Australia’s funding ecosystem has been challenging due to limited access to capital and conventional financing methods; bank loans have high compound interest rates, while VCs demand equity dilution.
Outfund, a revenue-based finance provider, provides Australian businesses with a new funding source.
Earlier, Force Over Mass, PostFinance, 1818 Venture Capital, and Tribe Capital led a Series A debt and equity round in which the company raised £115 million ($200 million AU). The additional funding will aid Outfund’s rapid expansion in Australia and internationally, as it offers SMEs a quicker, more equitable, and more cost-effective way to raise growth capital.
With a commitment to lend £500 million ($AU870 million) to e-commerce and subscription-based businesses worldwide, including Australia, over the next 12 months, Outfund will use the funds to offer enlarged lending rounds to smaller to medium-sized enterprises (SMEs).
Redesigning funding for Australian SMEs
By offering an alternative financing channel that enables online-based businesses to get the funds they need, when they need them, Outfund is reshaping the funding market for Australia’s SMEs. Businesses that have been in business for at least six months and have a minimum monthly turnover of $10,000 are eligible for funding between $10,000 and $10 million.
In contrast to traditional business loans, Outfund offers flexibility for SME owners by customising the time taken to repay each business’s specific needs and an agreed revenue share starting at 1%.
Same-day access to capital
SME owners can submit an online application for financing through Outfund. Due to the technology’s and product’s proprietary nature, only quick checks are needed to access capital; business plans and extensive risk assessments are not required.
Businesses only need to connect their revenue accounts, and Outfund will use this information to create a funding offer and distribute funds the same day. Outfund’s revenue-share percentages are calculated to ensure that each company has a sufficient cash flow for day-to-day operations; the more successful the company, the more successful Outfund. The funding balance between a company and a lender is now equal for the first time.
Outfund achieved significant growth in 2021, expanding revenues sixfold and moving into three new countries. With its wider reach and new capital, Outfund is set to loan over $870 million in 2022 and is expected to fund over 5,000 businesses globally.
Mr Charles Grover, Outfund Country Manager, Australia, said, “What sets Outfund apart from the market is our technology and our ability to provide in-product finance solutions to almost any partner. This not only ensures rapid growth but also gives our partners the ability to provide a range of value-add financial products to their customer base”.
A data-driven approach
The pandemic has seen more Australians embrace online shopping. In 2021, more than 80% of Australian households made an online purchase, driving national year-on-year growth to 12.3% – almost double the pre-pandemic baseline.
With the “golden retail quarter” – the peak trading period between October and December fast approaching, many SMEs will need to grow and sell more on the web in order to drive continued revenue and profitability, making an increased investment into inventory and marketing a priority.
However, the funding landscape is becoming more challenging, with limited access to capital and traditional financing routes offering an unfair deal to SMEs. Bank loans offer high compound interest rates (or are entirely inaccessible outside government schemes), while venture capitalists demand equity dilution.
The Outfund model is based on future revenue projections, and this data-driven approach means significantly fairer terms for SMEs.In addition to using the latest tranche of funding to lend more capital to more businesses, Outfund also plans to invest in new products and team growth.
Outfund’s latest round of funding and ambitious growth plans have made the company the largest revenue-based finance provider in the UK, Spain, and Australia.
Outfund’s technology is also taking the bias out of lending, with analysis based solely on business revenue and performance. One-fifth (20%) of Outfund’s portfolio comprises female business founders – a testament to Outfund’s commitment to advancing the democratisation of access to capital.
Mr Grover said, “Our ambition is for Outfund to be the go-to place to grow your business, without compromising equity or wasting time fundraising. We have developed a way to make the process of securing money for growth easier, fairer and, most importantly, faster.
“Our approach has been warmly received by Australia’s SME community, and we are now looking at how we can open the Outfund experience to more businesses – and continue to be part of their journey to success for a long time.
“The last six months have delivered continued growth for Outfund, and our team is proud of the number of entrepreneurs we have been able to support,” concluded Mr Grover.
Mr Mark Pearson, founder and managing partner of UK-based Fuel Ventures, added, “The Outfund team is pivoting the model of business funding, rebalancing the scales so that business owners don’t lose out financially while getting the capital they need to supercharge their online business’s growth. At Fuel we work with the most ambitious entrepreneurs building market leading companies. Outfund is a perfect example of this – a strong, passionate founding team creating a game-changing venture that is now a leader in its field.”
Mr Filip Coen, Partner at Force Over Mass, said: “Outfund provides SMEs with the short-term financing options they deserve: fast, flexible and on good terms. A modern, digital-first credit provider with automated credit and risk scoring, managed by an exceptional team. We are very excited to join Outfund on the journey ahead”.