July 14, 2024
1 Solar System Way, Planet Earth, USA
Technology

PayPal Ventures Leads $20M Round in Gynger, Offering Businesses 'Buy Now, Pay Later' on Tech Purchases

gingera platform that lends capital to companies to purchase technology, has raised $20 million in a Series A round led by PayPal Companieshe told TechCrunch exclusively.

The funding brings the New York-based startup's total venture capital raised to $31.7 million and includes participation from Gradient Ventures (Google's AI-focused venture fund), Velvet Sea Ventures, BAG Ventures and Deciens Capital.

In addition to the capital increase, ginger has closed a $25 million line of credit from Community Investment Management (CIM) with an agreement that allows it to borrow up to a total of $100 million.

Gynger was hatched in June 2021 from m)x(vCapital, a New York City-based early-stage venture fund founded by Mark Ghermezian. Ghermezian also previously founded Braze, a cloud-based customer engagement platform for multi-channel marketing. There, he told TechCrunch at the time of the company. last increaseHe saw how difficult it was to sell software and, on the other hand, how difficult it was for buyers to acquire the software.

Gynger works with both technology buyers and sellers. It aims to help companies “finance, pay and manage” all expenses associated with purchasing technology, including software, hardware, cloud and infrastructure. It does this by providing companies with access to unsecured lines of credit, which Ghermezian says gives them the ability to expand their runway and conserve cash.

Gynger says it uses advanced artificial intelligence and data analytics to underwrite and approve credit for customers. It automatically detects technology spending to recommend financing opportunities that best fit the needs of both buyers and sellers, according to Ghermezian.

The company says its application process takes less than 10 minutes and that businesses get credit decisions the next day, “and immediate access to funds once approved” with different payment term options. Gynger pays his clients' suppliers on his behalf and the clients pay them back later. Think of it as a buy now, pay later service for companies that buy technology.

On the other hand, Gynger offers vendors who sell technology a way to offer integrated financing through an accounts receivable platform that provides “flexible” payment terms, Ghermezian said.

“This provides suppliers with an extremely effective tool to accelerate sales, drive revenue and drive key financial metrics,” Ghermezian added. Gynger pays suppliers annually in advance, while its customers pay Gynger back “however they want.”

The market is big, Ghermezian said, pointing to a recent Forrester research report that estimates global technology spending is It is expected to reach $4.7 trillion. in 2024.

All that spending is translating into growth for Gynger. Revenue increased more than 700% year over year, according to Ghermezian. However, it did not start selling until the second quarter of 2023, so the growth starts from a small base. The company has also grown its customer base five-fold year over year, Ghermezian said. He declined to disclose concrete revenue figures, saying only that the company was on “a clear, near-term path to profitability.” To date, Gynger has facilitated thousands of payments for its customers across hundreds of providers, including AWS, Google Cloud, Okta, Cisco, Salesforce, HubSpot, Oracle, GitHub, Snowflake, and Amplitude.

Like all companies in the BNPL business model, the company charges interest on its loans and also makes money from buyers through loan origination fees as well as through interchange fees from its card program. It also generates revenue from providers through service fees, and later this year plans to generate revenue from platform/SaaS fees, according to Ghermezian.

Image credits: ginger

At the time of the company's latest raise, Ghermezian told TechCrunch that he saw Gynger competing closely with fintechs like Tube and capchase, which began by providing financing to companies outside of equity and venture debt. For its part, Capchase expanded into the buy now, pay later later space in May 2023. launching Capchase Pay. But today, Ghermezian said he no longer sees the companies as competitors. There are companies that do part of what Gynger does. Some have gone the SaaS acquisition route, such as Tropic, Zip and Vendr, Ghermezian also noted. Then there are companies like Brex and Ramp that offer corporate spending cards for purchases, including technology. But he considers Bill.com Gynger's main competitor.

Currently, the company has 25 employees, compared to 13 a year ago.

Gynger will use its new capital to expand its operations and finance loans.

“As we mature, we see our customer base grow from early-stage startups to more mature companies, from Series A to pre-IPO,” Ghermezian said. “We are also leveraging other verticals outside of technology, such as real estate, retail, healthcare and artificial intelligence.”

PayPal Ventures managing partner James Loftus believes Gynger's model gives him a “unique advantage.”

“We're betting that incorporating payments and financing into both the SaaS buying and selling experience will allow Gynger to drive massive network effects and create deep relationships that will ultimately allow the company to achieve its goal of becoming the next big thing.” AR (accounts receivable)/AP (accounts payable),” he said. “Access to integrated financing solutions that ‘work’ for both buyers and sellers simply did not exist at scale until Gynger.”

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