When a company in a sector we cover raises $57 million, it usually gets our attention. Especially when it’s in a space like buy now, pay later that is starting to feel a bit overheated.

San Francisco-based Vartana announced a $57 million round. The round breaks down as a $7 million seed round led by Audacious Ventures and a $50 million debt round from i80Group.

The company was founded in 2020 by CEO Kush Kella and Head of Finance Ahmed Sharif. The two had worked together at fleet management software company KeepTruckin. There, according to the funding announcement, the two execs identified a “broken” B2B contract management and payments infrastructure.

So the company built a managed checkout platform designed to give technology buyers a range of payment options. And at the same time providing technology vendors tools to close contracts and generate sustainable cash with prepaid deals.

“We create a win-win scenario for both buyers and sellers of SaaS and other technology products. Buyers can solve budget constraints by paying on a schedule that works for them, while sellers get paid upfront and eliminate churn on deals,” said CEO Kella.

“Our platform is the first-ever managed checkout platform to accelerate enterprise sales and we’re excited to work with stellar investors to help us bring it to market.”

The Affirm comparison comes from extending a BNPL option, which helps sellers get their money faster while giving buyers tools to manage cash flow. Affirm is a leading consumer BNPL player.

The Shift to B2B

Increasingly, we’ve seen investor interest in BNPL pivot from B2C to B2B. Recent examples of B2B BNPLs getting funded include Resolve, an Affirm offshoot that raised $60 million last year.

Resolve emerged from a San Francisco-based venture studio created by Affirm founder Max Levchin.

Resolve’s founders Chris Tsai and Brian Nguyen worked closely with Affirm as they developed the business idea. This led them naturally to the BNPL model. But since the consumer angle was already done to death, why not B2B? They launched the business in 2019.

Resolve’s use case sounds a lot like what Vartana is trying to do. B2B customers are always looking to stretch payments, essentially using their suppliers as a de facto source of credit. Whether the supplier is on board or not. Using Resolve, they can finance these extended payments, getting the cash upfront. They pay Resolve for this service, of course, but it beats chasing customers for payments that are 30, 60, 90 days late. Or worse.

We’ve also seen BNPL extend further into vertical categories. For example, we recently wrote about PayZen, a startup that raised a $15 million Series A to extend the BNPL concept to health care.

Bad Press Mounts for BNPL

Meanwhile, negative press on the potential dark side of BNPL, particularly on the consumer side, continues to mount. Much of the criticism is directed at the impact BNPL is having on the financial health of consumers. The BNPL concept has been largely sold as a responsible alternative to revolving credit card debt. Yet the evidence is mounting that consumers are defaulting on BNPL obligations at a growing rate. And that the use of BNPL is having a negative impact on credit scores.

The concerns have drawn regulatory scrutiny around the world. And in the United States, as we reported in December, the Consumer Finance Protection Bureau has opened an inquiry into BNPL.

The agency seems to be concerned that BNPL is leading consumers into a debt trap.

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately, too,” CFPB Director Rohit Chopra said in a statement.

“We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”

These growing concerns over BNPL, including that the field may be too crowded and that it may be creating a consumer debt bubble, seem to be having an impact on investors.

Affirm, for example, ended 2021 trading at 100.56. Yesterday it closed at 62.8. That’s about a 38% fall in less than three weeks.

Affirm’s rival Afterpay (recently acquired by Square), has also fallen off, but not as dramatically. Its stock price is down just over 21% since the end of the year.