds: “The partnerships we’ve secured with leading businesses like musicMagpie demonstrates how much our solution resonates with consumers looking for more flexible and affordable ways to pay.
“With the backing of Davidson Kempner, we have set ourselves the ambitious task of growing exponentially within the interest free market, while being true to our original aim of creating greater value for retailers everywhere and enhancing the entire buying, or indeed, renting, experience for customers by creating intuitive, user-driven platforms.”