What are people's thought on this. This is very closet and similar to AfterPay. This may be worthwhile for us to consider.
Fintech start-up Openpay begins $10m pre-IPO raising as it takes on Afterpay
Openpay, a new challenger to soaring ASX-listed fintech start-up Afterpay, has launched a pre-IPO capital raising, seeking $8-10 million ahead of a planned ASX listing next year.
The company is run by former BDO national head of retail Simon Scalzo and, like Afterpay, lets people buy and use goods and services now, but pay for them in instalments with no interest.
Afterpay is up more than 155 per cent since listing in May, and Openpay also plans to go public in mid-2017 to raise the funds for further growth.
Mr Scalzo said it had already attracted interest from a number of investors in its capital raising.
"The process to raise capital is pretty easy from here. We've had investors call us so far," he said.
"In my mind the road to raising capital isn't hard, it's more about ensuring that we partner with someone that will add strategic value to the business."
Unlike Afterpay, which has a purely retail focus at this stage, Openpay services a diverse range of industries – retail, medical, automotive and home improvement.
Despite only just officially launching, it has signed up a growing list of businesses, such as Spotlight, Ella+Friends and Robins Kitchen, and already has 40,000 users.
The start-up was formed from the amalgamation of a number of separate "buy now, pay later" companies, including JAM Payments, Evoke Autopay and a number of white-labelled businesses, which were all owned by the same syndicate of private investors.
The group of investors did not want to be named.
While Mr Scalzo was at BDO he helped create Evoke Autopay and his experience doing this led him to join Openpay as the chief executive.
"Having an involvement in that business, it was a natural fit for me to move across," he said.
"Compared to Afterpay our terms are longer. In the retail space we have up to four-month terms, and in other verticals it's up to 24 months. Our amounts are also flexible, and you can pay for retail items of up to $10,000."
As the company does not charge interest, it makes money by charging businesses a fee to use the service and for large-value transactions it also charges a $2.50 administration fee per repayment.
For businesses it also offers a data analytics platform, where they can see statistics such as high- and low-performing stores, and the age and gender of their customers and location data on where their customers come from.
For customers shopping in the stores or visiting the medical clinics which offer Openpay, the company utilises beacon technology so that the service automatically pops up on a customer's phone before they get to the cashier. So they can choose to buy more, knowing they can pay later.
While Mr Scalzo said joining the ASX was the company's present plan, it had not closed the door on pursuing future venture capital opportunities instead.
"We're in the process of assessing what makes sense for the business. The first step is the initial capital raise, then it's a possible IPO," he said.
"We're leaning towards the IPO path, but once we've gone through this initial process we'll be a lot better placed to make a decision."
