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Fintech startup Lumi raises $31.5 million Series A to transform small business lending

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Lumi Founder and CEO Yanir Yakutiel

Alternative lender and new Australian financial technology company, Lumi, has completed a $31.5 million series A capital raise as it launches to take on the realm of small business lending in Australia.

Lumi has welcomed the Josh Liberman Investment Group and a consortium of family offices as cornerstone investors. The raise was also backed by Arbel Fund LLP, Israel’s largest specialist credit fund, and global venture capital firm Follow [The] Seed.

The raise, which comprised of $25 million in debt and $6.5 million in equity, sees Lumi become the first pre-revenue lending fintech business in Australia to set up a warehouse securitisation program, in a bid to lower the cost of capital and to allow small to medium-sized enterprises (SMEs) a more efficient way to access capital.

Lumi Founder and CEO Yanir Yakutiel said the capital raise was testament to Lumi’s core promise to small business owners and validates the company’s ability to improve credit decisioning by harnessing big data in real-time to offer fast, flexible and fully transparent loans.

“We saw a real opportunity for Lumi to carve out a niche in the Australian small business space, particularly among hospitality, retail and professional services sectors, by building an innovative fintech platform that is solving the fundamental challenges in alternative lending: access and speed,” Mr Yakutiel said.

“Having the securitisation facility in place early on will allow us to scale up the Lumi business quickly either by increasing the existing facility with Arbel, or by working with Arbel to get additional funders into the business.

“Israel has a deep debt capital market, and the ability to be able to fund ourselves efficiently offshore, especially as the local credit market tightens, gives us a strategic advantage as we scale the business,” he added.

Mr Yakutiel who initially trained as a lawyer is the former founder and CEO of Sail Funding, which was established in 2015.

Social footprint and serviceability

Lumi combines API accessibility with rich data sources to inform its credit decisioning. It does this by augmenting traditional credit data inputs with the applicant’s social footprint to get a holistic view of the applicant’s ability to service the loan.

New applicants can get unsecured business loans from as little as $5,000, provided they have a valid ABN, a gross annual turnover for the business of at least $60,000, and have been operating for a minimum of 6 months.

The company allows interested borrowers to access up to $100,000 for a single loan on flexible terms without the hassle of lengthy applications or paperwork, all within an hour.

“We have the most sophisticated data universe in the country which makes Lumi a very attractive proposition and we’ve set up a securitisation program that will allow us to have different tranches and fund different grades of credit depending on the loan application we receive,” Mr Yakutiel said.

Taking out the friction in loan applications

Lumi is a member of Australian Finance Industry Association (AFIA), the leading industry advocate for Australia’s finance sector and is a proud member of Fintech Australia, the peak body for financial technology startups across the nation.

Mr Yakutiel welcomed the opportunity of being involved as an active member in both industry associations as real testament to Lumi’s credibility and its recognition of the need for advocacy and positive change to help shine a light on the challenges that small business owners face across the country.

What sets Lumi apart, he said, was both an unparalleled customer experience with real-time processing capabilities and high levels of automation, including algorithmic credit decisioning, resulting in industry leading approval and turn around times.

“With a focus on customer experience, we have built the platform to ensure loan applications are seamless, fast and secure and we are able to extract the diamond in the rough from the businesses that banks often overlook with our comprehensive credit decisioning algorithm,” Mr Yakutielsaid.

“We’re honoured to have the support of the team at Arbel Fund in their first investment in Australia, as well as our distinguished Australian investors who understand the opportunity from both a credit and technology perspective.

“We’re also very excited to have Josh Liberman join our register. Josh is known as one of Australia’s most prominent technology investors and having such a prominent investor join our register is not only a vote of confidence in the team and the vision, but it also allows us access to the Liberman Group’s expertise in finance and capital intensive business. It is a very strategic investment for us.”

Dean Kavanagh, Josh Liberman Investment Group Portfolio Manager, who joined the Lumi board, said: “We’re backing Lumi’s strong management team and will also take an active role in the business to support it during its rapid growth phase. The opportunity aligns well with our focus of investing in finance and technology businesses and we’re excited about being involved in Lumi from its inception.”

Gabriel Low, a Managing Partner at Arbel Fund LLP said the fund was excited about the prospect of investing in a team with a formidable vision for addressing the gap in small business lending in Australia, as well as being attracted to a company well-positioned to take advantage of the strong fundamentals underpinning the Australian economy.

“We have been following the Australian market with keen interest for some time and found a real alignment with Lumi’s vision to push for a new category of lending and their plans for future growth and expansion of the business,” Mr Low said.

“Arbel is pleased to back an exciting new fintech platform like Lumi with an appetite for difference that is giving confidence to the burgeoning small business sector at a time when Australia’s economy continues to show strong signs of improvement.

“We decided to invest in Lumi after a long gestation period, having first met Yanir in Israel in early 2017. The equity groups backing Lumi, coupled with the great team, the business opportunity, and the robust legal and securitisation infrastructure available in Australia, enabled us to make the investment,” he added.

Andrey Shirben, founding partner of Follow[The]Seed said: “We decided to invest in Lumi because we identified a fundamental uniqueness in its technology compared to its peers. Lumi is fundamentally a technology and data company that leverages its technological capabilities into credit.”

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