Today Bread announced their Series B financing led by Menlo Ventures with participation from a strong group of existing investors, including Bessemer Venture Partners and RRE Ventures. Our lead investment culminates a two-year period in which we’ve been building a relationship with Bread’s founders, Josh and Daniel, and developing a thesis on the online purchase finance market. When it came time recently to evaluate an investment in the company, the decision to lean in was easy: we loved the market and the business, and we felt strongly that Josh and Daniel were founders with whom we wanted to be associated. It was then just a matter of acting decisively to the win the deal.
Bread is a next-generation, online-focused purchase finance company. The company provides ecommerce merchants with a modern, API driven service that allows their end customers who qualify the opportunity to pay over time for their purchases. The service is simple to deploy, customizable, and designed to feel native within the modern ecommerce shopping experience and to be accretive to the merchant’s brand.
Purchase finance has historically been a huge market in the offline world ($100B) defined by long term and very collaborative relationships between providers and retailers. Those relationships are sticky and will continue to persist, but as commerce shifts online, so too will the demand for financing. Bread’s thesis, which has been proven out in other parts of the commerce stack, is that the large legacy players who dominated in the offline world will struggle to adapt and compete effectively in the online world and will be supplanted by new entrants. We wholeheartedly agree, and we believe that Bread has the ingredients to emerge as the dominant player in the fast-growing online space.
A key piece to the Bread story is the singular focus on being a white label solution provider. Bread wants to keep the brands of its retail partners front and center, powering those brands with highly customizable product offerings and an ever-deepening set of services that go far beyond finance and into areas like marketing, loyalty, and data.
In contrast to other fintech merchant services, Bread has no intention of trying to push a “one size fits all” product on its merchants, nor does it want to “co-opt” the merchant experience or compete with the merchant for brand loyalty. This ethos is perhaps subtle at first pass but it is the north star of the company and impacts everything from product development and customer support to the people and culture of the firm. It’s a service oriented culture that sees compounding value in long term relationships; we appreciate that. And it was not surprising to us that the Bread merchant partners that we spoke to were huge advocates of the service and viewed the company as a partner…for the long term.
We welcome Bread to the Menlo fintech family, which includes companies like BlueVine, Realtyshares, Signfyd and Betterment, and we look forward to many exciting years ahead.