So now we know what Merchant Growth did with all that money
The Vancouver company takes a big leap in the buy-now-pay-later biz.
If you were paying close attention, it was a bit peculiar when Vancouver-based fintech company Merchant Growth secured CAD $4.1 million in financing last October.
That’s not to say it was surprising that Merchant Growth and its 50 some employees were able to come up with the raise. No, it was more about the fact that the small business financing outfit felt the need to raise money at all.
The capital injection was the company’s first such move since its founding in 2009 and, a few months previous, Merchant Growth purchased Victoria-based Company Capital Inc.
So why the cash influx? Recently, the company announced the launch of Tabit—Canada’s first B2B buy-now-pay-later point of sale system—and everything made a whole lot more sense.
“We realized that the time is now and no one is doing this in Canada yet, so we’re in a unique positon to be the first to do it,” says Merchant Growth founder and CEO David Gens, who name drops companies like Resolve Pay (an offshoot of fintech giant Affirm) and Balance in the U.S. as examples of businesses making the model work in other countries.
“If you think about the ingredients needed to be a buy now pay later solution, we already had what I would say is the most difficult ingredient to attain: an automated credit adjudication engine for small business credit. That’s our core competency as a business. And so leveraging that to create an automated credit decision at point of sale, integrate that with the checkout experience for B2B transactions, the more we dove into it, the more it made sense.”
Essentially, once a business opts to use Tabit, the customer has the option to finance their purchase. Once they apply, the system makes a credit decision in less than a minute.
“The more we talked to sellers, buyers and potential users, we got even more validation,” says Gens. “So we decided to jump in with both feet.”
It turns out you can teach what Gens calls a “mature business” some new tricks. Even though Merchant Growth isn’t a decades old company—Gens founded it in 2010—many of the businesses that it works with are of the more traditional variety. “It’s mostly physical premise, some e-commerce,” says Gens, who explains that no single industry makes up a large portion of the company’s customers.
He adds that it’ll be interesting to see how the business and its customers roll with innovation. “Part of what most excites us about Tabit is we look at the businesses that Merchant Growth currently funds and a good portion of the time, they’re getting funded by us and then spending it on some kind of purchase or wholesaler provider that helps with their inputs,” says Gens. “It makes sense for us to make it easier for them as they’re making that purchase.”