Case study: Spotcap Australia

LH: The business is about a year old and we operate in three markets globally. We launched last September in Spain, in the Netherlands in March and Australia in May. We are backed by Rocket Internet, which is listed on the German stock exchange. Rocket’s well-known in Europe and they helped launch the Iconic, Zanui, Delivery Hero, Food Panda and Hello Fresh. They've also got fintech businesses, and Spotcap was born out of that. After launching in Spain in September, we raised about €13 million in equity in October and we raised some debt financing in March of this year. We aim to move into markets where we see unmet demand for SME credit, and we’ll move into another European market towards the end of this year. Our ambition is to become the global leader in small-business financing and short-term financing.

What is your point of difference in commercial lending?

LH: We don’t ask for any property securities, and we don’t ask for any director’s guarantees [or] personal guarantees. It's completely online, so there’s no paperwork required for the small-business owner, and the application takes about five minutes to complete. We ask for some business and personal information, and if they’ve provided us with all of the information we need, we can have a decision to them within 24 hours and have them funded the next day. So, from application to money in the account, it can be anywhere from 24 to 48 hours. When we launched, the maximum credit line was $100,000. We've upsized that to $150,000 since the launch because of the demand in the market.

How are you working with brokers at this stage?

LH: We’re a digital business and therefore we spend a lot of time on digital marketing. Michael’s working with the FBAA, the MFAA and we've done a couple of campaigns with them that have resulted in us signing up a vast amount of brokers to our product. We've also issued numerous loans through brokers over the last two months since we turned on that channel. We anticipate brokers being a big channel for us. It’s an initial awareness campaign at this stage, so we're introducing ourselves to them and their networks. What we’re finding a lot of the time is the brokers who focus on residential loans will also have come across a client who owns a small business who might be in need of some finance. And the feedback we’re getting from the market is that a lot of the brokers that have focused heavily on residential in the past are keen to diversify their business.

MD: Brokers can be as hands-on or as hands-off as they want. If they just want to test the water with commercial lending, they send the customer our way and we'll take care of everything, or they can get more involved if they want. There are a few who are happy to let us do all the work. Most of them are used to paper forms and doing things the way they operate with other lenders. Most of them do want BDM support.

Why are small businesses choosing you as opposed to the banks?

LH: They may not have been able to obtain credit from the banks. We look at credit differently than the banks do – we’re focused on real-time user metrics as opposed to historical financials and business plans going forward. We ask for information they would have already had to prepare for the tax office, and then they connect their bank account, which allows us to do some in-depth analysis over the performance of the business in real-time.

The second reason is that the process is just so much easier. They can make an application, forget about it and we’ll let them know within 24 to 48 hours whether or not they've been able to obtain finance through us.