Norwegian-based start-up Two has raised €18m ($21m) in a Series A funding round led by Shine Capital and Antler, and featuring participation from Sequoia Capital, Day One Ventures, and Local Globe. The company offers a buy now, pay later (BNPL) solution to businesses, allowing sellers to spread costs across 14 days to 12 months across all a company’s main B2B sales channels. The funds raised will be used to help the company expand its operations in Europe and other markets.
Two is a payment solution that provides businesses with a short-term financing tool to manage their cash flow. It offers a way for sellers to gain quick access to capital through its scoring and underwriting system, assessing orders for risk in less than a second with an approval rate of more than 90%. To manage risk, two has partnered with Allianz and Santander for larger deals between multinational companies, as well as with other third-party companies.
The payment solution also shifts risk from the seller to the payment provider, in this case Two. Despite the risk associated with payment solutions of this kind, Two CEO and co-founder Andreas Mjelde believes that the new economic climate is the way things should be. He believes that interest rates should sit at a couple of % and that it should be possible that a business goes bankrupt, which is part of the concept of being in business. He also believes that this makes solutions like Two’s more valuable and more important to use.
Two aims to differentiate itself by offering the cheapest and best customer experience in the B2B invoicing market, an area where there is significant competition. The company charges sellers a transaction fee that is, according to the company, typically lower than it costs to process cards from a business customer, which most commonly sits between 1.5% and 3.5% per transaction. Two is currently active in the UK and the Nordics, and will use the funds raised to expand its offering to the US and beyond.
Two has 67people and raised €10m in a seed funding round last year led by Sequoia. The company selected its investors with location in mind, according to Mjelde. The three larger investors, which were Sequoia, Local Globe, and Visionaries Club, were chosen for their strong presence in the US, UK, and Germany, respectively. Antler, which led the Series A funding round with Shine Capital, has invested in Two since its inception but usually focuses on very early-stage deals. Co-leading a Series A funding round is perhaps a sign that it is becoming more open to multi-stage investments.
The BNPL market has grown significantly in recent years, with companies like Klarna, After pay, and Affirm leading the way. The growth of BNPL has been driven by a desire for alternative payment methods and increasing consumer debt. In the B2B market, the potential for growth is significant, with many companies looking for ways to manage cash flow and improve their financing options.
Two is one of several companies trying to find a solution to B2B invoicing, but its focus on providing the cheapest and best customer experience could give it an edge in a competitive market. The company’s partnerships with Allianz and Santander for larger deals could also help it attract larger customers and expand into new markets. As the BNPL market continues to grow, Two’s expansion into the US and other markets could position it for long-term success.
In conclusion, Two’s recent Series A funding round will help the company expand its operations in Europe and other markets, as it aims to provide the cheapest and best customer experience in the B2B invoicing market.
