The BNPL crackdown didn’t break Walnut and his latest $110 million Series A.

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Walnut was founded Roshan Patel to offer a “buy now, pay later” model to healthcare, which is arguably home to some of the least transparent and taxing financial transactions. After in the first cohort of the Plaid startup acceleratora “fintech meets health tech” game launched last year with millions of venture capital behind it.

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Since then, the BNPL market — and its most famous pioneer, Affirm — has lost some of its luster due to a sharp fall in public market prices and a sense of chill among investors. Patel agreed with this characterization, saying that the BNPL model is “one of the first things to cut a market downturn” because it encourages discretionary spending. However, he thinks Walnut is still safe.

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“For healthcare, it’s non-cyclical and people always need it, and I think being able to help patients with something they really need, not what they want, is really helpful during a market downturn,” he said. is he. Patel countered, stating that he hadn’t noticed a decline in usage among clients needing various ways to fund medical checks. Walnut says its revenue has grown by 50% every month for the past six months, and now it’s helping “thousands” of patients split their bills and pay in smaller installments.

Investors have noticed growth. This time, the startup is back with new funding in the form of a $110 million Series A round. The round is divided into two tranches: USD 10 million – equity financing and USD 100 million – debt financing. The round was attended by existing investors including Newark Ventures, Afore Capital and 2048 Ventures, as well as new investors such as AngelList, Weekend Fund, Company Ventures, Banana Capital, Goodwater Capital and Muse Capital. The founders and executives of Ramp, Teachable, Clearbit, Afterpay, PillPack and Giphy are also investors.

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This time the fundraiser had a different temperature, says Patel, who closed the Walnut fund just over a year ago. The founder said he had more questions about unit profitability and economics “that had never been asked before,” but clearly wasn’t a problem to be answered. He did not disclose today’s round valuation, but said they could probably get about a 50% higher valuation if they moved up in the fourth quarter. Ultimately, he says it was “a great score.”

The $100 million share of debt financing, which will be led by ClearHaven Capital, will help Walnut address its biggest challenge, which is striking a balance between insuring low-income populations, paying healthcare providers up front, and collecting money from patients at the end. Since the startup was launched, Patel says default rates – or the percentage of patients who are unable to pay us back – have been “much better than expected” and comparable to more mature lenders. “The ability to assess and assess risk is very important to BNPL and we consider our underwriting skills to be one of our core technologies,” he added.

He estimates that Walnut is a loan company that helps patients pay for medical services over a period of time. Walnut is working with healthcare providers so that a patient’s bill can be paid in increments of $100 per month for 30 months instead of one aggressive credit card swipe.

Many BNPL startups, including Walnut, do cash flow underwriting where the company connects to users’ bank accounts to see daily income, spending and savings patterns to see if a loan is repaid by the end of the month. Because this method doesn’t take credit scores into account, it’s considered a more accessible way to determine if someone can get a loan.

Over the course of a year, the startup went from selling to small private practices to servicing other venture capital-backed digital health startups. For these startups, Walnut can operate as a platform layer (and perk) for clients. However, to really make an impact, Walnut needs to make sure it fits low-income demographics where they are (and it can’t always be a tech startup). Patel noted that companies such as Juno and Cureai, as the companies they work with, are reducing the cost of healthcare and are specifically targeting the low-income demographic.

He noted that the most popular specialty among walnut consumers is mental health care, an expensive but very important area of ​​healthcare. He believes there are many startups in the sector that are working to bring down the cost of patient care, so Walnut could make a bigger impact than if it focused more on fertility, which is inherently expensive. The startup also does not charge consumers any interest or fees.

The startup aims to expand its services across the country and increase its staff from 15 to 50 by the end of the year.




Credit: techcrunch.com /

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