“Here for the long term”: Why Brighte is using its latest $15.5 million raise to make an unexpected pivot
Wednesday, October 9, 2019/
Fintech Brighte has secured $15.5 million in Series C funding, as it prepares to make a move into Australia’s home improvement sector.
The funding round was led by AirTree Ventures. Atlassian co-founders Mike Cannon-Brokes and Scott Farquhar also became repeat investors — Brookes through his fund Grok Ventures and Farquhar through Skip Capital, the fund headed up by his wife Kim Jackson — along with prominent retail entrepreneur Naomi Milgrom.
Singaporean VC Qualgro also invested in the business for the first time.
Brighte provides what is effectively a buy-now-pay-later platform, offering zero-interest loans for the installation of energy-saving add-ons such as solar panels and insulation in homes.
However, this round will see the business move into the home improvement space, with the platform expanding to finance things such as pools and patios.
The funding follows Brighte’s Series B round in May last year, when it bagged $18.5 million. The startup also secured a massive $130 million debt funding facility from NAB earlier this year.
While founder Katherine McConnell is tight-lipped with regards to Brighte’s revenue figures, she does tell StartupSmart “sales volume is definitely increasing”.
Predominantly, she has been focusing on building a scalable platform and raising cost-effective debt, she explains.
“We are on a journey to breaking even … Growth is important, but also sustainably growing and being a profitable company is something that we aspire to,” she adds.
“We’re growing very quickly, but we have to make sure we hold it all together. We want to be here for the long term.”
An adjacent industry
According to McConnell, the move into the home improvement market is a natural next step for Brighte.
“We have had really great success in working with vendors in the solar and energy industry, and we’ve built a platform that really solved a lot of their problems at the point of sales,” she says.
Home improvement is an “adjacent industry”, and Brighte has already been fielding interest from vendors within it.
In fact, about 5% of Brighte’s loan book is already for home improvements, she says.
It’s also a move that opens up the market in a big way. Consumer solar industry has an addressable market of about $2 billion per year, McConnell says.
In the home improvement sector, “we see an addressable market of between $35 billion to about $70 billion, depending on whose stats you use”.
The solution is already proven in this market, but there are some changes that could better tailor it to purpose, making it faster and easier to use for vendors, McConnell explains.
This round of funding will allow Brighte to “make those changes, and to be able to market more aggressively through the home improvement sector”.
It may seem like a significant pivot, but according to McConnell, Brighte was never only about access to renewable energy solutions. First and foremost, it’s a fintech.
“It’s been about solving problems for our customers,” she says.
“It just happens that we financed about 5% of the Australian consumer finance market last year.”
Brighte is about solving problems for vendors, and solving the finance problem facing those making in-home sales.
“The verticals that we’ve chosen are verticals that haven’t had access to finance.”
The business started out in the solar and energy space, but the problem goes beyond this, McConnell says.
“We don’t see ourselves as targeting consumer solar,” she explains.
“We’re in a marketplace — there are two sides to it — and the side we’re focused on is helping vendors provide their customers with affordable finance.”
The future’s Brighte
Currently, Brighte has a laser focus on supporting vendors, but in the future, McConnell would like to have more of a direct relationship with consumers, too, “helping them access more sustainable and comfortable homes”.
And, while it’s not in the immediate plan, there is scope for Brighte to expand beyond Australia.
McConnell has been “keenly watching” the growth of platforms such as Zip and Afterpay as they have expanded into new markets, such as the UK, the US and New Zealand.
“The Brighte product is a buy-now-pay-later (BNPL) product,” she notes.
“So we definitely are watching keenly how BNPL is being accepted on a global scale.”
The founder is interested in whether Brighte could also have applications overseas. And that’s part of the reason she was keen to bring Singapore VC Qualgro on board as an investor.
It potentially gives the startup a toe in the door of Southeast Asia, where a growing middle class and increasing household incomes make for “huge opportunity”.
Equally, in the Philippines, for example, only 82% of the population uses grid energy. The rest uses diesel generation, she says.
“There’s this huge opportunity for renewable energy, there’s a huge opportunity for BNPL and affordable finance,” McConnell explains.
“It’s just considering what the problems are in those offshore markets, and if we as a team have those skills and the platform to be able to leverage in other regions,” she adds.
“We’re 100% focused on Australia, but I’m trying to build a 100-year business, and it’s always good to look ahead to future opportunities.”
Having seen Brighte through a sales growth spurt, four funding rounds and three bouts of debt financing, McConnell says the biggest lesson she’s learnt along the way is the importance of surrounding yourself with a great team.
“As a sole founder, the journey can be lonely, and the journey can be tiring, and you need really great people around you so together you can get the best outcomes,” she says.
Brighte has a headcount of 95 people now, and getting the best people on board remains a priority for McConnell.
“They can inspire you, and when you’re exhausted they can really push you and they can help share the load,” she explains.
“You can be more resilient in how you approach problems and setbacks. And then, when there are wins, it’s about celebrating wins with the team.”
McConnell says she’s been fortunate to be able to attract “some amazing talent in the business”.
The startup has been in business for about three years now, and there are team members who have been there every step of the way.
“It’s exciting to have people who have been with us from the beginning, sharing the good times and the bad times, and who are committed to our mission and the problem that we’re solving.”
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