Sydney-based fintech startup zipMoney has secured $20.6 million in funding through an institutional placement that will see the company “aggressively turbocharge” its national growth plans.
The funding round was oversubscribed and comes from “several leading institutional and sophisticated investors”.
The ASX-listed startup completed the funding round through the issue of 37.5 million shares at a price of 55 cents each.
ZipMoney offers a range of digital payment services and ‘buy now, pay later’ loans, and completed a $5 million backdoor listing on the ASX in September last year.
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The fintech secured a $100 million credit facility backed by Victory Park Capital in November last year.
The large cash injection will be used to provide loan book equity capital and accelerate expansion plans, zipMoney co-founder and managing director Larry Diamond says.
“We’re here to build a very large business and need a large amount of capital to do that,” Diamond tells StartupSmart.
“It’s a bit of an inflection point for us. The ability to raise such a large round really validates our business model in the space.
“It’s a turning point. With the significant sum of money we’re able to aggressively turbocharge our roll-out across Australia.”
The funding will also be used to acquire fellow fintech startup Pocketbook for up to $7.5 million.
The deal, which is currently in term sheets, would involve an upfront payment of $6.5 million and a further $1.5 million if certain milestones are met.
Pocketbook is a free money management and budgeting tool app that integrates with users’ bank accounts. After launching in 2013, the startup now has over 200,000 users.
“It’s a fantastic app,” Diamond says.
“They’ve built a strong financial management system for people and it’s a great platform for us to build out our financial management and engagement strategy with customers.”
Persistence and belief
Diamond says zipMoney has enjoyed year-on-year growth of 100% and recently saw month-on-month growth of 159% in April.
“Back then we were doing $1 million in transaction volume, now we’re doing $10 million,” he says.
“We’ve been head down, bum up and working harder than ever.
“We still work till 1am every night. We’ve been working harder than ever.”
It’s a big moment for the founder, who says he was struggling to raise a much smaller amount of funding less than two years ago.
“Twelve months ago we were running around trying to find $50,000,” Diamond says.
“People didn’t believe in us but we kept hustling. If we were to say we would raise $20 million only a year and a half later those people would’ve scoffed at us.”
Along with proprietary technology and a whole lot of hard work, Diamond says zipMoney’s success so far has been down to persistence and self-belief.
“Believing in yourself and the vision regardless of what anyone else is saying is paramount and so is building a great team,” he says.
“Never get overwhelmed by the tasks ahead – break it down into bite-sized tasks.
“If we thought about where we were trying to get it would’ve been scary. If you have an unwavering belief in the vision and you put your head down then you will get there.”