Zilch To A $2 Billion Valuation
How a UK fintech broke growth records.
Over at Claimer we recently had the pleasure of hosting Zilch CEO and co-founder Philip Belamant in a thought-provoking Q&A session.
If you’re not familiar with Zilch, they’re something of a runaway fintech success story out of the UK.
They launched back in 2020 amidst the pandemic with a unique direct-to-consumer ‘buy now pay later’ model. The following year they hit double-unicorn status — a valuation of more than $2BN.
Let me just repeat that.
In 2020 they *launched*. In 2021 they hit a valuation of $2BN+.
This unprecedented pace earned them the accolade “fastest-growing European fintech to become a unicorn.”
Here’s what their growth looks like in numbers, up until today:
📈 0 to 2.4m+ customers👥 0 to 250+ staff🤑 0 to $460m in equity and debt funding
That’s 2.4 million fintech customers we’re talking here - i.e. not a mobile game or social network with intrinsically higher virality/low CAC - so it’s gigantic in such a small timeframe from launch.
Hiring 250+ people averages out at 1 new hire every other work day over a period of 2 years, starting from scratch.
They blitzed through their funding rounds, going from Series A to Series C in around 20 months — breaking the European fintech record.
But, that doesn’t tell the real story.
That is, how Philip and his team pulled it off. What were the ingredients? What went right (and wrong)? How did they execute this?
This isn’t just hypergrowth - it’s hyperfast hypergrowth. A distinction reserved for only the extreme minority of venture-scale companies.
What I mean by that is Zilch had to level up every aspect of their business at *a much faster cadence* than the usual venture-scale pathway.
They were closing their Series C in a similar timeframe to other startups closing their Series A.
They were hiring their 250th employee in a similar timeframe to other startups hiring their 30th employee.
They were supporting a fintech customer base of 2.4m in a similar timeframe to other startups supporting 240k.
In an interview with FinTech magazine, Philip said:
My immediate thoughts on this were “How!?” just… “How!?”
Well, let me share a few key takeaways from the Q&A he did with Claimer’s CEO, Adam McCann.
Let’s start off with the aspect that intrigued me the most - hiring.
👥 0 to 250+ staff
Zilch used recruitment agencies for their first round of hires. This works, at first, but it doesn’t scale in the way you need it to.
Agencies are good at hitting the fast-paced hiring objective *numerically*, but not so much *culturally*.
So, they focussed on building an in-house talent acquisition team. This totals 25 people — meaning 10% of staff are dedicated to hiring… all day long.
In the event their in-house team is not able to fill a role, they loop in an agency.
Plus, the incredible growth story of Zilch has helped a ton.
As the business has gained more visibility in the fintech and startup press, inbound applications have “increased dramatically.” So, a solid PR strategy has also been important in attracting and scaling talent.
Philip admitted — despite their success — it has not been easy.
📈 0 to 2.4m+ customers
To grow from 0 to 2.4m+ customers you have to have a pretty good product, right?
Well, not always (for a bunch of reasons).
But, in this case, Zilch seems to resonate with customers.
With widespread job losses during the pandemic and now a cost of living crisis in 2022, it’s not hard to see why. They are easier, cheaper, and provide more choice to consumers than legacy ‘buy now pay later’ solutions.
This resonance with their target market came fast. They had instant hypergrowth product-market fit. There was no “trough of sorrow”, in Y Combinator speak.
But, like all such eye-catching headlines, the hardwork started longgg before. Zilch is the culmination of Philip’s previous learnings from launching products, making mistakes, and figuring out what works:
But, what are those learnings in terms of making Zilch a success?
Here’s two key product takeaways:
Don’t reinvent the wheel
With Zilch, Philip took a totally different approach to the ‘buy now pay later’ market.
Rather than build a full-stack of proprietary tech and infrastructure from scratch, his view is just build what you need:
Existing incumbents like Klarna and Afterpay did not take this approach. They spent a lot of time and money building their own tech, infrastructure, and direct integrations with retailers—they are B2B.
On the one hand, this is good because it creates a network moat effect. But, on the other, it’s super expensive at both a technological and operational level and takes ages.
Whereas, Zilch built upon the infrastructure that came before them. Which, was laid down by credit card companies like Visa, Mastercard, and Discover. And, marrying this with ad houses and sales agencies
By combining all of these things, and building over the top of this infrastructure rather than attempting to compete with it, Zilch could get bigger so much faster by going direct to the consumer.
Piggybacking on the MasterCard network gave them instant access to millions of customers in the UK.
The other key product takeaway is give the customer the experience they want.
That may sound obvious, but it’s one of those things that’s more often said — or aspired to - than actually achieved. It’s not easy doing it, it’s only easy in hindsight once someone (hopefully you!) has actually pulled it off.
Often, because we are heavily biased by what already exists in the marketplace. It creates a kind of tunnel vision that we need to break free from.
Sometimes, a nuanced change in approach can unlock a ton of value. Other times, stepping back completely and approaching it from a whole another entire angle is needed.
In the case of Zilch, their breakthrough was changing *who the customer is*.
By defining the customer they were serving as the end-consumer of a ‘buy now pay later’ product (B2C), rather than retailers (B2B), the entire proposition changed.
This unlocked a ton of new opportunity. Whereas legacy ‘buy now pay later’ companies were battling it out trying to close retailers, Zilch could innovate with an underserved party in this ecosystem — the end consumer. Who, ultimately, are a significant purchasing driving force.
Zilch capitalised on this advantage by building the business in a customer-centric way as they scaled. Namely, by focussing on the key actions customers take within the product:
🤑 0 to $460m in equity and debt funding
With Zilch’s growth numbers, you might be tempted to think raising capital was easy.
But, that has been far from the truth. At one point, a $100m financing deal fell apart—that was during the pandemic. So, Philip and his co-founder Sean had to fund the business themselves until financiers came back to the table.
Six months later, with product momentum and irresistible customer traction supporting their pitch deck, they made “300 calls” and closed their Series A.
That’s an oversimplification, of course. The main takeaway from how they’ve successfully funded their business over the last couple of years is what Philip calls their “capital story.”
This is a salient point. As a founder, it’s easy to slip into the cycle of selling a product to customers 100% of the time and to capital markets just <5% of the time (mostly, when actively raising a round).
Selling to financiers is more than just decks, intros, and calls. It’s the “capital story”, as Philip puts it.
The capital story never goes away, but it can be neglected. Everything about the business affects it in real-time. This, in combination with the fundraising narrative that goes alongside it, determines whether or not a company is “default-investable.” So, it serves as a kind of beating pulse of investability.
Another interesting point from Zilch’s capital journey is they chose to circumvent VC funding in their initial rounds. Instead, they sourced capital from high-networth individuals, family offices, and more traditional institutions (like Goldman Sachs Asset Management).
Family offices, in particular, are often overlooked by founders. But, there is a lot of them out there. And, they operate slightly differently to VCs… which can be a good thing. Particularly in the current bear market when venture capital might be off the table.
That’s it for today! 👋
If you’d like to learn more about how Philip has grown Zilch from $0 to a $2BN valuation in 2 years, you can check out the full Q&A here.
In there, you’ll discover:
💡 What advice Philip would give his younger-self
🦾 What’s been the greatest challenges with Zilch so far
📊 How they use OKRs to manage and grow the business
🚨 Bonus: What’s Philip’s take on startup advisors?
Haven’t tapped through to the Q&A yet? No worries, here’s the video. 👇
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