zipMoney, an online lending service for e-commerce, has received a $100 million loan from US asset manager Victory Park Capital.
zipMoney acts as a “buy now, pay later” service, integrating into online payment platforms and allowing customers to borrow between $500 and $10,000, unsecured for a minimum of three months. The company uses numerous sources, including bank accounts and social media, to approve new customers.
The money will be used to further fund loans made through the platform, and to expand and compete against the incumbents who offer consumer finance to major retailers.
To secure the $100 million credit facility, zipMoney has established an independent trust with $7 million in assets – their receivables. As zipMoney continues to lend to its customers it will sell those loans into the trust, building up the asset base against which bonds are raised.
“Because we’ve got a $100 million commitment, we can just draw down on that as quickly as we can use it, effectively,” explains Larry Diamond, co-founder and chief executive officer of zipMoney.
“And to extend it is very easy. You know we’ve invested a lot of money in the legal structure.
“It allows you to issue notes out of that vehicle as you grow, or in fact create another series [of debt notes].”
Victory Park will also be taking an equity stake in zipMoney, with a $1 million initial investment and an option for another $1 million.
“This is our first major deal in Australia where we see tremendous opportunity to be a leader in the market” said Harsh Patel, vice president at VPC. “There is a clear void in the market as traditional financing sources remain reluctant to support the local fintech sector.”
Diamond says the investment does two things: secures a long term relationship with zipMoney, but also brings access to VPC’s “intellectual capital”.
“If you look at what they’ve done globally, Victory Park has supported many of the innovative fintech disrupters in the world,” explains Diamond. “You know Kreditech, you probably know Square in America, Kabbage, on deck as well.”
“They’ve got deep expertise in digital lending platforms. So as well as bringing the credit, they’ve worked with marketplace methods, peer to peer methods, small business and sales finance lenders.
“They just bring such a rich, vast array of expertise.”
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