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Upgrade Announces Acquisition of Uplift, a Travel-Focused BNPL Startup
Upgrade, a leading provider of consumer financial products, recently revealed its agreement to acquire Uplift, a buy now, pay later (BNPL) vendor in the travel industry. The deal, valued at $100 million in cash and stock, marks a significant consolidation within the BNPL space. Uplift had previously raised nearly $700 million in equity and debt, but recent challenges in the BNPL sector led to this strategic acquisition.
Uplift’s Journey and Entry into the BNPL Travel Market
Founded in 2014 by Brian Barth, who had previously sold his travel startup SideStep to Kayak for $200 million, Uplift focused on offering installment plans for travel expenses. By partnering with major airlines, cruise lines, and hotel chains, Uplift gained access to a substantial distribution network, making it a prominent player in the travel-focused BNPL market. However, challenges arose as the BNPL sector faced post-pandemic malaise and increased regulatory scrutiny.
Upgrade’s Strategy and Decision to Acquire Uplift
Upgrade CEO Renaud Laplanche stated that Uplift initially approached Upgrade for a strategic investment, but Upgrade saw more potential in an acquisition. With Upgrade already offering BNPL and financing solutions for home improvements and auto purchases, the acquisition of Uplift allowed Upgrade to enter the untapped travel BNPL segment. The move is expected to bring numerous synergies and expand Upgrade’s customer base, adding 3.3 million users to their platform.
The BNPL Industry Challenges and Its Impact
The BNPL sector faced challenges, leading to a decline in investor confidence and valuations. Key players like Klarna experienced significant valuation cuts, and publicly traded companies like Affirm and Zip saw plummeting share prices. Changing consumer spending habits and concerns about stricter oversight and rising delinquency rates contributed to the industry’s woes.
Upgrade’s Diversification and Potential IPO
In preparation for a potential IPO, Upgrade has been diversifying its offerings, including rewards checking accounts, Bitcoin rewards cards, credit cards with BNPL-like options, and debit rewards cards. By acquiring Uplift, Upgrade aims to provide close to $10 billion in credit by the end of 2023. The expansion into travel BNPL is seen as a strategic complement to Upgrade’s existing direct-to-consumer strategy.
Future Outlook and Integration of Uplift’s Team
As Upgrade moves forward with the acquisition, Uplift’s team will join Upgrade in various capacities, integrating into corresponding teams, such as finance to finance. The acquisition is expected to boost Upgrade’s presence in the travel industry and offer affordable financing options to consumers for large expense categories. While Upgrade considers an IPO, the company remains focused on growth and providing valuable financial solutions to its expanding user base.