SME-lending startup Waddle has secured $4 million in Series A funding from Allectus Capital Limited, as the fintech gears up for significant partnerships within the banking sector.
Founded in 2014 by old school friends Nathan Andrews and Simon Creighton, Waddle lends in the business-to-business space, designed to help SMEs access working capital.
The Software-as-a-Service (SaaS) platform is designed to integrate with the SMEs’ own accountancy platforms, offering a line of credit based on their own invoices.
Creighton tells StartupSmart the automated platform relieves business owners of a lot of the administration involved with these kinds of financial products.
“Our users on average save 12 hours a week when they switch to Waddle,” he says.
“Our automation means we can also offer class-leading rates and compete with banks on pricing in the SME space.”
The startup has loaned more than $200 million to date, and has grown to 18 staff, with plans to double that within the next year. Last year, it secured a $50 million wholesale debt facility.
As it grows, Waddle is seeing more demand from banks, globally, looking to partner to digitise their own working capital products. Already, the startup has one pilot in place with an international bank.
Therefore, “the time was right to scale the delivery team to ready our service for consumption by additional bank partners”, Creighton says.
In Allectus Waddle found a partner with strong links to banks both locally and overseas, he adds.
“They will be pivotal in the distribution of our Software-as-a-Service offering to banks looking to digitise their working capital product offerings.”
Competition is king
Waddle isn’t the first fintech to offer new sources of lending to the SME market, and Creighton understands this.
SME’s often find it difficult to access traditional bank funding, he says. Either, they sit outside the typical credit model, or long lead times mean this route to capital is “a non-starter”.
However, “non-bank lenders have filled this unmet demand for several years now”, Creighton says.
“Through competition by fintechs and continual improvement of their models we have seen a reduction in the cost of finance to the SME, to the point that some fintechs can now compete with banks on pricing,” he explains.
“[It’s] a great result for SMEs.”
For Waddle, the point of differentiation comes from its close focus on solving “the working capital problem” for SMEs, and its offering of a “cloud-integrated accounts receivable-based credit line”, Creighton says.
“This is in contrast to the bulk of the fintech market that offers a variant on the term loan product,” he adds.
Love what you’re doing
For other startup founders, Creighton’s advice is to “make sure you really love what you’re doing”.
As a founder, you’re going to have setbacks, he says. Waddle first launched with “a very minimal viable product”, he says.
“Our first client wasn’t a raging success, it actually ended in a loss for us,” he adds.
“However, that only drove us to rapidly make product improvements.”
In these instances, having a passion for what you’re doing is important, Creighton says.
“Nothing else will get you through the years of long days and nights.”