Is Beforepay gearing up for a $158 million IPO?

Plans have reportedly been leaked for the IPO of fintech Beforepay, suggesting a listing next year could give the business a market capitalisation of $158.3 million.

Reports suggest the listing, planned for January 17, 2022, will price shares at $3.41, and will raise about $35 million for the three-year-old startup.

The IPO offer is expected to open on November 30 and run until December 30.

While a spokesperson for Beforepay confirmed the startup is indeed preparing for an IPO, and will release a prospectus soon, they said these numbers are speculation. The spokesperson was unable to confirm any further details about the upcoming listing.

Founded in 2019 by Tarek Ayoub, Beforepay applies a buy now, pay later (BNPL) model to salaries, offering users an advance of up to $200 ahead of payday.

The app syncs with users’ bank accounts, so when their wages land the advance is automatically repaid, plus a 5% fixed fee.

In May 2021, Beforepay named Jamie Twiss, former chief strategy officer and chief data officer at Westpac, as its new chief executive officer.

The following July, Brian Hartzer, former chief of Westpac and ANZ, and former exec at the Royal Bank of Scotland, joined as chair.

How fast is Beforepay growing?

Beforepay launched in January 2020, and according to Ayoub racked up some 20,000 new users within a matter of weeks.

The following November the startup raised $4 million in a funding round led by James Spenceley, Airtasker chair and founder of Vocus Communications.

Not three months later, Beforepay secured another $9 million in what it said was pre-IPO funding, this time led by Alium Capital.

At that time, the startup was increasing its user base at a rate of about 20%, month-on-month.

Today it has more than 100,000 active users and has completed more than $100 million in payments to date.

In a statement in July, Twiss said this is “only just scratching the surface”.

According to a report from the Australian Financial Review, Beforepay reported $4.5 million in income for the 2020/21 financial year. That’s up from just shy of $45,000 in the previous year.

Where does Beforepay sit in the Aussie BNPL sector?

Speaking to SmartCompany in 2020, Ayoub described the business as being like an Afterpay or Zip product, but for any products or services they can’t use traditional BNPL for — that is, groceries, Netflix and Spotify subscriptions, or even bills.

At the time, about 60% of Beforepay’s customers also used BNPL, he said.

“They use us for everything else that BNPL does not offer.”

It’s also just one of many BNPL-style fintechs emerging, and listing, over the past couple of years.

We’re also seeing big-four bank CBA making a play in BNPL and Paypal making a move too, driving original players Afterpay and Zip to diversify and evolve their services.

It’s a lively sector, but Beforepay in particular has driven lively conversation in the past, with some critics questioning whether it is taking BNPL too far, and whether it is merely offering expensive payday loans to vulnerable people.

Co-founder of financial wellbeing app Pineapple told SmartCompany BNPL and short-term lending services can be “some of the most expensive credit products on the market”.

While “marginally better” than payday loans, he still saw the costs as excessive, he said.