Online cash flow lender Waddle has secured a $50 million debt funding facility, as it revealed it almost doubled its lending volume in the last financial year.
The software is integrated into popular small business accounting packages like Xero, Intuit and MYOB to be able to look at which invoices are overdue for its customer. Based on this information, money is instantly lent out at the click of a button.
The Sydney startup saw a 84% spike in lending volume for the 2017 financial year, which exceeded the initially expected mark of $30 million.
Waddle co-founder Simon Creighton said the genre was previously “plagued” with complexities like factor pricing, contracts and bookkeeping requirements but his cloud software had “simplified” it to make the process feel just like a bank overdraft.
“Our customers are a mix of businesses that have never been exposed to non-bank products and customers that are already using receivables based funding products that are actively making the switch to our service,” he said.
Creighton said the latest debt funding deal took up the equivalent of one full-time staff member nine months to secure.
“While it was a stressful process, it was certainly rewarding. We’ve learned an enormous amount that will now guide us and prepare us for future raising conversations,” he said.
“It took three times as long as expected but we needed to take the time to find the right partner to carry us through. It was important that we did not take the cheapest or largest offer but the one that was the best fit for Waddle’s future plans.”
Creighton said he was “thrilled” to be able to secure a “sophisticated” funding partner to turn to for advice and guidance. The publicly listed company did not wish to be identified.
“Our current funder has the capacity to take us to where we need to be in the next three to five years,” he said.
“This will enable the team to really focus on Waddle’s next stage of growth, which includes building out further automation in credit, operations and user experience; building mobile applications; expediting current enterprise partner solutions and scaling up the development team for our wider global offering.”
Overdue invoices amount to an estimated $19 billion annually in Australia, according to Dun & Bradstreet, which not only slows the growth of the affected businesses but has flow-on impacts on the wider economy.
Waddle was formed and bootstrapped in 2014 by three high school friends — Creighton, who has systems expertise; Leigh Dunsford, who has a finance background; and Nathan Andrews, who is the technical brains behind the fintech.
The startup, based in the inner city Sydney neighbourhood of Surry Hills, expanded into the New Zealand market in September, and has customers from all sort of industries, including wholesale, manufacturing, recruitment, transportation and service providers.
Creighton said any startup needing capital needed to put in time meeting people.
“My piece of advice for companies planning on raising capital in the next 12 months is to start networking now so that investors have time to get to know you and your business,” the entrepreneur told Business Insider.
“You need patience and to understand that the process takes time as you and your potentials investors determine if you’re the right fit for each other.”