Turbocharging B2B payments: Why we invested in BillieDawn

Much has been said about how the pandemic has transformed buyer behaviours. More than ever, consumers are making their purchases online, putting rocket boosters under every element of the e-commerce industry.

But while the B2C market grabs the limelight, it’s dwarfed by its less glamorous counterpart. Annual volumes in B2B e-commerce are now over $12 trillion, more than three times bigger than B2C. And that figure is expected to grow another 19% over the next five years as more transactions between companies become digitised.

Creating a platform for business payments to happen seamlessly is clearly a huge opportunity, but it comes with its own complex set of challenges.

One major difficulty is automating the common practice of offering credit. Sellers will often allow buyers to “pay on invoice” — which could be up to 90 days — either by providing credit on their own balance sheet or using a third party to sell the debt and receive cash upfront. In an e-commerce environment that involves fraud checks, credit risk assessments, invoice generation, payment workflows, collections and reconciliations, all happening instantaneously when the buyer clicks to make their purchase.

Compare that to B2C, where a customer simply visits a website, buys something, pays for it, and it gets delivered. Credit checks are for small amounts, and therefore much easier.

As a result, many business payments still take place either offline or via a bank card. Both are imperfect solutions. The prize for the company that can automate buy-now-pay-later for the B2B market is access to a fee pool of about $180 billion.

Which is why we have invested in Billie.

Our relationship with the Berlin-based team goes back to 2019, when we first met Matthias, Christian and Aiga as they were raising their Series B. We were immediately impressed by the clarity of their vision, growth and deep experience — not only in B2B payments but in the wider risk and regulatory landscape too. This founding team had already earned their stripes, working together at marketplace lending platform Zencap, which was acquired by Funding Circle in 2015.

So we stayed close, watching them as they capably navigated the pandemic and continued to build out their impressive team (now 130 people from over 35 countries) and customer base. So when Billie came to raise its Series C, we were delighted that Dawn was the team’s partner of choice to lead the $100 million round — the world’s largest to date in the B2B BNPL market. And we’re in fantastic company, joined by Tencent and B2C payments giant Klarna, alongside existing investors Creandum, Speedinvest, Picus and GFC.

We’ve backed Billie for a number of reasons. For starters, it has a significant head start on its competitors in solving the B2B payments problem. Over the last two years, the team has built out a very high-quality platform, underlying technology and roadmap. With two core products: Flow, a financing option for the online checkout process, and Boost, which handles outgoing invoices for SMEs, offering instant financing, a collections process, and coverage of default risk.

Billie’s unit economics are also impressive. Based on current churn, a customer’s lifetime value is eight times the cost of acquiring them. And there’s the potential to unlock further growth by capturing SME buyers organically through partner platforms at the point of sale, then bringing them into Billie’s product environment and upselling a wider accounts payable and accounts receivable automation suite.

But what really sets Billie apart from the competition is the calibre of its partnerships and the distribution benefits it offers to them. It recently announced an exclusive deal with Klarna, which will see it hand over its business customers to Billie in the Nordics and DACH regions, offering significant long-term value, as well as integrate Boost into its sellers’ stores as an option at checkout.

The round will be used to fund Billie’s expansion beyond its native Germany, as well as building out the integration with Klarna and other partners. It will also support Billie’s plans to launch new features to its B2B buy-now-pay-later product, including longer payment deadlines, payment via instalments, special offers for business marketplaces, and e-invoicing.

Taking the pain out of B2B payments is a tough nut to crack, but in the race to win, we’re confident Billie is far out in front. So we couldn’t be more excited to support them with their mission to bring frictionless B2B payments to merchants and businesses across the world.

Follow Josh on LinkedIn and Twitter

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