The UK’s Divido is one of a number of startups and tech companies operating in the point of sale consumer finance sector. Its alternative payment option lets customers spread the cost of any purchase over a period of time while the retailer gets paid in full right away.
Today the London-based company is disclosing £2.5 million in seed funding led by Mangrove Capital, and DN Capital. The round is actually being billed as the second tranche of the London-based company’s seed funding. It follows a £200,000 grant awarded by 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.
That’s in reference to way that Divido operates a point of same consumer finance marketplace in the background. When consumers choose Divido as a payment option at checkout they are effectively asked to apply for financing to enable them to delay payment or split payments over a period of time, up to 5 years for higher priced items.
However, unlike competitors, such as Klarna, the company isn’t providing financing themselves but instead connects to its own marketplace of lenders who compete to offer the most suitable credit, including Divido’s most popular 0% finance option.
This line of credit can be applied for via a retailer’s website or, since Divido is omni-channel, in store or over the telephone, which is another key differentiator, Divido founder and CEO Christer Holloman told me during a call.
The marketplace element also differs from the traditional point of sale consumer finance model that typically sees large retailers partner with a single lender in order to be able to offer consumer credit at checkout and, in turn, makes it harder for smaller retailers to compete.
By operating a marketplace of point of sale lenders, in a seamless way and as a single payment option, Holloman says Divido is levelling the playing field somewhat, or, in Silicon Valley-speak, democratising the space. It also explains the startup’s modest funding; since it isn’t providing liquidity — that’s left to its partner lenders — all investment is being spent on operations, such product development and marketing.
And, in case you’re wondering, Divido makes money by receiving a kickback from retailers for each sale they make when the startup’s payment option is invoked and credit is provided.