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Leanpay raises series A round from Lead Ventures

Ecosystem

Budapest-based Lead Ventures is set to provide Slovenian BNPL scaleup Leanpay, a company that provides instant installment payment solutions in Slovenia and Croatia for online purchases, with a EUR 2.5 million capital injection, according to a press release sent to the Budapest Business Journal.

The investment will allow the fintech company to set foot in other CEE markets, launching services in Hungary as well next year, according to plans.

The strong momentum of e-commerce, mainly due to the pandemic, has revved up demand for simple fast, and modern online payment services. The so-called „Buy Now, Pay Later” (BNPL) solution has generated significant growth among new generation options. Even though its name might imply simple installment payment or a loan, BNPL is significantly more flexible: With a modern UI (user interface) and real-time, fully digitized processes, it provides a unique customer experience, and the repayment is spread over a longer period than traditional loans.

This installment payment option specifically created for online buyers has generated above EUR 400 billion turnover globally in 2020, which, according to expert estimates, could double by 2025. The solution of the Swedish Klarna, considered the best-known player in the European market, has already been integrated into the system of over a quarter-million e-commerce businesses. Businesses utilizing the BNPL solution have perceived a significant increase in the conversion rate, according to the press release.

"There is exceptional growth potential in BNPL, and its regional expansion can also greatly alter online consumer behavior," explains Ábel Galácz, CEO of Lead Ventures.

"Leanpay is not like classic BNPL service providers, such as Klarna," stresses Misa Zivic co-founder and CEO of Leanpay.

While the Swedish market player mainly focuses on fashion items, with an average cart value of EUR 150, LeanPay has three times that figure, mainly thanks to consumer electronics, home furnishings, furniture and sports equipment. According to Zivic, the other difference is Leanpay’s focus on Central and Eastern Europe, a market that is almost untouched by global players.

"The CEE region is not the number one expansion target of global and Western European players," adds Galácz, who believes the reason for that is mainly found in stricter regulations and the smaller and fragmented market structure.

“The company’s self-developed risk model, which can further teach itself through machine learning based on the experience and information gained, also adapts and manages the uniqueness of local markets. In addition, Leanpay’s management and team capabilities fit perfectly with the visionary yet regulated and well-defined expansion strategy that Lead Ventures also supports," notes the CEO of Lead Ventures. 

Lead Ventures will make a capital investment of EUR 2.5 mln in the startup, which has already raised EUR 1.8 mln from recognized financial investors in recent years.

One of them is South Central Ventures, which joins the Lead Ventures investment with EUR 500,000.

“Leanpay has made fantastic progress in recent months and we are confident that this transaction can further accelerate this outstanding performance," stated Jure Mikuz, SCV’s managing partner. "The nearly threefold increase in revenue and the trust of nearly 400 online webshops have encouraged them to continue to support the team in achieving common goals." 

Leanpay will use the capital injection to speed up expansion in existing markets and to continue its CEE expansion, the press release notes. According to plans, they will enter Hungary, amongst other regional markets, in 2022.

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