An Alternative Take On BNPL Rings In Its New Era On The Public Markets

Omnichannel lease-purchase platform Katapult officially opened the trading day on the NASDAQ market (July 8th), ringing in its new life as a publicly-traded firm on the stock exchange.

“We are excited about the opportunity to celebrate this accomplishment and ring the Opening Bell on Nasdaq,” CEO Orlando Zayas said.

While Katapult was officially (and literally) ringing in its new public existence this week, the firm is not quite new to the public markets — the bell-ringing followed Katapult’s first day of trading by about a month. In early June, Katapult Holdings Inc. and SPAC FinServ Acquisition Corp.  closed the merger they’d announced as 2020 was coming to an end.  As of June 9, 2021, the combined company — Katapult Holdings Inc. — was officially in existence and ready to head off to the NASDAQ exchange for trading with a new billion-dollar valuation in hand.

What Makes Katapult Different

Katapult is a lease-to-own product that resembles BNPL offerings in many ways, Zayas told Webster in an interview shortly before the firm went public, but it is designed to be more flexible than the 3-4 installment model that most BNPL firms feature and is meant to target the sub-prime consumers that many mainstream BNPL offering tend to leave behind.

It’s not a competitor product, Zayas noted, so much as it is designed to be a complimentary one created to cover the ground BNPL as we know it tends to leave bare.

“We’ve had to learn how to tailor our models to better capture that data, make a determination on that consumer within five seconds and do it the right way so we [mitigate risk],” Zayas said. That’s a tall order, especially with the limited data the firm has to render such decisions — but it’s also a big opportunity, because BNPL market leaders are aware that “they aren’t addressing the non-prime consumer very well,” he noted.

Katapult, he said, is designed for those non-prime consumers — and as a result, he noted, they tend to see a really high repeat rate on the platform, with some 45 percent of their consumers coming back after that first purchase.  The company’s strength, Zayas said, lies in its ability to get customers the big-ticket items they need fairly immediately, from appliances to tires, in a way they can afford and manage.

“If your refrigerator breaks down and you’ve got three kids, you can’t wait until your next paycheck to hopefully buy a new one. And if you don’t have the credit access to put it on a private-label credit card, you surely aren’t going to take a refrigerator and split it over four payments,” Zayas pointed out.

Now that Katapult is a public company, he told Webster, the firm has officially started the “next phase of its evolution.”  It’s one that will let the firm forge new partnerships and will open up capital markets to provide access to cheaper money, which in turn could allow it to develop new products for its non-prime consumers.