Financing All Necessities Under The Sun(bit)

By Michelle Chang, Senior Associate, Group 11

Today, Sunbit announced a $130MM Series D financing led by Group 11 with participation from previous investor Zeev Ventures, as well as new investors Migdal Group, Harel Group, AltaIR Capital, and More Investment House.

The round values the company at a $1.1BN post-money valuation, adding Sunbit to the Global List of Tech Unicorns, making it the fifth in Group 11’s continuously growing stable of unicorns. This is a major milestone not only for the company but also for Group 11 as it is the first time we are inducting a unicorn by leading a Series D financing round. Group 11 has been a backer of Sunbit since its inception 2016, when we led the company’s first institutional financing round. We joined the company’s board of directors and have connected the company with key employees and investors, including but not limited to Zeev Ventures, who also led the company’s most recent Series C round, and all investors in this financing round

While we have all seen various Buy Now, Pay Later (BNPL) players such as Affirm (AFRM) and Klarna rising to prominence recently, we believe Sunbit is poised to win the BNPL race as a truly disruptive and category-defining company. Sunbit’s physical point-of-sale BNPL offering is unique with differentiated technology featuring a superior, AI-led underwriting infrastructure that creates value for both merchants and customers. Led by a stellar, veteran founding team, with perfect product-market-fit, and defensible technology and infrastructure, Sunbit is without a doubt the winning solution to take market share in the massive, underserved market.

Got 99 problems and a toothache is one

63% of Americans live paycheck to paycheck. 39% of Americans don’t have enough money on hand to cover a $400 emergency. 56% of Americans have $5,000 or less in savings, while a third have $1,000 or less.

If Jill, an average American, found out she had to have an emergency root canal for her tooth pain, she would be slapped with a terrifying $1,800 bill. Without the money on hand, Jill would have very limited options. She could try one of the few legacy financing providers in the healthcare space. However, they only accept applicants with credit from the higher end of the spectrum, and still decline 50% of applicants. Or, instead of trying to apply for a new credit card at the POS, Jill would have to take out a personal loan with exorbitant interest rates and unfavorable terms, or try to come up with the money another way.

Unfortunately, Jill’s situation is not uncommon. In fact, tens of millions of Americans find themselves similarly with their backs against the wall in dire financial situations because they have limited available cash and oftentimes cannot afford essential purchases.

In an effort to address this pain point, which is prevalent in various industries ranging from dental and eyewear to automotive services, point-of-sale (POS) financing in the U.S. has grown into a massive $391 billion market, comprising approximately 3.5% of the total annual consumer spending in goods and services. However, despite the market need and opportunity, until the launch of Sunbit in 2016, the POS financing system was broken and lacked adequate solutions. With long application processes, low approval rates, little transparency in the fine print, hidden fees, and unfavorable payback terms, legacy providers failed to help customers pay for necessary transactions during their time of need.

Sunbit’s Genesis

Image source: Los Angeles Business Journal

Sunbit was founded by co-founders Arad Levertov, Tal Riesenfeld, Ornit Dweck-Maizel, and Tamir Hazan PhD in 2016 with the mission of making financing in-person purchases fast, fair, and easy with high approval rates for customers across the credit spectrum. Sunbit’s offering is unique with an application that takes less than 30 seconds, requires nothing but a state-issued ID, phone number, email address, and does not involve a hard credit check. Once approved, unlike other legacy competitors, Sunbit approves 90% of applicants almost immediately, customers are given clear and fair rates for purchases up to $8,000 that can be split to 3, 6, or 12 monthly payments.

Because Sunbit is offered as a financing option at the physical point-of-sale, and the underwriting process takes seconds, Jill can apply for a loan at her dental office and be approved instantly, taking the fear and stress out of an unexpected but necessary transaction. No awkward conversations, no hassle at the time of payment, all the ease and control at her fingertips with an online tool to manage her plan, adjust payments, view activity, or pay off early.

The Physical Point-of-Sale Savior

Image source: Patrick Hyundai

Though Sunbit initially started by helping with emergency purchases, such as Jill’s root canal or auto repairs, it has become the de facto Buy Now, Pay Later partner of choice for everyday needs across the auto, healthcare (dental and vision), veterinary, and education verticals.

For many customers, Sunbit was the first and only financial partner that lent a helping hand (pun intended) when no one else would. This early show of good faith in the customer has built immeasurable brand loyalty and equity amongst over a million customers who now increasingly turn to Sunbit to finance their other everyday purchases across expanded verticals. History, and Sunbit’s incredible performance, have shown that when someone gives you financial access when no one else would, you become a loyal customer.

Sunbit’s good faith has proven to be a successful business model. Sunbit originated over 125,000 loans in the first quarter of 2021 and is available at almost 7,000 locations. The company is on target to end the year with a million loan originations, a presence at almost 10,000 locations, and 2.4x year-over-year revenue growth.

The Sunbit Prophecy: What the future holds

Building upon the company’s good faith business model, Sunbit’s ultimate vision is to eliminate financial waste for Americans at every point-of-sale without having to be at every point-of-sale. This means “connecting all the dots”, becoming the customer’s preferred payment method across all channels: at the retailer’s physical point-of-sale, online, and through device integrations with POS systems and card readers which will exponentially expand Sunbit’s footprint.

In the future, Sunbit will be used to finance all types of transactions, not just essential or everyday purchases. Sunbit will effectively become a bank of sorts for customers, meeting all of their financing needs while encouraging financial literacy and responsibility.

We believe that Sunbit is a thoroughly differentiated platform that is rapidly increasing market share in a blue ocean opportunity. With triple digit year-over-year growth, Sunbit is on target to reach over 10 million loan originations since inception and $500 million in revenue in 2023. To read more on why we believe Sunbit is a category-defining company, read our previous article Gone in 60 seconds: How Sunbit is revolutionizing point-of-sale financing.

Image source: Sunbit

Group 11 is thrilled to welcome Migdal Group, Harel Group, AltaIR Capital, and More Investment House to this round. We are proud to continue supporting co-founders Arad Levertov, Tal Riesenfeld, Ornit Dweck-Maizel, and Tamir Hazan, PhD, and the entire Sunbit family in their mission to eliminate financial waste while passing value back to both merchants and customers.

Dovi Frances is a financial services entrepreneur and founding partner of Group 11, a venture capital firm based in Los Angeles, California.