Neuberger Berman Invests $1 Billion in E-commerce Loan Startup Wayflyer
Wayflyer, a purveyor of financial backing for emerging e-commerce enterprises, has unveiled its acquisition of a staggering $1 billion in capital investment from the venerable Neuberger Berman, a renowned titan in the world of investment management. This substantial infusion of capital is being characterized as an “off-balance sheet program,” a strategic move allowing Wayflyer to shield select assets and liabilities from disclosure on its financial statement. This maneuver undoubtedly facilitated the maintenance of a favorable debt-to-equity ratio for Wayflyer, an entity that had already procured hundreds of millions in credit to facilitate its lending activities.
Over an indeterminate timeframe, Wayflyer is slated to procure assets worth up to $1 billion from funds under the astute stewardship of Neuberger Berman. Given the unconventional nature of this off-balance sheet arrangement, it is reasonable to anticipate that Wayflyer has secured terms more advantageous than what would have been feasible otherwise. Wayflyer’s co-founder and CEO, Aidan Corbett, expressed his perspective on this pivotal development, stating, “As e-commerce entities endeavor to navigate the complexities of growth amidst the prevailing economic milieu, we are witnessing an escalating demand for our dependable financial solutions, particularly within the U.S. market. This $1 billion off-balance sheet acquisition of assets from Neuberger Berman underscores the potency, success, and tenacity of our value proposition. It shall endow us with the capital prowess required to ensure the continued prosperity of our e-commerce clientele, irrespective of economic conditions.”
In a prior exposition by my esteemed colleague, Ingrid Lunden, on Wayflyer’s operations, it was elucidated that the company seeks to introduce a novel paradigm to revenue financing for e-commerce merchants. This avant-garde approach leverages the insights gleaned from data analytics and predicates loan repayments upon a company’s revenue performance. Wayflyer, established in September 2019 by Corbett and Jack Pierse and headquartered in Dublin, Ireland, typically extends loans ranging from $300,000 to $400,000. These funds serve to underwrite critical expenses such as inventory procurement and shipping costs, pivotal requisites for the operation of an e-commerce enterprise.
In its deliberations concerning loan approvals and repayment schedules, Wayflyer harnesses a multifarious array of data sources. These encompass platforms such as Shopify and Woocommerce, TrustPilot reviews, Google Analytics, and comprehensive data related to the performance of shipping services. This approach furnishes Wayflyer with predictive advantages, as Corbett asserts. He avers that the platform can proficiently forecast occurrences like the onset of potential financing challenges for a merchant in the future.
Since its inception four years ago, Wayflyer has undergone prodigious expansion, enlisting the patronage of more than 3,000 clients onto its platform, with the deployment of loans exceeding the remarkable sum of $2 billion. Remarkably, Corbett contends that a substantial majority, surpassing 80%, of Wayflyer’s clients return for additional financing subsequent to consummating their initial funding agreements.
Nevertheless, Wayflyer finds itself navigating through the treacherous waters of an e-commerce realm characterized by its capricious vicissitudes. According to research conducted by Forbes, Huffington Post, and Marketing Signals in 2019, an estimated 90% of nascent e-commerce ventures flounder within the initial 120 days of their launch. The principal culprits identified in this study are suboptimal marketing performance and a conspicuous lack of visibility on search engines.
However, in defiance of these challenges and despite the headwinds induced by economic downturns and the competitive landscape, which includes formidable contenders like Clearco and Uncapped, Wayflyer’s investors have evinced unwavering faith in the startup’s modus operandi. In June, Wayflyer, which has thus far amassed a substantial sum of approximately $236 million in equity financing, renewed a $300 million debt facility from J.P. Morgan.
Zhengyuan Lu, the managing director at Neuberger Berman, conveyed his optimism, asserting, “The global e-commerce sector is poised for continued robust expansion in the forthcoming years. We are perpetually in pursuit of pioneering collaborators who furnish authentic value within this domain, and we have been profoundly impressed by Wayflyer’s business model and the seasoned acumen of its team.”
Lu’s optimism is not an isolated sentiment. Morgan Stanley prognosticates that the e-commerce sector could ascend to a staggering $5.4 trillion by 2026, a notable escalation from the present $3.3 trillion, as e-commerce solidifies its grip on 27% of total sales within the ensuing three years.
Corbett has delineated the strategic direction Wayflyer intends to undertake with the proceeds from this monumental $1 billion transaction, affirming that the funds shall be instrumental in propelling the company’s growth trajectory, particularly within the expansive U.S. market.