Technology

PayPal Ventures leads $20M round into Gynger, which offers companies ‘buy now, pay later’ for technology purchases

Paypal Ventures Leads 20m Round Into Gynger Which Offers Companies Buy Now Pay Later For Technology Purchases

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Gynger, a platform that lends capital to companies for technology purchases, has raised $20 million in a Series A round led by PayPal Ventures, it told TechCrunch exclusively.

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

In addition to the equity raise, Gynger has secured a debt facility from CIM (Community Investment Management) with an agreement to fund up to $100 million.

Gynger was incubated in June 2021 out of m]x[v Capital, 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 multichannel marketing. There, he told TechCrunch at the time of the company’s last raise, he saw how difficult it was to sell software and — on the flip side — how difficult it was for buyers to purchase the software.

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

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

The company claims that its application process is less than 10 minutes and that companies get credit decisions the next day, “and immediate access to funds once approved” with different options of payment terms. Gynger pays its customers’ vendors on their behalf, and the customers pay it back later. Think of it as a buy now, pay later service for companies purchasing technology. 

On the flip side, Gynger offers vendors selling technology a way to offer embedded financing through an accounts receivable platform that provides “flexible” payment terms, Ghermezian said.

“This equips vendors with an extremely effective tool for accelerating sales, pulling revenue forward, and shortening key financial metrics,” Ghermezian added. The vendors get paid annually upfront by Gynger while their customer pays Gynger back “however they’d like.”

The market is large, Ghermezian said, pointing to a recent Forrester research report which estimates that global tech spend is expected to reach $4.7 trillion in 2024.

All that spend is translating into growth for Gynger. Revenue is up over 700% year-over-year, according to Ghermezian. However, it only started selling in the second quarter of 2023, so that growth is from a small base. The company has also increased its customer base by 5x year-over-year, Ghermezian said. He declined to reveal hard revenue figures, saying only 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 vendors, including AWS, Google Cloud, Okta, Cisco, Salesforce, HubSpot, Oracle, GitHub, Snowflake and Amplitude.

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

Image Credits: Gynger

At the time of the company’s last raise, Ghermezian told TechCrunch that it saw Gynger competing closely with fintechs like Pipe and Capchase, both of which started out by providing businesses funding outside of equity and venture debt. For its part, Capchase in May of 2023 expanded into the buy now, pay later space after launching Capchase Pay. But today, Ghermezian said he doesn’t view the companies as competitors anymore. There are companies that do parts of what Gynger is doing. Some have gone down the SaaS procurement path, like Tropic, Zip and Vendr, Ghermezian also noted. Then there are companies such as Brex and Ramp that offer corporate expense cards to use for purchases, including technology. But he views Bill.com as Gynger’s main competitor.

Presently, the company has 25 employees, up from 13 a year ago.

Gynger will use its new capital to scale its operations and fund the loans.

“As we mature, we are seeing that our customer base is growing from early-stage startups to more mature companies, spanning from Series A to pre-IPO,” Ghermezian said. “We are also tapping into other verticals outside of technology, such as real estate, retail, healthcare and AI.”

PayPal Ventures Managing Partner James Loftus believes that Gynger’s model gives it a “unique advantage.”

“We’re betting that embedding payments and financing in both the buying and selling experience for SaaS will allow Gynger to drive massive network effects and create deep relationships that will ultimately allow the company to realize their goal of becoming the next big AR (accounts receivable)/AP (accounts payable) platform,” he said. “Access to embedded financing solutions that ‘work’ for both buyers and sellers simply have not existed at scale until Gynger.”

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