Australia’s latest almost-unicorn: What is BNPL player Scalapay, and where did it come from?

Yet another Aussie buy-now, pay-later player has burst onto the scene, with a $210 million Series A raise valuing the newcomer at more than $1 billion.

While it is Aussie-born, Scalapay’s focus is actually on the other side of the world, and on the luxury retailers of Milan, Madrid, Paris and Porto.

The round was led by US giant Tiger Global, and also included backing from Baleen Capital and Woodson Capital.

They join existing investors Fasanara Capital and Ithaca Investments.

What is it?

Founded in 2019 by Simone Mancini and Johnny Mitrevski, Scalapay is simply a BNPL platform, allowing consumers to pay for products in three interest-free installments, while charging a merchant fee.

When the co-founders were drawing up their MVP, Mitrevski tells SmartCompany, they knew the Aussie market was already pretty well serviced, with the likes of Afterpay and Zip dominating in the BNPL space. But they also knew the model worked, particularly in the fashion sector.

So they looked to Western Europe, where the trend hadn’t taken off yet in such a big way, and honed in on “the heart of fashion” in Milan.

Two years later, the fintech has a presence in Italy, France, Germany, Spain, Portugal, Finland, Belgium, Netherlands and Austria.

Mitrevski doesn’t share any revenue growth figures.

But, on average, merchants using the products see their average basket size increase by 48%, and conversion at the checkout increases by 11%.

How is it different from other BNPL players?

Scalapay’s product and business model is similar to Afterpay, Zip, Klarna and the like, Mitrevski explains.

But he sees Scalapay as something of an upmarket player in the BNPL arena, with a leaning towards the luxury goods and fashion sectors.

The founders believe consumers shouldn’t have to make sacrifices on quality or taste because of a little thing like the price tag.

In fact, the startup has secured a three-year contract as the official sponsor for Milan Fashion Week, becoming the primary BNPL platform for fashion merchants.

The brand is not about fast money or fast fashion, Mitrevski explains. It’s about helping people afford quality.

“We know that if you align yourself to some of those really high-end luxury items, a lot of residual business then flows on from the retailers that are more aspirational,” he says.

At the same time, while the other players are heading in the direction of offering consumer finance and banking services, Mitrevski says Scalapay is well-and-truly focused on merchants, and solving pain points for them.

For example, the team is planning on looking into tools to boost conversion rates for retailers.

It’s a separate product, the founder says, but “it aligns with our mission of enabling merchants to create amazing customer experiences”.

Finally, Mitrevski points to a slightly different tech model, which allows for merchants to use the one platform across their EU stores. That means larger retailers don’t have to worry about localised BNPL offerings.

Where did it come from?

At just two years old, Scalapay has launched across several markets, integrated with 3,000 merchants online and in 2,000 physical retailers.

It has also launched its app, and partnered and integrated with two European banks.

In January 2021, the startup secured a massive $63 million seed round, and since then it has more than doubled its headcount to 150 people.

It has offices in Milan, Paris, Munich and Dublin, as well as its core tech team in Woolongong.

Mitrevski says the key to such rapid growth has been getting the right people on board.

He and his co-founder made a point of hiring a leadership team with deep experience in tech, retail and fashion, as well as those who have experience in startups and hypergrowth.

“The team that we assembled is world class,” he says.

“Really, we genuinely have the best.”

It’s about getting the execution right, he says. But a big part of that is getting people on board who have executed before.

“Hypergrowth is always going to be a little bit messy, that’s for sure. But with the people that we’ve got, it’s, it’s a lot less messy.”

Where is it going?

The Series A round is all about pushing for even more growth, Mitrevski says. Over the next 12 months, the team are looking to hire an additional 80 employees, including developers, product managers and designers.

Then, it’s all about working closely with retailers to develop more products to help them reach more customers, and offer great services themselves.

“We always wanted to build something that was like the ‘Amazon Prime for retailers’ that don’t want to be on Amazon Prime,” Mitrevski says.

That is, solving problems around conversion, analytics and other integrations, to help them build their brand, while also building a relationship with their customers.

“Our goal is to take that burden off the back office,” he adds.

“The ultimate dream would be to have a suite of products that just really become almost an indispensable tool for merchants.”