As many venture capital-backed fintech companies have struggled to stay afloat, Zilch, a buy now, pay later (BNPL) provider, has opted for a different strategy: growing its way to profitability.
CEO Philip Belamant told CNBC’s Squawk Box Europe that, while many fintech firms have had to cut costs drastically in recent years, Zilch has focused on expansion rather than contraction.
Belamant said:
“If you think of the last two and a half, three years, a lot of VC-backed companies, especially high-growth fintech businesses, have had to cut their way to profitability,”
“Some of those have actually cut so far they went bust along the way. It’s not been easy. And, for Zilch, we took a different approach. We looked at this and said let’s grow our way to profitability.”
Belamant’s comments come at a time when the fintech sector is facing increased pressure to become profitable amid tightening economic conditions. Many companies, especially in the BNPL space, have faced challenges as they navigate rising costs, regulatory scrutiny, and shifting consumer behaviors.
New Leadership and Financial Backing
Mark Wilson Joins Board as Non-Executive Director
In a separate announcement on Tuesday, Zilch revealed that it had appointed Mark Wilson, the former CEO of insurance giant Aviva, to its board as a non-executive director.
Wilson, who led Aviva through significant restructuring and growth, expressed enthusiasm about joining Zilch during a critical phase in its development.
Wilson said:
“I’m excited to join Zilch at a critical juncture and further help the company steer its path toward sustainable success as a category leader.”
Zilch has also secured significant financial backing to support its growth plans.
In June, the company announced it had raised $125 million in initial debt financing from Deutsche Bank. This was with the option to draw down up to $315 million in credit from both Deutsche Bank and other banks.
According to Zilch, this deal is expected to help triple its overall sales volumes in the next few years.
This move is seen as part of Zilch’s broader strategy to scale its business and expand its customer base, positioning the company for long-term profitability. The additional financial support provides Zilch with the flexibility to continue growing, despite the challenges faced by the broader fintech industry.
The Competitive Landscape and IPO Ambitions
Eyeing a Public Listing
Belamant has also indicated that Zilch is eyeing a public listing within the next 12 to 24 months. This timeline suggests that Zilch is positioning itself for an initial public offering (IPO) as it seeks to capitalize on its growth strategy.
Belamant first hinted at these plans during an interview in June, and the company’s recent moves appear to be aligned with these ambitions. Zilch’s potential IPO would place it in direct competition with other BNPL providers, most notably Klarna, which has also signaled its intentions to go public.
Klarna’s CEO, Sebastian Siemiatkowski, has previously stated that a stock market flotation could happen as soon as this year.
The Road Ahead
As Zilch continues to grow and prepare for a potential IPO, its focus on expansion rather than cutting costs sets it apart from many of its fintech peers. With new leadership on its board, financial backing from major banks, and ambitious plans to triple sales volumes, Zilch is positioning itself as a key player in the highly competitive BNPL market.
However, with increasing regulatory scrutiny on the BNPL sector and the broader fintech industry facing economic headwinds, Zilch’s path to profitability and long-term success will depend on how effectively it navigates these challenges while continuing to grow.
