Having doubled their revenue quarter-on-quarter last year, and raised a total of $30 million in debt and equity funding, big-ticket buy-now-pay-later alternative PayRight is readying for international growth.
Founded in 2015 by brothers Myles and Piers Redward, PayRight actually preceded its better-known counterparts Afterpay and Zip.
“We really wanted to give the market an alternative,” Myles says.
“As things progressed and Afterpay and Zip started making a fair bit of noise, we established there was still a gap being unserviced,” he adds.
PayRight focuses on bigger-ticket items, with an average transaction amount of $2,500, and a limit of $20,000, plus longer repayment terms.
In total, the startup has raised $30 million, almost $23 million of which is debt funding.
Some $26.5 million of the total has been raised in the past 12 months, including $10 million in debt funding closed in December last year.
The investment has been led by corporate advisory firm Henslow and wealth manager Escala Partners.
Although it had been gradually growing, it was about 12 months ago that PayRight starting ramping things up, almost doubling revenue quarter-on-quarter in 2018.
“Once we became fully funded we released that handbrake and started to grow from there,” Redward says.
Currently, PayRight has about 1,000 merchants on its books, and between 100 and 200 joining every month.
And the higher price point means the startup attracts a diverse bunch. Merchants include direct-sales businesses, home improvement services, photography and even dentistry, as well as education.
PayRight has almost 20,000 customers, and that number is “growing rapidly with more and more merchants coming on board”, Redward says.
The founders are targeting $45 million in loan volumes in 2019, and ultimately see the platform lending $200 million per year.
According to Redward, lending for higher priced items differentiates PayRight from the likes of Afterpay and Zip, because it’s typically used for more considered purchases.
This means it can attract a “more safe and secure demographic” of people using the service.
Allowing 36 months for users to pay off a purchase is also “a key point of difference”, he says.
Redward also takes pride in PayRight’s focus on responsible lending. All users are put through a credit assessment, answering questions “we would expect in a more traditional finance application”, about things like residential and employment status.
Still, the process takes just a few minutes, Redward says.
“It’s a very quick real-time assessment and approval,” he adds.
Over the next 12 months, the focus will be on growing PayRight’s presence in the market, “trying to get the name out a little bit”.
It’s also preparing to launch in New Zealand, while also continuing to refine the technology, attract new merchants and scale the business.
Finally, the startup is about to launch its solution for e-commerce businesses, as a response to demand from the market.
The founders have seen more and more inbound interest coming from e-commerce merchants, Redward says.
“In many ways, we have some of the other players in the market to thank for that,” he says.
Following the hype around the buy-now-pay-later space as a whole, merchants are looking for a solution for higher-ticket items.
Having a pay-later option is starting to become an expectation, Redward adds.
“Not having one puts you at a competitive disadvantage,” he says.
Ultimate dispute resolution
For other aspiring startup founders, Redward’s advice is to “just give it a go”.
“Particularly where there is an opportunity in the market.”
In the early days, “it seems overwhelming and daunting”, he adds.
“But get out there, roll the dice, surround yourself with good people and give it a crack.”
Getting the best people on board has been a significant benefit for PayRight, Redward says.
Both the founders have a lot of experience in the finance space. Piers previously worked as head of sales and distribution at Now Finance and in consumer finance at Flexigroup, while Myles has a background at GE Capital and Northern Trust.
The pair have “quite complementary skill sets,” Redward says. And having backers that are also experts in this area has been an added bonus.
“They’ve been very supportive,” he says.
“From day one, we’ve been able to grow to the extent we have, because we’ve been able to surround ourselves with really good people.”
Of course, Redward is also working on the business side-by-side with his brother, bringing a certain dynamic to the founding team.
Growing up together, with all the fighting and arguing that comes with that, “probably makes the transition into a work-environment context an easier one”, he says.
“You don’t always agree on things, but you quite quickly work towards a resolution. You’ve got that background of ultimate dispute resolution,” he adds.Back