A trio of financial services veterans recently started a company called Equipifi and announced on Wednesday that it had raised $3 million in seed capital to help get operations up and running.
Equipifi is a software company that enables banks and credit unions to offer Buy Now, Pay Later (BNPL) services to their customers. The biggest BNPL companies — like Affirm, AfterPay and Klarna — work with retailers to offer delayed payment options to consumers, but Equipifi plans to hit the same customers by working directly with financial institutions.
The seed round was led by New Stack Ventures, with participation from Revolution's Rise of the Rest Seed Fund, SaaS Ventures, PHX Ventures, and several strategic angel investors. Baleon Capital led a subsequent seed round with participation from SixThirty.
Equipifi is still a very new venture, according to CEO and co-founder Bryce Deeney, who said the seed financing officially closed on Sept. 8 and they cut first payroll to the five employees a week later. There are now 11 employees at the young company.
“From a startup perspective, we are fresh. But many of us come from executive roles at massive organizations with thousands of employees,” Deeney said. “So it's fresh, the funding round is very fresh. However, we're not green.”
Deeney co-founded Equipifi with Arthur Miller and Bill Simmons. Deeney and Simmons previously worked together at Alaska Federal Credit Union (which has a secondary HQ in Glendale) and when Miller, who had been working at Early Warning Services in Scottsdale, heard what they were working on he wanted to join up right away.
Pandemic popularity
The Equipifi software kicks in to offer the BNPL service when a customer uses their debit card on an eligible purchase, as determined by their bank or credit union. When a qualifying purchase is made — like an $800 TV for example — the customer will get a push alert or text telling them they can set up a BNPL plan.
From there, users are sent to their mobile banking app to see payment options. The bank then puts the $800 spent on the TV back into the user’s account and the BNPL payment gets withdrawn automatically each month.
The banks or credit unions may charge interest on the BNPL transactions, at their discretion. Equipifi makes money by charging subscriptions to the financial institutions using the software.
Deeney said he couldn’t share specifics yet but that Equipifi was already working with about 20 financial institutions and the plan is to go live with three of them in the first quarter of next year.
The explosion in BNPL popularity, Deeney said, is due to the Covid-19 pandemic and its impact on how consumers spend their money.
“The pandemic hit and Americans started feeling uneasy about their financial futures,” he said. “A lot of the credit card users started migrating to using debit cards again. And that shift hadn't slowed down.”
Even as people opt for debit cards instead of credit, Deeney said they still want to make larger purchases, so they’ve turned to BNPL as an alternative.
'Arizona is home'
Deeney said that raising capital ended up being easier than he anticipated, but he had to make an early adjustment after just a few meetings with California venture capitalists.
“What I found was the ones in Silicon Valley would say, ‘Oh, you're in Scottsdale, when are you moving to the Bay Area?’ And I'd say, ‘I appreciate your time, but I'm really not interested in relocating. Arizona is home,’” he said. “So I ended up purposely reaching out to venture firms I found online that had theses talking about that they prefer to invest in companies outside of Silicon Valley.”
That led him to Chicago’s New Stack Ventures and the Rise of the Rest Seed Fund, which was started by AOL co-founder Steve Case and previously invested in Scottsdale-based Qwick.
“We also purposely sought after local investors that can be advisors and like personal advisors and help us grow the company the correct way in Arizona,” he said. “That's an incredibly important piece of our story.”
Specifically, Equipifi and Deeney are working with CampusLogic founder Gregg Scoresby and Axosoft founder Hamid Shojaee. Both Shojaee and Scoresby make investments in budding Phoenix companies and serve as advisors to local founders.
Equipifi is currently based at AZ CoWork in Scottsdale, a coworking space owned by Shojaee, but Deeney jokes that the company is growing so quickly they'll soon be kicked out for taking all the space.
