A cleverly disruptive point of sale credit financing app, Divido, has raised $2.5m of funding at an unknown valuation, in a round led jointly by London-based VCs DN Capital and Mangrove Capital Partners.
Divido was founded by Swedish entrepreneurs Christer Holloman, CEO, Fredrik Borquist, CFO and Anders Hallsten, CTO.
Previous to launching Divido, Holloman headed up EMEA sales for Google backed Glassdoor.com, the career “reviews” site, Borquist was an IT director and trader at RBS, and Hallsten built e-commerce platforms for the likes of Hush Puppies and Fossil Watches.
Divido partners with retail stores to allow shoppers to make expensive purchases and, rather than paying for them immediately, take out a contract with a credit provider, interest free, on the spot.
The firm say that they are currently able to facilitate £25m of credit underwriting and can finance transactions up to £25k, and the bonus for retailers is that they receive all of the cost of the purchase up front, although the retailers themselves must pay some of the costs of the financing themselves.
The company’s funding comes hot on the heels of recently awarded £200k grant from the UK government’s innovation agency Innovate UK, to “support Divido’s mission to bring transparency and competition to traditional point of sale consumer finance”, according to Tech Crunch.
Divido invites a network of different credit providers to bid for the financing contracts, allowing smaller credit providers to muscle in on a market that is typically dominated by store cards backed by a single, major finance provider, or credit cards.
And the company are not just present on the High Street either – they also provide financing for funerals, bikes, furniture, healthcare, fashion and education, and offer their services to smaller merchants to enable them to expand into offering financing to their customers.
Divido offers different packages to merchants; deferred payment, which enables the customer to pay nothing until the end of the period – but a 3% charge is levied on the merchant themselves by Divido.
The second option, 0% finance, is, Divido says on its website, the most popular option “as it drives the most new business”; customers pay 0%, whilst the merchant pays from 6% on the amount financed.
Finally, Low Cost Credit is also available, in which the customer pays 9.9% and the merchant pays from 0% commission to up to 3% APR on the amount financed.
The company has appointed several advisors to help it flourish, including CMO and CPO of WorldPay, Kevin Dallas, CRO of Corporate banking at Barclays Carsten Egeriis, and Taylor Wessing partner Jonathan Rogers.
Divido certainly embraces levels of complexity that mark it out as a disruptive innovator in the FinTech space, giving both customers and retailers options they haven’t had before. To what extent can a retailer up-sell goods and services to customers through Divido, before they start to feel the pain of helping to fund the customer’s spree, and how much can an unwitting shopper afford to buy “on tick”, as it were?
Used wisely, Divido could make a significant difference to retailers bottom lines, and allow shoppers to purchase what they want, when they want it – get it wrong, and both sides may find themselves facing a personal credit crunch.
Thanks to FinTech, even the humble high street shopper can add a bit of “colour” to their transactions – hadn’t it all just been a bit too “vanilla” up until now?