Venture Capital

Co-Founders Were Key to Afterpay’s Appeal, Early Investor Says


By Stuart Condie

SYDNEY–Venture capitalist Dana Stalder understands why Square Inc. CEO Jack Dorsey was impressed by Afterpay Ltd.’s co-founders.

Mr. Stalder, general partner at U.S.-based venture-capital firm Matrix Partners, was only expecting to offer advice when he met Nick Molnar and Anthony Eisen in 2017. Instead he soon offered to help fund the Australian buy-now-pay-later platform’s expansion to the U.S.

“Frankly, I walked into the meeting not even thinking it was going to be an investment opportunity,” Mr. Stalder, who was introduced to the pair by a former PayPal Australia executive, said in an interview with The Wall Street Journal.

“An hour meeting turned into a two-plus hour meeting, turned into subsequent meetings that same week while they were in California. And you know, we ended up figuring out a way to work together,” he said.

Not dissimilarly, Mr. Molnar initially met Mr. Dorsey for advice about philanthropy. Months later, Mr. Dorsey was lauding the co-founders as Square launched an all-stock offer valuing Afterpay at about US$29 billion.

“It’s a very interesting match with Jack Dorsey and the company he’s built at Square. It’s incredibly aligned,” Mr. Stalder said.

PayPal Holdings Inc.’s former commercial chief, Mr. Stalder has been an Afterpay board member since 2018, when Matrix invested US$15.0 million in what was then known as Afterpay Touch.

Mr. Stalder said he was immediately struck by the fact that the Australian entrepreneurs were both humble and “laser-focused on getting successful.” While Afterpay and the installment payment model it was promoting were largely unknown in the U.S., Mr. Stalder said he was confident it would take off.

“I knew from my PayPal days that consumers–and merchants for that matter–in these card-dominant Western markets behave the same,” Mr. Stalder said.

“I had just seen that when we took PayPal first to Canada and then the U.K., and then France, Spain, Italy, Australia and the like. I saw this pattern of what was the same and what was different, and I knew this could be successful in the U.S. market.”

Afterpay racked up more than US$7 billion in North American transactions in the 12 months through June. It had 10.5 million users in the region–65% of its global total–at the end of its third full fiscal year since launching in the U.S.

Mr. Stalder said Afterpay, which boosts merchants’ traffic and conversion rates while remaining free to consumers who make repayments on time, had led to an innovation shift in payments. The previous such shift was the move to contactless payments and the next will likely be blockchain-enabled decentralized finance, he said.

Matrix this year waived 35% of the underlying interest it held in Afterpay’s U.S. unit for about 373 million Australian dollars (US$274.6 million) in cash, while the 0.9% stake it holds in the overall company is valued at A$343.0 million by Square’s offer of A$126.21 a share.

Mr. Stalder said working with Messrs. Molnar and Eisen, who will join Square, had been one of the highlights of his career. Yet he doesn’t expect to work with them again.

“There’s no venture capitalist on the planet who would not back these guys, but I don’t think they’re ever going to need venture capital money again,” he said.

Write to Stuart Condie at [email protected]


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