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“A phenomenal amount of money”: How Lumi bagged $8 million at less than a year old

Stephanie Palmer-Derrien /

Lumi

Lumi founder and chief Yanir Yakutiel. Source: Supplied.

Small-business lending startup Lumi has raised $8 million in its second funding round, despite being less than a year old, bringing its total investment to date to almost $40 million.

Launched in August last year, Lumi secured $31.5 million in debt and equity funding just three months later.

The latest round was all equity funding, and was led by a consortium of family offices. Existing investors including global VC firm Follow [the] Seed also took part.

Speaking to StartupSmart, Lumi founder and chief Yanir Yakutiel said since last year’s raise, the team has been “working very hard to utilise the money wisely”.

Lumi has invested in the platform’s technology and growing the team, and has “grown the business quite considerably”, Yakutiel says.

While the founder doesn’t go into specific figures, he says the platform has originated “not an insubstantial amount of loans”.

After the first raise, the startup was predicting double-digit growth month-on-month.

“We’ve been meeting our targets and have enjoyed very rapid growth,” Yakutiel adds.

Growth ambitions

The funding will be used to support ongoing growth of the business, and for developing the technology, the founder explains.

Yakutiel has plans to make “quite substantial platform investments” over the next 12 months, while also hiring both technical and operational staff.

The funding will also be partly used to bolster the business’ balance sheet, creating more leverage to support more lending.

However, Yakutiel is already looking ahead to the next capital raise, which he hopes to close in Q1 next year.

“We’ll get all our ducks in a row as we wind down for the summer holidays, and be ready to race out of the gates when people are back at their desks in early-to-mid Q1 next year,” he explains.

“We’ve maintained the same ambitious growth trajectory — I think the market positions are very favourable for us,” he adds.

“We don’t see any reason to become any less ambitious.”

Equally, Yakutiel says as a cash-intensive business, Lumi has to keep hitting the capital markets.

“We sell capital. We’ve got to raise the capital to be able to sell it,” he says.

“Raising money here at Lumi is pretty much my full-time job.”

This was partly why the startup went down the family-office route for this investment. In fact, while VC firm Follow [the] Seed has invested in this round, the startup didn’t target VC firms at all.

As it’s such a young business, Lumi would typically attract early-stage VC investors, Yakutiel explains.

“These guys aren’t really in a position to write the cheques of the sizes we needed,” he says.

However, once the startup is more established and more institutionalised, there’s a “more compelling conversation” to be had.

Next time around, “VCs will play a much more dominant role in the investment”, he says.

Startups are a team sport

When it comes to raising significant capital for an early-stage startup, Yakutiel admits founders need thick skin.

“You can’t be deterred by rejection, and you’ve got to keep chipping away,” he says.

Lumi has raised “a phenomenal amount of money for the stage we’re at”, he says, but while it’s happened quickly, it hasn’t been an easy process.

Especially during the initial round, “I genuinely felt that I was very close to closing the raise for a much longer period of time than I thought it would take”, Yakutiel says.

“I just had the perseverance to get through it.”

According to Yakutiel, part of what prospective investors are looking for is “the resilience of the team”.

And so, especially for single founders like himself, it’s important to get the best people on board.

“You’re better off having a first-rate team and a second-rate idea than a first-rate idea and a second-rate team,” he says.

“You’re literally nothing without them.”

Startups are “a team sport”.

“You need to have the strongest person in every position to make this happen,” he adds.

For this latest round, things were a little simpler, as the round was only equity, without the added complication of debt funding.

But also, “the track record spoke for itself”, Yakutiel says.

“We delivered what we said we would, the team is strong and robust, the loan book is performing well, everything adds up,” he explains.

“I’m just surprised when people say no. To me, it seems like a no-brainer.”

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Stephanie Palmer-Derrien

Stephanie Palmer-Derrien is the editor at StartupSmart. You can contact her at [email protected].

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