Gynger, a platform that lends capital to companies to purchase technology, has raised $20 million in a Series A round led by PayPal Ventures, TechCrunch reported exclusively.
The financing brings the New York startup’s total enterprise capital to $31.7 million and includes participation from Gradient Ventures (Google’s AI-focused enterprise fund), Velvet Sea Ventures, BAG Ventures and Deciens Capital.
In addition to increasing equity capital, Swings finalized a $25 million loan from Community Investment Management (CIM) under an agreement that permits it to borrow up to $100 million in total.
Gynger was incubated in June 2021 with m]x[vCapital[vCapital[vKapitał[vCapital, an early-stage enterprise capital fund from New York founded by Mark Ghermezian. Ghermezian also previously founded Braze, a cloud-based customer engagement platform for omnichannel marketing. There, as he told TechCrunch during the company’s last raise, he saw how difficult it was to sell software and, on the other hand, how difficult it was for buyers to buy software.
Gynger works with each buyers and sellers of technology. It claims to help companies “finance, pay and manage” all expenses associated with purchasing technology, including software, hardware, cloud and infrastructure. It does this by giving companies access to unsecured lines of credit, which Ghermezian says gives them the opportunity to extend their runway and save money.
Gynger says it uses advanced artificial intelligence and data analytics to underwrite and approve loans for customers. According to Ghermezian, it mechanically detects technology expenses and recommends financing options that best meet the needs of each buyers and sellers.
The company claims that the application process takes lower than 10 minutes and that companies receive credit decisions as soon as the next day “and immediate access to funds once approved” with a number of payment term options. Gynger pays its customers’ suppliers on their behalf, and the customers pay them back later. Think of it as a “buy now, pay later” service for companies purchasing technology.
Gynger, on the other hand, offers technology vendors a way to offer built-in financing through its receivables platform, which provides “flexible” payment terms, Ghermezian said.
“This gives suppliers an extremely effective tool for accelerating sales, increasing revenues and reducing key financial indicators,” added Ghermezian. Sellers receive an annual payment from Gynger in advance, while their customer pays Gynger “however they want.”
The market is large, Ghermezian said, pointing to a recent Forrester research report that found global technology spending is expected to reach USD 4.7 trillion in 2024
All of those expenses translate into growth for Gynger. According to Ghermezian, revenues increased by greater than 700% 12 months over 12 months. However, sales didn’t start until the second quarter of 2023, so growth is starting from a small base. Ghermezian said the company also increased its customer base fivefold from the previous 12 months. He declined to release hard revenue numbers, saying only the company was on a “clear near-term path to profitability.” To date, Gynger has enabled hundreds of payments for its customers from tons of of providers, including AWS, Google Cloud, Okta, Cisco, Salesforce, HubSpot, Oracle, GitHub, Snowflake, and Amplitude.
Like all companies operating on the BNPL business model, the company charges interest on its loans and also earns money from buyers from loan origination fees in addition to interchange fees under its card program. It also generates revenue from vendors in the type of service fees, and plans to generate revenue from SaaS/platform fees later this 12 months, according to Ghermezian.
At the time of the company’s latest raise, Ghermezian told TechCrunch that he saw Gynger competing closely with fintechs like Pipe and Capchase, which started off by providing companies with financing beyond equity and enterprise debt. For its part, Capchase expanded its offer to “buy now, pay later” in May 2023 after the launch of Capchase Pay. But today, Ghermezian said he now not sees the companies as competitors. There are companies that do some of what Gynger does. Some of them, like Tropic, Zip and Vendr, have gone the SaaS procurement route, Ghermezian also noted. There are also companies like Brex and Ramp that provide corporate expense cards to use for purchases, including technology. However, he believes that Gynger’s important competitor is Bill.com.
The company currently employs 25 employees, up from 13 a 12 months ago.
Gynger will use its latest capital to scale its operations and finance loans.
“As we mature, we see our customer base growing, from early-stage startups to more mature companies, from Series A to pre-IPO,” Ghermezian said. “We also tap into other industries outside of technology, such as real estate, retail, healthcare and artificial intelligence.”
PayPal Ventures managing partner James Loftus believes Gynger’s model gives it a “unique advantage.”
“We believe that embedding payments and financing in both the buying and selling process for SaaS will allow Gynger to create tremendous network effects and create deep relationships that will ultimately enable the company to realize its goal of becoming the next big AR (accounts receivable)/ AP (accounts with suppliers),” he said. “Access to built-in financial solutions that ‘work’ for both buyers and sellers simply didn’t exist at scale until Gynger.”