Klarna Rival Zilch Raises $125M to Triple Sales, Speed IPO

British buy now, pay later (BNPL) company Zilch has announced the successful acquisition of $125 million in debt financing. The capital injection, secured through a deal with German banking giant Deutsche Bank, is expected to propel a threefold increase in Zilch’s sales figures within the next two years. Additionally, the funding is anticipated to expedite the company’s progression towards an initial public offering (IPO).

The debt financing was structured as a securitization, a financial instrument that pools multiple loans together. This approach offers Zilch greater flexibility in accessing capital, potentially allowing them to draw upon an additional £250 million through collaborations with other financial institutions.

Zilch allows customers to split purchases into interest-free installments, competing directly with established BNPL players like Klarna. The company focuses on responsible lending practices, differentiating itself by not charging late fees.

This latest funding round underscores Zilch’s ambitious growth trajectory. The company has already amassed a significant customer base, exceeding 4 million users, and processes over 10 million monthly payments. The capital secured from Deutsche Bank will empower Zilch to expand its operations and potentially capture a larger share of the BNPL market.

Analysts suggest that for every $1 of debt raised, Zilch could generate $30 in gross merchandise value (GMV), representing the total value of transactions processed on its platform. Based on this projection, the $125 million infusion could translate to nearly $10 billion in GMV by 2026.

Zilch’s success in securing substantial funding reflects growing investor confidence in the BNPL sector. The convenience and flexibility offered by BNPL solutions are increasingly appealing to consumers, particularly younger demographics. As the market continues to mature, competition between BNPL providers like Zilch and established players is likely to intensify.