As Clearco and Wayflyer struggle, Paperstack secures $9M to fuel pivot into e-commerce lending

▤ Summary

It fuelled its first million dollars worth of loans using a combination of equity funding, personal savings, and traditional bank loans (both personal and business) obtained by company co-founders, CEO Assel Beglinova and CTO Vadim Lidich.Since then, economic conditions have worsened and traditional financial institutions have tightened up their underwriting amid a flurry of market headwinds, and larger FinTechs focused on e-commerce lending, like Clearco and Wayflyer, which Paperstack competes with, have struggled.Amid this challenging market environment, Paperstack sees a lot of opportunity to expand its e-commerce lending operations and help fill the gap as other players cut back, and the startup has closed $9 million CAD in equity and debt hoping to do just that.Founded in 2021, Paperstack is a revenue-based financing startup headquartered in Toronto with an office in New York. The startup serves brands with over $250,000 in annual sales, including Desert Farms, EATABLE, and Thrilling Foods.In an interview with BetaKit, Lidich noted that the $9 million round involved a pretty substantial lending facility, but declined to disclose the amount or how much of this total consisted of equity. The CTO noted that Paperstack plans to use this credit facility to support the companys operations and build up its lending portfolio.The financing, which Paperstack classified only as an investment round, closed in late December, and comes about a year and a half after the startup closed $250,000 in pre-seed fundingback when its focus was on bookkeeping and tax filing tech.In comparison, Clearco and its competitors have secured hundreds of millions of dollars to become leaders in the e-commerce lending market, but still face a challenging path forward. In addition to Clearco and Wayflyer, the revenue-based financing space also features other emerging players like Uncapped, older firms like Liberis, and new entrants like Paperstack.Since Paperstack first entered e-commerce lending, rising inflation, interest rates, and a slowdown in online shopping and consumer spending have had a heavy impact on both the tech sector and the industry it serves. In Clearcos case, the company has also changed CEOs and exited overseas markets, handing this portion of its business to London-based competitor Outfund.The much smaller Paperstack faces the same conditions that forced bigger players to regroup, from mounting inflation and interest rates, which have made it difficult for many startups to raise capital, to slowing e-commerce growth.Securing financing is much more challenging across the board, acknowledged Lidich, who noted that current economic conditions have led many FinTech firms to pull back and leave certain regions.

▦ Linked Companies

Liberis

$10M to $25M