STARTUP STAGE: StretchBill enables STR managers to offer layaway-style payment option

StretchBill

Founded in 2023, StretchBill creates a pay-over-time option for those booking short-term rentals, including an option that lets individuals traveling together each take responsibility for specific payments.

For property managers, StretchBill enables them to take online bookings with lower processing fees than the typical credit card rate of 3%.

What is your 30-second pitch to investors? 

StretchBill is an alternative to credit card payment, offering a pay-over-time option that works like layaway, not lending. Those booking short-term rentals connect their bank account and agree to a payment schedule, with the booking paid in full before arrival - typically over six weeks. StretchBill also offers a unique solution for groups booking a trip together called GroupPay where the payment schedule is set with a different person paying each week. StretchBill’s first market is vacation rentals, with a plan to expand to other proptech and travel markets later this year.

Describe both the business and technology aspects of your startup. 

Our mission is to offer the flexibility of paying in installments, without the costs of consumer lending and lower processing fees than credit cards. In a world dominated by online bookings requiring credit card payment, StretchBill can cut the cost of processing in half for property managers. StretchBill’s GroupPay option is a turnkey way for any vacation rental company to give groups the ease of splitting their booking without the person booking the rental personally taking on all the financial liability. GroupPay makes it easy for property managers to also capture the group members’ contact information as most major property management software (PMS) platforms do not collect this data.

StrechBill uses a modern technology approach that focuses on application development over infrastructure. Our primary goal is to maximize developer productivity while reducing operational overhead. Our technology stack includes Next.Js, Typescript, serverless functions and Postgres all running on cloud infrastructure. 

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths: We have an incredible team both full-time and advisors that have worked specifically in payments for the proptech and travel industries. We are acutely familiar with the problem we are solving and are continuously looking for more integrated partnerships to scale up StretchBill’s potential. Our business model allows us to grow without the high cost-of-capital and risk of defaults that are common for online lenders that do not apply to us. 
• Weaknesses: We are bringing a completely new way to pay without the benefit of a war chest of investor capital to spend on customer acquisition/awareness. This means there is a lot of education as to why StretchBill is the only way to take an online booking without the roughly 3% credit card fees, and to create a sense of urgency when property managers are facing many headwinds with the economy this year. Finally, like many platform companies, we have the classic “chicken and the egg” - property managers want us to be already integrated with their software, and the software platforms want to see existing clients using StretchBill. Thankfully, there is so much value to the property managers that it is starting to force the hand of the software platforms.
• Opportunities: We see a variety of reseller opportunities for StretchBill. Besides property management software, website and booking engines can offer StretchBill to their install base and earn a revenue share from each StretchBill booking. Since we are offering an online payment option that costs billers/property managers less than 3%, we think there are many vertical markets that are 50% or more card payment that could save a substantial amount in processing fees. 
• Threats: Although our approach to paying-over-time is different from any incumbent payment platforms or buy now, pay later providers, marketplaces like Airbnb and VRBO that offer predatory lenders like Affirm and Klarna could become what consumers need to use if they don’t have the funds in their bank account. Venmo and other P2P cash platforms offer a way for groups to split payments but currently focus on lower ticket markets like restaurants.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

There are two types of customers we are serving: guests/renters and property managers. From a guest/renter perspective, StretchBill offers the flexibility to pay over time instead of a lump sum so that a guest/renter can book the property they really want (not just be limited to the one they can pay in full at booking). StretchBill also solves for splitting a booking among a group, which has been a problem in the industry forever. Instead of the person booking being personally financially liable for the entire booking, the cost (and requirement to pay or risk cancellation) is spread among the group. For property managers, StretchBill cuts payment fees relative to credit cards in half, minimizes fraud/chargebacks and attracts new guests that either don’t want to pay with a card or want payment flexibility.

From an industry perspective, the vacation rental/short term rental industry has needed more flexible payment options to better compete against both other hospitality categories (hotels) and online travel agency sites offering a predatory buy now, pay later lender. What the industry doesn’t need are renters/guests going into debt that is still being paid off after their stay at the highest interest rates in 25 years. StretchBill avoids those financial burdens for guests, allowing guests to easily book again the following year without carrying debt.

So you've got the product, now how will you get lots of customers? 

We recently launched our platform with some initial property managers, but our plan to scale will be integrating with major property management software-as-a-service platforms, booking engines, and website providers in the industry. We offer a revenue share to quickly drive StretchBill adoption across each integrated partner’s client base.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market. 

With 15-plus years of experience understanding the payments needs of the vacation rental industry with VacationRentPayment/YapStone, it was very evident that property managers have been frustrated with credit card fees and chargebacks continuously increasing. With these fees representing their second-largest expense after payroll, discovering an alternative that would work well for online bookings that could cost significantly less became a passion of mine. With the popularity of buy now, pay later in the retail sector, we wanted to offer an installment-based payment option that would not have the costs associated with lending. With technology that has only existed for the past couple of years to make pay-by-bank a frictionless experience for consumers, these moons all aligned to become StretchBill. The size of the addressable market for property managers’ direct bookings (not including online travel agency bookings like VRBO and Airbnb) is $25 billion in the United States. When you consider all the other proptech and travel verticals that can also leverage the StretchBill platform, the total addressable market approaches $500 billion.

How and when will you make money? 

We offer our platform at a fraction (up to 50% off) of the cost of credit card processing for consumers that pay with StretchBill. We have positive unit economics since day one because we have negligible customer acquisition costs and don’t carry any default risk or cost-of-capital like online lenders. On an operating basis we anticipate hitting break-even in 12-16 months.

What are the backgrounds and previous achievements of the founding team?

Our founder and CEO (Matt Golis) was the co-founder/former CEO of YapStone, a payments company that revolutionized credit/debit/ACH processing for the apartments, vacation rental and other proptech industries. With 25 years of experience in payments focused in similar markets, Matt’s uniquely qualified to understand why StretchBill is needed in travel and other proptech industries. 

Our chief technology officer (Doug Reed) is the former CISO of Carta, one of the fastest growing fintechs for managing cap tables and other corporate governance for startups. He has more than 25 years of experience with embedded payments, connecting to financial institutions, and customer-facing bill payment products. 

Our advisory board includes former U.S.-based leaders from Klarna, Vtrips, YapStone and other travel industry thought leaders.

How have you addressed diversity and inclusion within your business? 

We want to have a diverse team that brings different perspectives to make StretchBill successful. That diversity is manifested in both the geography of our development and design team, and the balance of men and women on our advisory board and StretchBill ambassador teams. StretchBill’s model reflects our belief in financial inclusion as travelers cannot always pay in full at booking and have been subject to the highest credit card interest rates in 25 years. Our pay over time platform gives people the time to pay for their trip, making renting a vacation rental more attainable to more people.

What's been the most difficult part of founding the business so far? 

Trying to create a sense of urgency with potential partners and prospects that don’t move as fast as we do. We see a ton of opportunity for StretchBill’s platform across multiple sectors, but we want to be the absolutely best solution in our first market (vacation rentals). Without a war chest of significant capital, we have to be much more resourceful in how we educate the market about why StretchBill makes sense and use cost-effective methods of driving awareness to our brand. 

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones? 

We’ve attracted some great talent - both our founding team and our advisory board. Leaders in both the travel and fintech industries recognize StretchBill’s potential - both from a disruption to the status quo of a world that is around 100% credit card payment at booking and the user experience that makes it easy for renters to pay over time. In addition, having spent the past 20-plus years offering a vertically focused proptech payment solution with my last venture YapStone, StretchBill not only knows many of the key customers/partners but also how our solution can solve a real problem in the industry. Finally, we are fortunate that we have a number of industry advocates that are helping us spread the word.

A year from now, what state do you think your startup will be in? 

We will have proven our model in the vacation rental industry, and will have established anchor client/integrated partners in two other vertical markets. In addition, we should be approaching (if not already achieved) profitability.

What is your end-game (going public, acquisition, growing and staying private, etc.)?

Right now we are head-down focused on building the business. If the market recognizes the impact that StretchBill can have to drive more bookings and save property managers processing fees, it is absolutely reasonable to believe it can be a stand-alone business that files to go public. StretchBill would be a great feature for any travel technology company offering an online booking experience that wants to differentiate itself from its competitors.