Zilch rides the buy now, pay later wave to become Europe's latest unicorn

London-based Zilch has become Europe's latest unicorn with a $110 million round raised amid feverish demand for buy now, pay later services.

The startup is now worth $2 billion—four times as much as its more than $500 million valuation following an $80 million Series B in April. Zilch claims to be Europe's fastest-growing unicorn ever, reaching the coveted status just 14 months after its Series A.

European BNPL startups have been on a tear this year with valuations going through the roof. Perhaps the most famous in the space, Klarna was valued at $45.6 billion in June—up 47% from the $31 billion valuation it hit in March. Last month, Berlin-based Billie raised $100 million at a $640 million valuation, while Dublin's Scalapay hit $700 million with its $155 million Series A.

The momentous rise of BNPL—which is expected to reach $166 billion globally by 2023, according to GlobalData—has caught the attention of regulators across Europe, which are now threatening to clamp down on such services.

Following a review in February highlighting the risk of BNPL to consumers, the UK Treasury opened a consultation to determine the shape and form of BNPL regulation including new rules around how BNPL companies treat customers in financial difficulty. The European Commission has also proposed an update of its rules which demands more clarity around the risks of credit and would tighten the rules under which creditworthiness is assessed.

The introduction of stricter regulation could have a big impact on BNPL startups' growth prospects but some are already planning for the future. Zilch, as an example, has launched a feature to inform users about payment options based on their financial data, warning users if using their services will likely have a negative impact on their financial health.

Zilch's Series C was led by Ventura Capital and Gauss Ventures. It will be used to fund its US launch and increase headcount by over 150 people over the next 18 months.