Buy now pay later outfit Butn is preparing for an initial public offering this year after signing a deal with food delivery giant Easi for delivery riders to access early payments.
Butn provides BNPL products for businesses and integrates directly into merchant, vendor and supplier payment systems to enable 15-minute transactions and has raised $12.5 million in preparation for listing on the Australian Securities Exchange this year.
Co-founder and chief executive Rael Ross said the partnership with Easi was a “landmark deal” for Butn which has facilitated $166.6 million in total lending for the 2020 financial year, up from $105.4 million in 2019.
“There’s so many small to medium enterprises, or independent contractors in the gig economy, no matter where it is everyone’s waiting for the money,” he said. “But it doesn’t make sense. If you’ve done the deal and you delivered the goods why shouldn’t you get that money instantly?”
Mr Ross said Easi’s 25,000 registered drivers and 20,000 merchants could opt-in to receive same-day payments rather than having to wait two weeks to get paid which is the case for Uber Eats, FoodPanda and Deliveroo drivers and merchants.
A spokesperson for Uber Eats said its drivers are paid on a weekly basis and as of this year can opt for payments in one to two minutes through an instant pay option available through its app.
Mr Ross said Butn wanted to get traction first with Easi before moving on to other food delivery platforms.
“We can embed in any platform, and give those end users, those customers of the platform, instant access to their money at the click of a button, frictionless, first to market” he said. “So whatever they need through the click of a button they now have access to and that’s really the game changer and that’s what the market has been receptive to and that’s why an IPO is happening this year.”
Butn was started by Mr Ross and Walter Rapoport three years ago and the $12.5 million funding round lead by Canaccord Genuity follows another funding round of $5 million late last year.
If Butn lists it will join a cluster of BNPL outfits on the ASX including market leaders Afterpay and Zip and newcomers such as Splitit, Humm and Sezzle.
Almost all have boomed during the COVID-19 pandemic, with share prices soaring as online shopping increased in popularity.
Mr Ross said there was still room in the market for another entrant and Butn was different to other BNPL players as it did not target consumers.
“We don’t do any B2C [business to consumer] products we’re only B2B [business to business],” he said. “As far as we’re aware there’s no one that’s really been able to capture that B2B buy now pay later market.”
Kitty Lu, national operations manager at food delivery company Easi, said the partnership would help attract drivers and riders to deliver with Easi so they could get earlier access to cash.
“Our main focus is actually to provide cash flow support as well as opportunities that come with it,” she said. “As a technology company we are all about innovation and this particular partnership is the world’s best.”
Inside the yellow box: Easi takes on the food delivery giants.
Easi rider: The food delivery minnow taking on the giants
The Australian food delivery platform which delivers food in distinctive yellow boxes will start offering BNPL options through Butn in March before expanding to other markets it operates in.
Ms Lu said Easi had seen an increase in demand from both customers and drivers as a result of the coronavirus pandemic.
“A lot more people have been registering to become a driver due to increased unemployment in other sectors,” she said.
CORRECTION: An earlier version of this article included a reference in the caption to Kitty Lu, national operations manager, at Easi. The photograph is of Linda Liu, managing director of Easi.