The e-commerce boom during the pandemic spurred the rise of buy now, pay later (BNPL) companies, but as those services have come under increased examination and regulation, a new generation of companies have shifted BNPL functionality to business-to-business (B2B) transactions, helping organizations optimize their cash flow.
Working behind the scenes of these platforms is OatFi, a NYC fintech that provides end-to-end infrastructure to facilitate BNPL products and other embedded working capital tools for B2B payments platforms.
OatFi emerged from stealth on Tuesday with an $8 million seed round led by QED Investors. The seed round brings the startup’s total funding raised to $11.25 million. OatFi currently has 14 employees, but co-founder and CEO Mike Barbosa said he expects that number to reach 22 by the end of the year.
B2B BNPL platforms can help small- and medium-sized businesses optimize their cash flow by extending due dates on payments owed and turning outstanding receivables, or money owed to the business, into cash.
OatFi allows these platforms to create their own BNPL product on their existing platform without having to create a credit business. Because businesses, in partnership with OatFi, can create their own BNPL tool, they can also tailor the user experience to meet the needs of their B2B customers.
“Most existing B2B solutions have copy-pasted the BNPL playbook for consumers, but the problems for businesses are much different,” Barbosa said in a statement. “An SMB’s working capital issue could exist on both sides of their cashflow conversion cycle, depending on their relationship with suppliers and customers.”
Barbosa, who previously worked at Morgan Stanley and Bloomberg before co-founding a climate-tech startup, launched OatFi with John Jordan, who worked as a software engineer at Disney+ before starting a Web3 app development agency.
Along with the seed funding, OatFi also announced a $50 million credit facility from Architect Capital.
