On the Sunday square announced that it was engulfing Afterpay in a deal worth $ 29 billion at the time of the announcement. Alex continued yesterday with more details on why the deal made sense for Square and Afterpay this way, but we wanted to ask a few notable VCs what this means for the startup market.
For context, the Square deal follows a ton of money and interest pouring into the BNPL marketplace. This year alone, VCs have invested in companies like Alma ($ 59.4 million, January 2021), Scalapay ($ 48 million, January 2021), Wisetack ($ 19 million, February 2021), Nothing ($ 80 million, April 2021) and Split ($ 30 million, June 2021).
Most of the investors we contacted were generally optimistic about the integration of Square and Afterpay, but were less excited about the opportunities for other mainstream BNPL businesses to emerge.
There is also the interest of certain large public enterprises. After a slow start, PayPal is aggressively push BNPL’s services with merchants who offer it as a payment option. And there are reports that Apple is build your own BNPL offer via Apple Pay.
We reached out to Commercial enterprises founder and generalist Dan Rosen, Better Tomorrow Ventures founding partner Jake gibson, Fika companies partner TX Zhuo, and Matthew Harris of Bain Capital Ventures to see what they thought of the deal, as well as what it could mean for the opportunity for other BNPL companies and startups.
The main takeaways? “Buy now, pay later” can be effective in driving retail conversion, but scale matters and long-term margins appear slim for BNPL startups.
Now let’s listen to the business community.
The point of view of the company
Why is the BNPL market so hot?