How ChargeAfter CEO Meidad Sharon grew to $16.7M revenue and 2K customers in 2024.

hey folks my guest today is madod he's a ceo and founder of the award-winning retail finance sas network platform charge after the first global network to provide a complete solution to point-of-sale financing from multiple lenders over 15 years of experience he has over 15 years of experience scaling global payments and sas businesses with the people and customer first approach madonna are you ready to take us to the top sure sure all right 15 years man you're an og what was the first s company you were working on i actually started in the in the mobile space in the time that mobile was uh developing all the value that services be and and starting to have the internet on moved from there to the payment space and and from the payment space this was a natural development in the bnp and point of sale financing space so just describe for people that are not familiar with buy now pay later maybe they've never heard of like uh you know a firm or these sorts of businesses what is buy now pay later yeah so buy now pay later is basically the ability to split a payment to a purchase to a several payments typically between four to six but there are many other types of binomiator that allows the consumer to split the payments of the purchase to up to three years in many cases and this is a very developed very growing trend where consumers can instead of paying now they can pay later and split their purchase it's a new form of credit i would say so most folks listening guys if you have bought maybe a tesla or a purple mattress you may have saw pay with a firm under the checkout page or something like that this is the space you're playing in so mad will consumers buying that mattress or the tesla ever know about you or are you working behind the scenes with tesla directly or with the mattress provider directly so we are working behind the scenes our platform and network is enabling the merchants to have their solution usually we are allowing the merchants to white label it we are working with lenovo as an example if you go to lenovo website you will see lenovo financing it is powered by charge after and we are allowing them to offer this to their consumers you just saw you said lenovo the computer company right computer gaming pcs exactly yeah so i so i see this actually right now uh lenovo financing if you guys just google it there's basically a big pre-qualification button you're basically enabling lenovo to take this in-house not have to rely on a firm or one of these other tools that do it we enable lenovo to have this in-house in the sense that they are utilizing our platform to connect to multiple players like a firm okay that would enable their consumers to have much better coverage than having only one player the the pain point that charge after is solving is that there are many bnpl lenders out there each one of those lenders is focusing on a specific financial product it can be paid for it can be long-term installments it can be revolving line of credit or even a leasing product but each one is different and each consumer would prefer a different product each lender is also focusing on a specific credit segment it might be prime near prime or subprime which means that they will approve only 30 of the consumers or in other words declines 70 of the consumers and each lender is focusing on specific geography but the merchants from their side they're looking to have a solution that would cover all their consumers and they want to have this flexibility and and the consumer from their side they're looking first to be approved right [Music] the consumer experience of being declined in 70 of the cases is not positive so first they are looking to be approved and second they don't want necessarily to have only one option they want the option that has the best fit for them that they can choose from and by having multiple lenders on charge after platform and network we are enabling the merchants to have full coverage best conversion rates best approval rates and the consumer we're almost bidding on their behalf between the different lenders because a firm is an example they're a great lender really they're a great company but they have a very specific product to a very specific um credit box in ever in in in the us right they don't cover our countries they don't cover um nearby most of prime they don't cover revolving line of credit understood oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're gonna get a different valuation a vc is gonna pay a different valuation private equity firm is different if you're gonna do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderprep.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview and so flesh the marketplace out for me how many merchants like lenovo have installed uh charge after on their website so we have we have with many many merchants thousands of merchants that installed charge after millions of consumers used charge after so far we have an amazing investors visa invested in charge after synchrony bank invested in charge after citibank bbva oh sorry just before we get into your funding history because i want to touch on that just i want to understand the merchant side so when you say thousands you're talking between like a thousand and three thousand lenovos have you installed yeah lenovo lenovo is a client for example okay but my point is it's somewhere between like a thousand and three thousand when you say thousands that's what you mean we are private companies so we're not sharing the exact number of merchants that we have but we have wide distribution of charge after across many um many merchants in many territories understood and then on the flip side of the marketplace how many lenders like a firm are on the platform and does a firm have to opt in or do you automatically add them you don't need a relationship with them no so so each lender that is on the platform has a relationship with charge after we have uh close to 40 lenders already on the platform which will go probably 280 by the end of the year so we have dozens of lenders on the platform yep and then i guess when when we talk about your growth which is going to tie into your funding story here i imagine one of the things you measure is just gmv right how many loans done monthly if is that accurate that's a key metric for you yeah yeah so and so are you talking like last month are we talking tens of millions or hundreds of millions or just maybe a million per month can you give me a range of what your gmv is monthly yeah so again we're we are private company we aren't revealing those types of data and to the public but we we are certainly processing very big volumes in in hundreds of millions uh hundreds of millions per month again we cannot share this type well my dad you just shared the number so i now need to qualify it so my audience doesn't get confused you said hundreds of millions is that lifetime no it's not a lifetime but but let's focus on other stuff because we don't feel comfortable to mention specific numbers on a podcast and we are sorry just to be clear you mentioned the number you said hundreds of millions so i want to now make sure i understand it clearly when you say hundreds of millions over is that all time to date or it's not monthly or you don't want to say it's not it's not all times it's not all times it's it's the current volume that the current run rate that we have okay there you go perfect so you're taking last month's gmv times 12. let's keep its run rate yeah yeah we'll move on we'll move on but that helps me qualify right and by the way this is how everyone calculates gmb run rate last month times 12. so this is very standard stuff talk to me about growth though right so when did you launch the company what year so we launched the charge after 22 217 and we started with one merchant and one lender and we grew it from there do you are you able to share who that first both those first ones were it was uh both of them were in the u.s we started from the u.s u.s is where we have the most activity uh even now and the merchant was in the electronic space and the lender was a typical point of self-financing lender this is great yeah it wasn't available back then it's it was financing which is quite the same but still well i mean you made a strategic decision at some point not to compete directly with firm you said you know what i don't want to take that risk on the balance sheet maybe i'll just be the marketplace in the middle i mean that was that's a very important decision you made why did you make that decision yeah it's a great point i think that what i saw in the market you know i'm coming from the payment space in the payment space if you think about it there are tens of thousands of issuing banks which are very similar to the lenders in the bnp in space and and but then there is the networks visa and mastercard that are connecting all those separated issuers into one comprehensive network which is allowing each merchant not to choose whether they want to work with this issuer or the other but to work with all of them and this is the vision of charge after we are building the visa of bnpl the leading network and platform through the bnp air space so i saw that there are so many lenders in the market there will be more each one of them focusing on a very specific area we wanted to give the full solution to our to the merchants to banks that are using our solution to get into the market and we wanted to be this network that is connecting all the ecosystem and how um we haven't talked about how you make money here right so what model have you built for yourself yes so we are we are um a network solution very similar to how visa and mastercard are making money we are making as well so we are getting uh um a fee from the lenders that are working with us and from the merchants that are working with us okay got it and and are are both of those on a percent basis for example would a company like lenovo just pay you a flat sas fee or are both of them paying you like a percent of deals done yeah it's a great question again on um we are not getting into the specific business model let's keep it as as a fee and this is an ongoing fee that they pay as part of the transactions well i mean sorry i'm going to dig here though because this is a critical question there's a lot of folks in the space that are trying to figure out do we charge a flat fee here sas fee not tied to a percent of gmv or deals closed then there's some that are on the total opposite side which is no flat fee at all free to use you only pay charge after if we bring you deals right and we help you close deals and it's a percent of gmv are you picking ones under the other are you more of a blended model okay fair enough we'll leave it at that um let's fast forward a bit so first customers in 2017 we've talked about how many uh folks you're working with now today on both sides of the marketplace tell me about the funding history why did you it sounds like you've raised why'd you decide to raise capital yeah it's a great question i think that we see a very big market demand to what we do and from all sides we have more and more lenders that want to join the platform we have more merchants that are using the platform we have more distributors and payment players that are understanding that bnpl is here to stay they want to add these banks that are that are adding this to their offering and they are they're coming to us basically so we can provide them with the technology and connectivity and so with so much demand we needed more capital to accelerate our growth this was the main reason uh for the for the last race we we started thinking that we will do a smaller raise and we had so much investors that they wanted to invest that we decided to increase the raise to the and to the size of the race that we had eventually so let's start from the first capital you brought in what year was that and what was the round size yeah so we we started in 2017 with the seed funding from pico partners vc based in israel in the u.s the second round was left and how much was the seed 1.5 one five okay and and by the way i just don't know back in 2017 in israel were you seeing the standard terms you see in seed rounds in the states you know you're raising at a five or ten cap something like that on a convertible note excuse me were you seeing back in 2017 sort of standard seed terms in israel like we see here in the u.s so a standard cd in the us would be a million to two million on a five million to ten million dollar cap were you sort of seeing that same deal back then it was similar to the us without getting into the specific terms okay cool okay what happened after the seed and then we had our a round led by propel backed up by bbva synchrony joint and plug and play joint and yeah and what was the size there um i think that it was 8.5 million 8.5 you have to think about dilution's a real thing when you do these raises i thought you would you would know you know these numbers off the top of your head huh we yeah we had we had few investors coming and yeah it's it was it was a very intense last year in terms of uh capital raise so the the former rounds are a bit vague at this point i see fair enough fair enough all right what happened after the series a we had visa joined you know kind of in between the rounds and and then we had this round and so again my audience doesn't know what this one is so what tell us what you just raised sure sure so in the recent round we raised 44 million and and we had we added to our existing investor group which is really great right the investor group that we had before was composed of visa no need to present visa any further synchrony bank that is one of the leading banks in buy now pay later in the us and bbva that is one of the largest banking group worldwide and in the recent round we added a citibank again no need to present citibank and one of the largest banks in the world we had the brothers why was it important for you to get all these banks on board does it enable you to increase your margin profile at all well we think that what we are building here is a technological solution but also an ecosystem and and we view ourselves as an industry platform and as such as many plug players in the industry that are investing in charge after we view it as a better thing if you think about who are the investors of visa they are the banks right if you think about who are the investors of expedia on the travel space there are airlines so we we have a similar strategy where we think that as many as more banks investing in charge after we are building the ecosystem we are getting partners and we have a better base to implement our vision i know i guess so what i'm trying to go deeper on is like let's say that you help a consumer spend a dollar at lenovo using a firm of that dollar right lenovo and a firm are going to pay you some whatever percent cents whatever then obviously visa also takes whatever 300 bips right city takes 300 bips whatever the card is takes 300 bips do you have the ability to expand your margin larger than three percent of that dollar by bringing some of these banks on board no it's not connected to that and by the way if you're working with us um in lenovo or elsewhere but it's more about the ability to add more players that are believing in charge after vision and in charge after um marketplace and and usually they don't only invest they also participate in the marketplace so it's not about increasing the margin when we are working with when a lender is involved in a specific transaction it's only this lender right it's not also visa and also um citibank oh so visa could be an another version of a firm that visa could be the lender in the platform like a firm actually they are these are enabling visa installments it's a product of visa that is enabling the consumer to split these payments over multiple installments from from three months to 18 months using his existing card i see that's smart and then look i don't know a ton about all of your competitors you're gonna know more here so my question to you is if your competitors that own a marketplace like this are processing a dollar of like gmv like this how much are they probably making on that dollar from both sides of the marketplace is it is it five cents two cents a cent it is very similar to the margins that the visa must have heard of having the three cents two cents three cents it's more it's more complicated to that you're referring to the total cost that involves in the visa world right it will include the cost of the issuer the cost of visa and the cost of the acquiring bank or the gateway and but in general our model is similar we are okay doing the same thing that visa did in the payment space in the bmpr point of self-financing space well again not talking i'm not talking about you i'm curious about just the overall market so you're saying your competitors when they do this look there's complications here i don't want to go deep on all these complications but it's somewhere between three and five cents per dollar of gmv something like that again i don't think that this is um you know the right place to relate to margins i think that we have similar margins to their our competitors have similar margins to us and it's similar business model um and it's not different than what uh is happening in the payment space yeah sorry the whole show is about educating founders right so we are not familiar with your space that's why it's called the top entrepreneurs right so we're trying to learn the business model so in the space what is the margin you're seeing there again is it's i think it's three to five percent i mean tell me if that's wrong no it's certainly not three to five percent right it's less lesser more it's it's much less right oh wow okay if you look on the on the payment space right when a merchant is typically paying in the u.s somewhere between 1.6 to 3 on a critical transaction right this cost would include the issuing cost the cost of the card for the issuer it would include the network cost visa or mastercard and then it would include the margin of the distributor the acquiring bank the gateway right all those three players in the ecosystem and would would benefit out of this total cost in our case in our industry it is very similar right instead of the issuers we have the lenders instead of the uh the choirs the distributors might be the same the same companies and then we are we have the network in the middle got it got it that's very helpful okay so that's lower than i would have thought my audience probably thought so under three percent not a lot of margin to work with here so you need a lot of volume exactly yeah and you give us a run rate earlier right uh you don't like that you gave it but you give us run rate early right so 8.3 million uh per per month uh and if you're taking less than three percent there people can sort of uh back into obviously what that what that looks like from a run rate perspective 250 thousand dollars a month recurring revenue back to you guys um as you scale i didn't say 8.3 million i said hundreds of millions and and again i'm not relating not to revenues and not to volumes in this in this code i want to be very clear we are private company and we are my dad you keep saying that but then you give the number you say hundreds of millions so you are giving a number and i'm trying to make sure my audience understands that number so i'm i'm sorry right i don't want to be rude or something but on a on a podcast i usually speak about the market trends the value proposition of charge after certainly not on the specifics of how much we make how many merchants we have and in in the places that i do want to mention like the lenders i'm mentioning in the other places like merchants and volumes and margins i don't want to be specific so i just want to be very clear it's it's happy to discuss this with investors which we are doing and with clients but not on not only podcasts yeah i mean look a lot of folks are not you know if if someone doesn't hit and dive deep on the business model you end up with we works of the world that raised way too much money that brag about valuations and how much they raise and then a bankrupt three years later so i'm asking these questions you're trying to understand is there a real business here or is it basically flooded with vc dollars you're losing money and never loses money the longest maybe wins a network in the long run it sounds like that's not the case with you but that's why i asked these questions uh we'll move on from that though for now i think we have a good sense you guys are growing growing nicely tell me more about your team today right so how many folks are full-time are on the team yeah so we have 120 employees currently and we are growing very fast and did you i know you have israeli roots did you keep your engineering team over there or how many engineers total yeah we have we have offices in israel and in the us and our engineering is in israel mostly and what i imagine heavy engineering right about how many engineers on the team of engineering yeah yeah what's next product wise and where can you see the space going right now your marketplace what's step two no i think that we are very clear about our north star and our vision we have uh you know and i'm speaking out about the bigger picture the if you look on the credit market the credit market was dominated by credit cards and for many years we believe that the ability of consumers to get the credit that they need at the point of sale point of need which is bnpl is going to be the future of credit within this market we are the one connecting the market right we are creating the connectivity we are not the lenders but we are the ones connecting the the industry creating what we call the the third wave of credits and so we are very clear on our vision and we just continue to do that we are adding more and more lenders uh all the time we are adding more merchants we are being connected to all the leading payment players and basically enabling them to use our rails that we have created and by that offering bnpl to their merchants and consumers we see ourselves as the rails and the connectivity layer of the industry so on that note on that note let's wrap up with the famous five number one favorite book favorite book book and grow grow to grow to defend grow to defend number two is there a ceo you're following or studying i'm following many ceos number three what's your favorite online tool for building charge after so i'm a great admirer of sage force i think it's a very good tool number four how many hours of sleep to get every night four or five i'm not the best that's not a lot that can't be healthy i'm sleeping no seriously that's not healthy five you can survive on five hours a night yeah yeah wow i mean that's that's [Music] when a ceo comes on the show and says that amount of sleep it either usually they're bragging because they want to sound good to vcs that they never sleep which is not healthy or they're just super human and they actually just don't need sleep it sounds like you just don't need sleep i do need sleep but five hours is enough for me awesome and what's your situation without married single kids no i'm i'm married happily with three great daughters oh that's amazing and how old are you i'm 50. take us home last question something you wish you knew when you were 20. i wish i knew that fintech would be such a big thing when i was 20. guys launched in 2017 he's sitting at the center of the buy now pay later world specifically building a marketplace connecting thousands of merchants like lenovo lenovo to over 40 lenders like a firm or the banks directly like visa building nicely he says quote processing hundreds of millions dollars of run rate gmv which is exciting nice growth just closed a 44 billion dollar series sorry 44 million dollar series b uh earlier this year we'll see what happens next my dad thanks for taking us to the top thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm 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