Alternative lending fintech Athena Home Loans has secured $70 million in Series C funding, just nine months after launch, and less than a month after Treasurer Josh Frydenberg called on customers to “shop around”, specifically naming the startup as a potentially better option.
Founded in 2017 by former bankers Nathan Walsh and Michael Starkey, Athena is a cloud-based home-loan platform designed to provide an alternative to the big four.
This latest round is being touted as the biggest-ever Aussie round led by local investors, with existing backers Square Peg, Airtree and Hostplus on board again.
AustralianSuper has also joined the round in its first early-stage VC investment, and Salesforce Ventures and NAB Ventures have also become new investors.
Speaking to StartupSmart, Walsh says the funding is partly pegged for helping Athena move into the purchasing market, in addition to its current refinancing offering.
But, it’s also for fuelling growth in the business, and investing in new products, the existing platform and talent as it scales up.
Securing the biggest Aussie-led funding round is “really exciting”, Walsh says.
“It shows maturity. That the local VC sector can be supporting funding opportunities of this scale and making such a difference in people’s lives is a great milestone for the local ecosystem.”
However, it also marks an evolution in the fintech space as a whole. What’s important in this new market, he suggests, is combining new technologies and trust.
“Aussies are very early adopters of technology in most parts of their lives, so it’s not a hurdle to have them shift from older-generation solutions,” he explains.
It’s not a new concept that there are opportunities to create better and simpler solutions using technology, and that Aussies are open to adopting those solutions.
“In many cases, incumbents just haven’t been able to deliver against those.”
But the other side of this is the trust element. Consumers have to be confident the product is going to be a better option for them.
Athena has consciously tried to provide an alternative to the status quo.
“The home loan market in Australia needs to change,” he says.
For example, he highlights the “loyalty tax”, which sees existing customers getting a worse deal than new customers, as something front-of-mind for consumers.
As well as committing to automatic rate matching for existing and new customers, Athena has also passed on the Reserve Bank’s latest rate cuts in full.
“When you look to the 12 largest lenders in home loans in Australia, that’s not true of any of them,” Walsh says.
And this is where fintech can start to make a big difference in people’s lives.
“People want to see not only that you say the right thing but that you back that up with action,” he says.
An inflection point
When the rate cut was announced earlier this week, Treasurer Josh Frydenberg urged consumers to “vote with their feet”, and said the incumbent banks “have a lot of explaining to do”.
“Some of the smaller lenders have actually passed on this rate cut in full, and I saw Athena today is offering a variable rate at 2.84% … people should shop around and get the best deal,” Frydenberg said.
This was something of a turning point for Athena.
“It was a surreal moment to have the Treasurer of Australia calling out Athena on live TV and national radio on the day of that rate cut,” Walsh says.
In fact, he says Athena saw about $1 billion worth of loan applications within the following two weeks.
When you get prominent people talking about you, “the community notices”, he adds.
That said, he notes the government has been a strong supporter of fintechs for some time, bringing in initiatives such as open banking.
We’re at an inflection point, with things improving for Aussie homeowners. When politicians recognise the benefits of increased competition, things can only improve for everyone.
“This is not just about bashing the incumbents, but really about unlocking new models, and taking a very different approach to the market,” Walsh explains.
“Support for innovation is going to make a big difference in many sectors, in terms of what new, innovative players can bring.”
For other startups, there is no silver bullet to getting the kind of traction Athena has seen, Walsh says.
“Focus on an authentic problem. Something where the community is looking for real change,” he urges.
“How do you use innovation to really materially bring something better to meet those needs?
“Is there a trick? No.
“At its heart, it’s about solving really important problems,” he adds.
Walsh has always spoken about the importance of getting a talented and dedicated team on board. But something he’s learnt is the importance of getting the right investors in too.
“We didn’t know how valuable assembling a team of high-calibre investors can be for a startup,” he says.
“The value is so much more than the capital. It’s the insights, the council, the network, the community.”
He advises others to think carefully about the investors they bring on at each stage of the journey, and the value they’re going to bring.
“I probably did not appreciate just how significant that was at the start,” he adds.
“We’re learning every day, there’s no question about that.”