Jasper Dykes had the idea for a travel finance company long before he was financially prepared to start up. Years of research and planning later, he launched Fly Now Pay Later in November 2015, a unique financing solution that makes expensive dream holidays accessible to anyone. Here’s his business journey.
Where did the idea for your business come from?
Back when I was about 19, a friend rang up and said he found a fantastic holiday on Expedia. I think it was like almost £2000, and when you’re booking online you have to pay the full balance at the point of check out. It was so hard. I went in search of holiday finance, and realised it didn’t exist. At the time I felt I was too young to start a finance company, so I spent a number of years doing other things.
The main way I started was by researching the industry through books on Amazon. Using that knowledge, I put in core components of the business together. Holiday finance hadn’t been done before. The problem was that big lenders weren’t lending for the holiday sector, so everyone shied away, thinking the travel sector was very volatile.
After all of my research, I put together a management team. I met Stuart Jeffries, a financier and now one of the co-founders.
How did you know there was a market for it?
We started out as a credit broker. We launched a test with Travel Pack and had a lot of demand for the product and service. We then deployed some capital, loaned to a group of consumers, and watched how those loans performed. Once we were happy with the performance of the asset class, we applied for our license to become a lender ourselves. In this six to nine-month period, we built up our technology platform and started to developing our business.
We received our license in August 2015.
How did you raise funding, and why?
When we first launched our proof of concept in 2014, we had a small amount of seed capital. We’ve raised about £1.2 million from private investors, and using that momentum, we landed the Honeycomb deal (specialist lender Honeycomb Finance provided £20 million in September 2016).
Lending in the travel sector is a new asset class, and a lot of financiers are cautious about it. Honeycomb is a listed entity in the main market. They saw a need to fund alternative assets in the consumer lending sector. There are so many alternative options cropping up. They identified a need to provide that funding for other lenders. Up until now traditional wholesale lenders and banks have a real cookie-cutter approach.
The great thing about Honeycomb is that they have been live for as long as we’ve been live, really. So they’ve got a very modern point of view on alternative lending and the fintech sector.
All of their guys know the consumer lending business like their back of their hand. It really helps when (your financiers) know their stuff.
Describe your business model in brief.
We have developed a unique technology that fits within the checkout of the travel providers. When customers get to the payment page, they’ve got an option to spread the cost of their holidays so they can essentially fly now and pay later. The period is usually between two to ten months, for which we receive a small transaction fee of 7 to 15 per cent of the basket value a month. Customers can spread the principle, the booking value, interest-free. Think of us kind of like the Paypal of the travel sector. We’re like a plugin.
The travel provider gets full payment once the payment is confirmed, and we help increase conversion and sales in general. It’s a real revenue enhancement tool with a very simple integration process.
We call it a transaction fee because technically, for regulatory reasons, it’s not really interest-free.
What was your first big milestone and when did you cross it?
Our first big milestone was raising £150,000 seed round to bring the business to market.
What advice would you give to other entrepreneurs?
Know your sector like the back of your hand. Immerse yourself in the industry, get to know the movers shakers pioneers of the industry. Do whatever it takes to become as knowledgeable as possible. When you’re in front of investors, they can feel how passionate and knowledgeable you are about your sector. Without passion, you will struggle to raise funding and get traction.
Where do you want to be in five years’ time?
I’d like to see Fly Now Pay Later integrated in all of the key major booking hotspots. I want us to become commonplace in the travel sector. Much like how consumers finance a sofa or car, we want our alternative payment option to help spread the cost.
Expedia is not a customer yet, because until now, we haven’t had the capability to work with larger players. As a start-up, we have to go through a series of building blocks to access that kind of funds to (support high-volume customers like Expedia). Expedia is a multibillion pound business, and if we work with them as a plugin or a travel partner, that would mean we’d penetrate 10 per cent of their sales. We would need £100 million pounds just to support one partner, so it was definitely out.
The Lowcostholidays.com collapse is an example of why the sector is so hard to break into. It unfortunately went out of business a week before rolling out (affecting almost 140,000 holidaymakers).
Whether it’s an IPO in three to five years, or creating some sort of liquidity, I want to steer the business to access America and Europe, and become a capital of that industry.
I will be piloting the business until we achieve all of our goals, to the point where I’ll be no longer be required. That’s the dream, isn’t it? I’d also like to start more business and solve more problems.
If you weren’t an entrepreneur, you would be…
I’d probably be in motor racing or something that is fast-paced and requires concentration. In some ways, it’s similar to being an entrepreneur.
What is your philosophy on business or life, in a nutshell?
We’ve raised money, and made promises to our investors. Failure is not an option. I want us to continue creating sustainable value for all of the stakeholders in the business. If I can’t demonstrate that I can do this, I’ll have issues in subsequent funding rounds and future business. Entrepreneurs need a demonstrable track record of delivery.
In life, I love doing what I want to do. I’ve always been incredibly creative. I couldn’t be doing a normal nine to five job. In terms of starting businesses, I like doing things that are really challenging. When we first started up, it was a real mountain to climb. In any other future business I set up, it’ll have to be in a really challenging vertical.