Buy Now Pay Later startup Scalapay raises $155m Series A

Buy now, pay later startup Scalapay has raised a $155m Series A fundraise, the largest ever in Europe. 

The round, which was purely equity capital, was led by Tiger Global at a $700m valuation. Other investors include Baleen Capital and Woodson Capital, who participated in its early rounds, as well as new investors Fasanara Capital and Ithaca Investments.

Scalapay was founded and launched in 2019  and now has 3,000 merchant partners is active in Italy, France, Germany, Spain, Portugal, Finland, Belgium, Netherlands and Austria. 

The latest funding round brings the total amount raised to $203m in two years since launch and just over half a year since its seed funding in January 2021.

Scalapay was founded by Simone Mancini and Johnny Mitrevski. They were joined in the early stages by Raffaele Terrone, Daniele Tessari and Mirco Mattevi as part of the founding team. 

AltFi sat down with Mancini and Mitrevski to hear how they will look to grow in a fiercely competitive space. 

Scalapay is the pair's third startup together. The other two "fizzled out" Mitrevski says. 

"In that time, we got some good experience about selling online and the kind of skills you need to be able to facilitate these transactions. That grew into us working in various companies that were dealing in this space and we thought we could do a better job."

"Heading into southern Europe was really about going to the mecca of fashion. When we were thinking about where to go we knew from our initial testing that this product will work well with fashion-related products and goods. We thought let's start a buy now pay later in the hub of the fashion capital of the world."

Mancini, who is CEO of the company, told AltFi he wants to bring the Italian concept of “dolce vita and slowing down to enjoy the small things in life” - to the rest of the world through its product and fashion partners.

Scalapay recently became the Official Sponsor for Milan Fashion Week as the primary Buy Now, Pay Later platform for fashion merchants in a three-year contract. Brands such as Alberta Ferretti, Intimissimi, Liu Jo, Luisa Spagnoli, Moschino, MSGM, Twinset  have signed up for Scalapay.

It is currently seeing 30-50 per cent of the transactions from its luxury fashion merchants being done with Scalapay.

"We only operate in discretionary spend categories. It's about buying the products that you love. That's the relationship we want to have with the customer, and the merchant as well. If we start doing longer-term lines, where the emails that the customer gets from us, the debiting, that we do on a monthly basis becomes a burden for the customer that not the space want to move into," Mancini said. 

Like rivals Klarna it allows customers to spread payments over 3 instalments without interest but while the likes of Klarna and Afterpay have launched deposit accounts and moved further into the banking space, Scalapay says it plans to stick to solely growing its merchant base.

Mancini says that becoming a fully regulated bank is not "off the table" as an option and may depend on how BNPL is regulated in the future but that it is not a core focus at present. 

"What's the advantage of becoming a bank or heading into that space that Afterpay and Klarna are heading in which is being almost like a free banking type service? It's not really what we're about. Insofar as it helps us stay operational it may well be something that we'll need to look into. But as a play we think probably not," he said.

In terms of where they take the product next and what's the vision of the product roadmap, Mitresvki says it probably won't be in the direction of what Klarna is doing in creating a large aggregated marketplace and trying to draw users into its app for them to buy from there.

"Our mission is always about helping the merchants. If we can drive traffic to the merchants and let the merchants be able to deliver what they want and that curated experience that they're really passionate about. Our goal is not to just scoop the pool and bring everybody into our app. The goal is to be a merchant partner. And so anything that we do with the product is always going to be about what's the next thing that the merchants need to create a better experience for their customers?" he said.

In July, Scalapay appointed Pingki Houang as General Manager, previously General Director for ShowroomPrive and Chief Executive of FashionCube (one of the largest European omnichannel retailers) as well as Arlene Reynolds, previously Head of Global Operations for Just Eat to oversee operations and country expansion.

Scalapay is planning some ambitious expansion globally with a move into the core BNPL markets including the UK and US, which "could be as early as next year," Mancini added.

"Scalapay has quickly become an important player in European payments and the BNPL sector,” said Alex Cook, Partner, Tiger Global. “We are impressed by their product development pipeline and a strong focus on merchant success.