New SME lender launches into broker channel

Outfund specialises in revenue-sharing finance and connects into SMEs payment processors (for example, PayPal, Shopify, Stripe etc) to review revenue history and make a predictive model of where their revenue will be. A same-day funding offer is then provided based on the company’s performance.

Funding is lent to a small business (typically an e-commerce business requiring funding for inventory or marketing), which is then paid back over a period of up to six months through a proportion of their revenue. 

According to Outfund, the share is typically between 1 and 20 per cent of the revenue (as agreed with the client).

The revenue-based finance (RBF) provider was founded by entrepreneur Daniel Lipinski in the UK two years ago, and soft-launched into the Australian market last year with a direct-only offering.

After having now raised £115 million ($200 million) via a Series A mixture of debt and equity, the fintech has committed to lend £500 million ($870 million) to e-commerce and subscription-based businesses across the globe, including Australia, over the next 12 months.

The new funding will support its growth in Australia, including through new product initiatives, and has also enabled it to expand its loan limits. 

It can now offer SMEs that have been in business for at least six months, and have a minimum monthly turnover of $10,000, with between $10,000 to $10 million (up from its previous limit of $3 million).

The fintech has also outlined that it will focus on growing its broker channel for the remainder of 2022.

Charles Grover, Outfund’s country manager for Australia, said: “Collaborating with brokers and technology platforms is a big initiative for us for the rest of the year.

“We are the only RBF provider on Valiant and Swoop platforms and are slowly building our broker base. 

“We have about 25 to 30 brokers signed up now,” adding that once its business-to-business working capital product is live in Australia (expected later this month), it will “see big growth as it is a new niche for the broker community.”

Speaking to The Adviser, Mr Grover elaborated that it will be looking to expand its products for the broker channel.

He explained: “We’ve been reaching out to brokers and getting them to sign up to our portal for the past two months, and what we found through these conversations was that while they do have clients that are e-commerce or online businesses, a lot of their clients are more in the wholesale space or the B2B space. 

“So... we want to open up a new product, which is very similar to the e-commerce product that we already have, but this is going to be focusing on all B2B businesses. It will still have the same model (where they’re paying us back through their revenue), but they’ll be able to use the funding for other aspects of their business, not just inventory and marketing.”

He outlined that this could include typical working capital requirements, such as payroll, logistics, equipment, etc.

Mr Grover added: “For a lot of SMEs in Australia, a high percentage of their funding is coming through the broker network.

“I’ve been in lending both in Australia and in the US for about nine years now and I’ve always seen a lot of success through the broker channel. So, I think it’s just a good time now, especially with real estate taking a little bit of a break… to announce that Outfund – after a year of trading in Australia and having success with direct to customer – will branch out to that network and see if this RBF product is something that can excite the brokers and bring in more clients.”

He added that he hopes to build broker partnerships through aggregator panels in the near future.

Mr Grover concluded: “We have developed a way to make the process of securing money for growth easier, fairer and, most importantly, faster.

“Our approach has been warmly received by Australia’s SME community, and we are now looking at how we can open the Outfund experience to more businesses – and continue to be part of their journey to success for a long time.

“The last six months have delivered continued growth for Outfund, and our team is proud of the number of entrepreneurs we have been able to support.”

The fintech lender estimates that it will lend over $870 million in 2022 and expects to fund over 5,000 businesses globally.

[Related: ANZ makes bid for MYOB to bolster SME offering]