Raylo raises $136M to build out its gadget lease-and-reuse ‘fintech’ platform – TechCrunch

With the economy teetering on recession, and sales of mobile phones and other consumer electronics slowing down globally, a U.K. startup called Raylo that’s leaning into both of those themes has picked up £110 million ($136 million) to grow its business, offering consumers access to new gadgets by way of short-term leases.

The London-based company currently operates in the U.K. selling monthly subscriptions for phones, tablets and laptops, and it plans to use the funding both to expand that list to a wider range of gadgets like e-bikes, as well as to continue investing in its tech, which includes an AI-based platform to assess risk for each sale, recommendation tech and a platform called “Raylo Pay” that is embedded by third-party merchants for Raylo to power leasing services for them.

The circular aspect of its sales model, the company said, is also the basis of another development at the business: Raylo said it now has “B Corp” status — which signifies that as a for-profit company, Raylo also is operating with a view to making “a material positive impact on society and the environment through their operations,” as laid out by the B Corp organization.

Notably, this funding is coming mainly in the form of debt, with a portion as equity, although CEO and co-founder Karl Gilbert would not disclose the exact amount. NatWest and Quilam Capital are providing that debt, with unnamed previous backers providing equity. (Existing investors include Telefonica, Guy Johnson of Carphone Warehouse fame, Octopus Ventures, Macquarie Capital and others.)

This is a significant injection of financing for Raylo: Prior to now, it had raised only about £12 million in equity, including $11.5 million in 2021, and about £30 million in debt. Raising debt at the moment is significantly easier than equity-based for many startups that are generating cash: They are using the funding as they might a more traditional raise but without giving up a stake in the company, nor facing negative pressure on their valuations as a result of doing that.

“This round transforms our finance infrastructure so that we don’t need a lot of equity going forward,” Gilbert said, adding that the round “is designed for us to hit profitability.”

Raylo has been growing at a fast clip, with its subscriber base doubling in the last year and Gilbert noting it’s on track to double again this year, and Raylo Pay growing 10x in the last six months to a “£3 billion opportunity.”

The actual numbers of users and revenues are not being shared but it appears that the activity off Raylo’s platform is the big prospect: Gilbert describes his company not as an e-commerce platform, but a “fintech” because of the roles that Raylo Tech and the other technology play, and how all of that aligns the startup more closely with neo-banks and other financial services startups using personalization, AI and related tools to better target their services — which in turn are built not for acquiring goods as such, but for helping people to manage their money better.

All the same, as far as consumers are concerned, the …….


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