The Buy now, pay later (BNPL) phenomenon has grown in popularity over the years as consumers seek alternative methods of financing. BNPL is a new payment option that allows consumers to receive their purchase right away (Buy Now), either online or in-store, and then pay (Pay Later) for their purchase in installments. BNPL is now revolutionizing the customer journey by being seamlessly integrated into e-commerce as a checkout option.
So far, BNPL accounts for only a small portion of overall credit card spending. However, with the coronavirus pandemic-fueled e-commerce boom, this alternative model of financing may be poised to disrupt the $8 trillion US payment card industry. To date, the current BNPL model is mostly focused on the consumer-to-business (C2B) e-commerce space. Now, one tech startup is aiming to take the model to the business-to-business (B2B) sector.
Enter Ratio, a new type of buy now, pay later provider and financing platform for recurring revenue businesses across three continents. Founded in 2021, Ratio brings a new flavor of BNPL services that combines payments, predictive pricing, analytics, and finance, allowing B2B SaaS firms and other recurring revenue businesses to boost sales while gaining immediate access to the value of new contracts.
Ratio is a new type of fintech platform that was born during this triple-whammy time of economic uncertainty, funding slowdown and cash flow crunch. It allows SaaS and other recurring revenue businesses to embed buy now, pay later (BNPL) services at their points of sale, so B2B customers can check out with a payment structure and schedule that match their evolving cash flow needs. At the same time, Ratio also provides businesses with non-dilutive capital financing based on their recurring revenue contracts.
Today, San Francisco-based Ratio emerged from stealth raising $11M in venture funding and a $400M credit facility for customer financing. Co-founded by two industry veterans and serial entrepreneurs, Ratio is rewriting the rulebook for SaaS pricing and financing, driving value for vendors by delivering a new set of tools to accelerate growth in the turbulent market.
The subscription economy is now a $1.5 trillion segment of the recurring revenue market, with industries ranging from software to razor blades deploying subscription-based business models — but companies still face challenges with deferred cash flow, steep discounting, and the time needed to recoup customer acquisition costs, even as customers’ desire for payment flexibility is growing more ubiquitous.
The current cash flow crunch has only exacerbated this problem. That’s where Ratio comes in: its game-changing platform allows SaaS companies and other recurring revenue businesses to provide embedded buy now, pay later (BNPL) services that granularly match their customers’ cash flow needs. This provides ultimate flexibility to the customer, while boosting sales for vendors and giving them immediate access to the value of the customer contract.
Simultaneously, Ratio allows SaaS businesses to leverage their recurring revenue streams to unlock instantaneous new non-dilutive capital — without having to give up additional equity, dilute control of their business, steeply discount their products or spend countless hours in an always-be-fundraising mode.
Ratio’s founders and management team have deep roots in the SaaS and technology spaces, with proven experience building large software businesses and early-stage companies. Together, they created Ratio to solve the challenges they themselves experienced running major SaaS businesses and startups.
Ratio co-founder and CEO, Ashish Srimal, has held executive positions at SAP and Medallia. He was also previously the founder and CEO of SmarterMe, the world’s first intelligent mobile assistant for sales, and has advised numerous SaaS, venture, and private equity firms. Co-founder and CTO Mason Blake also co-founded UpCounsel, the world’s first B2B legal marketplace, where he served as CTO and eventually as CEO. The company later exited to LinkedIn where he led the service marketplace team before founding Ratio.
“We created Ratio to revolutionize the way that SaaS companies and technology businesses price, get paid and fund their growth,” said Ashish Srimal, Ratio co-founder and CEO. “Payment flexibility, intelligent and iterative pricing, combined with a frictionless quote to cash process is the new strategic frontier for SaaS growth. We use data, machine learning, and finance as tools to unlock this growth lever for our customers. This creates a win-win for both tech buyers and sellers — buyers get more payment flexibility to match their cash flow and procurement constraints, and sellers get more revenue acceleration tools. Our mission is to democratize the way that we buy, sell, and fund technology. We imagine a world where every buyer and seller of technology — no matter whether they’re in New York or Nairobi — has access and opportunity to buy and build the best. In short, we help accelerate and democratize the way that software eats the world.”
“We think Ratio is a game changer for SaaS companies. The way it uniquely combines finance, pricing, and an intelligent checkout flow in a simple and elegant solution has not been seen before in SaaS. The solution not only increases the speed to close and drives higher ACV/TCV, but enables much needed improved cash flow for high growth tech companies,” says Ullas Naik, General Partner at Streamlined Ventures. “Ratio is on the forefront of two critical trends; first, the ability for SaaS companies to leverage their recurring revenue to their benefit and second, embedded intelligent sales and finance tools to enable greater efficiency. Ratio gives companies a new and powerful strategic lever to accelerate growth.”
Ratio’s investors include Streamlined Ventures, Cervin Ventures, 8-Bit Capital, HoneyStone Ventures, multi-billion dollar asset managers, and a range of tech CEOs from both large and small companies.
