Consumer fintech start-up MoneyMe has announced a $30 million capital raise after just two years in operation, signaling increasing confidence by the investment community in fintechs who demonstrate an ability to achieve their growth projections and deliver true consumer value.
The funds came from a ultra high net worth Australian family office, whose investment portfolio otherwise mostly comprises large scale property on the eastern seaboard, indicating growing confidence in fintech as a newly credible asset class for investors who may not have previously considered it an option.
“Valuations in the fintech sector have largely been based on forward-looking growth projections until quite recently, rendering it a somewhat risky and mostly untested investment class for many high net worth Australian investors,” said Clayton Howes, CEO of MoneyMe.
“Now that the fintech movement in Australia is reaching the two year mark, however, a number of investors who were previously sitting on the fence when it came to investing in fast-growing, tech-based startups are now finding the confidence to put their money behind those firms who have now demonstrated an ability to generate real returns.
“This is great news for innovation in Australia nation-wide, as it means we may begin to see Australian fintechs given the type of support and funding opportunities needed to finally compete on a global level.”
What will MoneyMe use this funding for?
The $30 million capital injection comprised a portion of both debt and equity, and is intended to fund the launch of a series of niche Australian-first financial products that MoneyMe will be marketing to the millennial market throughout 2016.
This is a market that MoneyMe believes will form an increasingly important target demographic for fintechs wishing to tap into a large and unmet demand for finance that is timely, convenient and personalised to the consumer’s needs.
“The millennial market is a particularly important one for financial organisations, as it is a market with a demonstrated propensity to spend big on lifestyle and convenience, and pay a premium for the opportunity to do so,” continued Clayton Howes.
“But it’s also a market that’s growing tired of being peddled financial products that are delivered en-masse and by traditional means – as if each consumer has the same risk profile, lifestyle needs, and capacity to repay.
“For this reason, fintechs with the ability to create niche products that are delivered in a tailored way that suits the unique needs of the millennial market will immediately find themselves at an advantage over slower-moving, more traditional finance providers who seem incapable of adapting fast enough to meet the changing demands of this market,” concluded Clayton Howes.
The $30 million capital raise follows a $1 million venture capitalist injection at MoneyMe’s inception in 2013, and is expected to be the first of three capital raises completed during 2016-17.
What is the story behind MoneyMe?
MoneyMe is one of Australia’s fastest-growing digital finance firms, using fintech to revolutionise the market for small loans in Australia. Its CEO, Clayton Howes, has over 15 years’ experience delivering investment strategies, restructuring operations, and launching start-ups across corporate, merger, and new business structures.
Clayton shared with Anthill more about the background of MoneyMe and what they are looking to achieve with it in the interview below.
What exactly does MoneyMe do?
MoneyMe uses fintech to offer short-term small amount consumer loans to the millennial market. Using superior technology than the banks currently possess, we’re able to create a picture of an applicant’s creditworthiness using more touch points than the banks use during the credit assessment process, and personalize loan costs to individual customers’ risk profiles within minutes.
Our loan sizes currently range between $200 and $2000 with repayment periods ranging between 30 and 60 days. However, our recent $30 million capital raise will be used to develop and launch a number of new products throughout 2016, including medium-sized loans ($2001 to $5000), personal loans ($5001+), and two niche financial products that will be the first of their kind in Australia.
What inspired you to start?
As is probably the case with many start-ups, the vision for MoneyMe was conceived during a casual chat over a beer between the co-founder, Steve Bannigan, and myself.
We’d both had decades of corporate experience behind us at that point, and were being a little silly, tossing around a few somewhat outrageous ideas about how we could unleash ourselves from the shackles of cumbersome, slow-moving corporate Australia and use our knowledge and experience to create something completely different.
We wanted a whole new way of reaching the millennial market, which we saw as having increasingly different consumer demands than older generations. This market was the spend-as-you-earn generation, the social-media sharing, corporate-rejecting market we found both intriguing and highly promising from a business perspective.
As we continued chatting, our ideas began to sound a little less silly and a little more achievable – at one point I think we looked at each other with a bit of fear in our eyes and Steve asked me – “Are we actually going to do this thing?” I shrugged my shoulders and replied, “I think it looks that way!” and the rest, as they say, is history!
What gap in the market are you looking to fill?
The MoneyMe vision is to become the new finance provider of choice for the millennial market in Australia. We believe traditional credit providers, such as banks and credit unions, are failing to meet the unique needs of this market across a number of parameters, including the types of financial products currently on offer, the way these products are being delivered, and the marketing initiatives being rolled out to engage with this unique segment.
In terms of product type and delivery, we believe millennials are looking for maximum convenience and minimum commitment. It’s a market with a spend-as-you-earn approach to life, a group that wants to use their money to experience a certain lifestyle and buy the latest gadgets, without being tied down to the long term commitment of managing credit card debt, or having to go through the process of entering a bricks and mortar bank to fill out lengthy paperwork to apply for credit.
For this reason, mobile technology is steadily becoming more important these days. In fact, our behavioural science team has determined that around 70 per cent of our loan applications are initiated from a mobile device. Twenty five per cent of these are thought to have occurred while on public transport, and a further 10 per cent while waiting for a service provider, such as a doctor or hairdresser. This market wants finance on the go, and they’re happy to pay a slight premium for the service.
It’s also a group that is highly skeptical of being marketed to by large corporates, but one which is more than happy to align itself with brands that deliver true value, and which they can personally identify with.
Brands that can meaningfully engage with this group within their personal social spheres of influence may find themselves benefitting from the viral nature of these platforms, as their customers spread the word about their offering for them. We found this to be the case when we offered our customers free fuel all summer recently in return for covering their cars with MoneyMe hashtags and branding – our own customers began to do our marketing for us on social media, and the response was somewhat overwhelming.
What sets you apart from your competitors?
We believe the key MoneyMe difference lies in our desire to create a truly tailored range of products for individuals within this specific market segment. This requires truly understanding what drives this segment, what they’re looking for in a finance provider, and also the technology needed to deliver this.
One of the biggest weaknesses we see in the larger financial institutions, with their legacy practices and systems, is the blanket approach they seem to take with their customers. Treating all applicants as if they have the same credit needs and borrowing capacity may make the process simpler for the lender in the absence of any sophisticated technology to distinguish between potential borrowers, but it doesn’t result in the delivery of a superior experience, or the most appropriately priced product.