Aussie student-focused fintech QPay has secured $1.15 million through an equity crowdfunding campaign, as it ramps up to meet a global opportunity in the disrupted university sector.
The Birchal campaign raised $1,149,658 from 745 investors, smashing its minimum target of $500,000.
Founded in 2014 by Andrew Clapham, Muhammad Satti, and Zaki Bouguettaya, QPay appeared on Shark Tank in 2018, securing $380,000 from Naomi Simson and Steve Baxter in one of the largest deals ever seen on the show.
At its core, QPay is an app offering cashback and rewards for university students, in a bid to encourage positive money management habits. It also offers a QPay card, issued by Mastercard, designed to incentivise saving and smart spending decisions.
The startup works alongside universities and student clubs and societies, helping manage things like admin and ticketing. It also helps merchants in the vicinity of the campuses to attract students through cashback offerings.
It’s intended to help students build healthy spending habits for the long term, Bouguettaya tells SmartCompany.
He draws a parallel with health and fitness. Going to the gym and working out is only one part of the puzzle.
“If you don’t address every other aspect of what makes someone healthy, you’re going to end up being ineffectual,” he explains.
“You have to go to the gym, but you also have to consider eating healthily, and mental health is a big part of it as well.
“There are a lot of little pieces that add up to you being generally healthy. Financial health is very similar.”
Seizing the opportunity
Despite having backing from two Sharks and high-profile Aussie VC Blackbird, the co-founders opted for an equity crowdfunding round this time, partly because it can simply be a quicker way to raise capital.
The founders want to be able to launch in Canada in conjunction with the start of the academic year in September, Satti explains. There was no time for drawn-out venture rounds.
But this is also serving as a marketing play, he says, that can help get its card product into the hands of as many students as possible.
“There’s no better way than crowdfunding to let all of our current users know about the actual card program,” he adds.
Many of the investors are actually users, and people who want to gain access to the card, he says.
The funding will largely fuel a push for overseas growth. Already, the startup has a presence in the UK, Canada and New Zealand, and has plans to push into the US and Europe within the next 18 months.
The COVID-19 pandemic has pushed universities to remote and digital learning, Satti explains.
But for the most part, they’ve focused on shifting their core services — lectures and exams — and neglected the cultural aspects of university life.
Meeting friends, socialising and meeting like-minded people is a big part of university life, he notes, and it’s all disappeared.
“But the tuition fees stay the same.”
Suddenly, universities are trying to justify their fees, and moving supporting activities online. And QPay was there to help.
“We raised capital to basically recognise that opportunity,” Satti says.
“COVID will still have an impact for a while to come,” he adds.
“For universities in particular, there will likely be a hybrid approach.”
He predicts there will be a handful of new players emerging to support the online component of university life, and QPay has a chance of being up there in the global market.
Challenger meets challenger
The completion of the raise coincides with QPay announcing a partnership with Aussie neobank Volt, which will see Volt streamlining its student services and gaining access to QPay’s 400,000 Aussie users.
The new bank provides “a perfect partner” for QPay, Satti explains.
It’s “not just a challenger bank”, he says.
It also has a focus on encouraging healthy saving strategies and empowering customers, with their long-term best interests at heart.
Once QPay is working with a university, typically it serves a customer for between two and five years, Satti explains.
“When they graduate, Volt would be the perfect fit to service that customer.”
Volt is also focusing on its ‘banking-as-a-service’ offering, which launched with a partnership with Microsoft last year.
“Over the next five years, I anticipate that that movement is going to be a lot larger,” Bouguettaya says.
He predicts that in the coming years more and more services will require a ‘banking’ element, but won’t have the capacity to build a bank to meet it themselves.
“Volt is in a pretty interesting space,” he says.
“QPay can sit on top of their banking infrastructure.”
A new household name?
Ultimately, Bouguettaya and Satti see QPay as being well positioned to take advantage of an opportunity on a global scale.
When people ask the founders what their business does, they can find it tricky to answer succinctly, Bouguettaya explains.
But that’s true of any tech success story. Google, for example, “organises the world’s information”, he notes.
“But what does that mean?”
In reality, it means providing a search engine, YouTube, Android, and much, much more. You could say the same about Apple, Facebook and Microsoft, Bouguettaya adds.
“All of these guys are so diversified, but their core competencies are within the fact that their services all tie in together,” he says.
While he admits it’s operating on somewhat of a smaller scale, he says QPay does this across one specific demographic.
The startup set out to play a role in every spending decision of every single university student. It helps students save money; it helps universities manage clubs and societies; and it helps merchants reach students as customers.
“We have a range of services that cater to each one of those stakeholders, and each one of those services ties into the others in a way that makes all of them more compelling,” he explains.
“It becomes a competitive advantage.”