News & Analysis

FlexiGroup invests $2 million into Perth fintech Kikka Capital

- May 31, 2016 3 MIN READ
Kikka Capital

Financial services group FlexiGroup has announced a $2 million investment into Perth fintech startup Kikka Capital. FlexiGroup has agreed to acquire a minority equity interest in Kikka with an option to increase investment in the future, while Kikka will have the opportunity to leverage FlexiGroup’s existing network to drive more rapid loan growth across its online distribution channels.

“Kikka is one of the new and innovative lenders in the commercial market, and investment from FlexiGroup provides access to capital and the ability to commercialise our product at scale, which gives us a significant competitive advantage,” said David Brennan, founder of Kikka Capital.

Kikka is an online small business lender, providing small businesses with loans of up to $100,000, with no application or early repayment fees. Operating solely online, Kikka is able to process applications immediately with minimal data, meaning small businesses can receive unsecured finance within seven minutes.

Brennan believes this partnership is key for the sector and will influence the future of SME lending in Australia. The partnership deal will see Kikka’s white label model expand to FlexiGroup’s existing and new customers: FlexiGroup has a network of over 16,000 merchant, vendor, and retail partners in four key market areas that include B2B, B2C, retail to consumer, and online.

“FlexiGroup has provided asset financing to Australian businesses for more than 20 years. By partnering with one of Australia’s leading fintech lenders we will be able to offer our established commercial customer base a new avenue,” said Brennan.

The Australian SME market is becoming more competitive and more innovative with startups such as Spotcap, Skippr, Neu.Capital and TruePillars filling the gaps left by mainstream lenders and the big banks. The startups that will come out on top will be the ones with access to capital, and the companies that make strategic partnerships with global players with reach in multiple markets overseas.

With its alignment to FlexiGroup, Kikka will be able to commercialise its product at scale and has the potential of securing further funding from the financial services company in the future.

CEO of FlexiGroup Symon Brewis-Weston said the investment will provide an opportunity for the company to expand its offering to commercial customers, and will help it to develop its own credit models and customer experience expertise.

“One of FlexiGroup’s traditional strengths has been our ability to accurately assess credit risk. This partnership allows us to improve risk pricing one step further by combining our leading credit decisioning processes with Kikka’s real-time and daily cash flow assessment,” said Brewis-Weston.

“We are in the unique position to be able to benchmark this, and other, credit models with our own established ones and create best-of-breed models using the latest technology.”

Kikka launched earlier this year and linked up with US startup Kabbage, a US loan provider that has lent over US$1.6 billion to more than 100,000 businesses. Kikka has based its credit model on the US startup and represents how the US and Australian businesses and startups can leverage off one another to gain traction in global customers.

Since launch Kikka has made some strong strategic deals showing there is also a trend for non-financial institutions world-wide to use fintech partnerships to give their customers added benefits.

In March this year Kikka partnered with Qantas through Aquire, the airline rewards program for small to medium businesses. Through this partnership Aquire members are able to earn 10,000 reward points of eligible loans of $10,000 or more.

Milko Radotic, CEO of Kikka Capital, said at the time that partnerships like these are key to the fintech sector’s future in Australia.

Though there is much hype around online only lenders, the model of a direct business to consumer model is difficult to gain traction in,” he said.

Increasing investor attention is being placed on Australian fintech startups, as traditionally they are great at thinking global from day one. The size of the opportunities outside Australia’s market is enormous and with Kikka leveraging off FlexiGroup’s existing customers and with the startup being specifically online-only now is in the perfect time to think outside of local markets and expand cross borders.

Image: David Brennan. Source: Supplied.