CBA's venture arm, X15, takes invoice lending fintech Waddle off Xero's hands

Small business invoice lender Waddle is getting new parents, with the Commonwealth Bank taking the fintech off Xero’s hands, three years after the ASX-listed accounting platform acquired the Sydney scaleup in an $80 million deal.

Waddle, co-founded in 2014 by Simon Creighton and Nathan Andrews, makes it easier for banks and fintechs to lend to small businesses by leveraging their accounting data and automating many of the manual processes in invoice financing. It has agreements with UK and Australian banks, including CBA through its Stream Working Capital product.

The cost of the deal, made via the bank’s venture-scaling subsidiary, x15ventures, was not disclosed, but it’s likely to be a fraction of the original price.

Xero acquired the lender in 2020 for $31 million, also offering an additional $49 million in earn out. But in March this year, just weeks after Sukhinder Singh Cassidy took over from Steve Vamos as Xero CEO, she wrote off the cloud-lending platform at a cost of up to $40 million as part of cost cutting measures. At the time Singh Cassidy said she was unsure whether Waddle would be shut down or sold, but the brand will now live on with Australia’s largest bank.

CBA group executive, business banking, Mike Vacy-Lyle, said the acquisition will enable the bank to accelerate the growth of its Stream Working Capital product.

“Access to working capital is vital for many businesses and Stream Working Capital offers greater flexibility, simplicity and faster access to cash flow,” he said.

“Through acquiring the Waddle platform, we can continue to provide the best integrated digital working capital solution in the market and support more of our customers with faster funding assessments and approvals.”

x15ventures MD Toby Norton-Smith said placing the fintech under his organisations wing will give Waddle the flexibility and freedom to continue innovating at pace.

“We set up x15ventures so that digital native businesses can operate how they’re used to – both culturally and technically – while also getting access to the assets and reach of one of Australia’s leading banks,” he said.

“We look forward to welcoming Waddle to x15ventures and helping them continue to realise their ambitions to scale and support more small businesses.”

Completion of the transaction is expected to occur reasonably soon after satisfaction of customary conditions.