Collaborate Corporation (ASX:CL8), formerly known as QANDA Technologies, has today announced an investment in FundX, a Sydney-headquartered peer-to-peer lending startup supported by venture tech firm BlueChilli.
Collaborate’s initial investment of $150,000 for an 8.33% equity stake in FundX, makes the ASX-listed company the largest investor in FundX’s recently completed round.
FundX is a new peer-to-peer platform that allows SMEs to have their invoices funded by investors, giving businesses access to working capital within 24 hours instead of waiting up to 120 days for their invoice to be paid by a debtor. The startup uses big data, machine learning and predictive algorithms to analyse risk and authorise invoice funding in less than two minutes, with users simply linking their business accounts via MYOB or Xero.
Collaborate Corporation, on the other hand, has made many investments and acquisitions over the past few years, focusing on collaborative consumption, peer-to-peer and businesses. Collaborate first got into the game of online marketplaces by purchasing 43.3 percent of Marketboomer, an online trading platform that allows hotels to view offers from multiple suppliers in real-time.
Since going public, Collaborate acquired peer-to-peer car rental business DriveMyCarRentals.com.au, peer-to-peer caravan rental business MyCaravan.com.au and peer-to-peer ‘rent anything’ platform Rentoid.com. The company also has a proprietary online reputation management platform PeerPass.com.au which ‘creates trust between individuals’ and enables safe transactions in the sharing economy.
As part of the investment deal, FundX will be able to license Collaborate’s PeerPass verification platform to support its funding decision making processes, enabling it to cost-effectively assess a range of trust and reputation criteria.
Collaborate’s investment into FundX marks its first step into Australia’s fintech space, and it wouldn’t be surprising to see the company making more investments into fintech.
Though it’s uncertain which financial technologies and business models will be winners in the long run, one thing that is certain at the moment is that the traditional financial services landscape is being disrupted by new entrants leveraging technology to deliver new and existing services in smarter and more convenient ways to consumers and businesses.
Between 2013 and 2014, the financial and insurance services industry contributed the highest share of sector value to the national economy (9 percent or AU$130 billion), making it Australia’s largest sector, bigger than mining and manufacturing. With fintech promising to lead this sector, it’s understandable that Collaborate wants to get its skin in the game.
Collaborate’s CEO Chris Noone, who is joining FundX’s board as a non-executive director, said the company’s investment in FundX is a “great opportunity to disrupt the highly profitable yet inflexible and antiquated banking sector.”
“ABS data suggests that access to finance is the most common barrier to innovation, affecting around 400,000 businesses locally. It’s a big problem that requires smart solutions,” said Noone.
“We are very excited to be involved with FundX in exploring peer-to-peer and fintech opportunities in an SME market that is worth over $120 billion in Australia. FundX is able to leverage Collaborate’s peer-to-peer and marketplace skills and knowledge, while we simultaneously address significant opportunities in the fintech sector.”
From a distance, it appears Collaborate is emerging from the pack as a market leader in the collaborative consumption and peer-to-peer business space, so there is certainly merit in the company’s strategy to own little bit of every vertical to see what takes off.