Sydney fintech startup zipMoney raises $20.6 million to fund proposed acquisition of Pocketbook

- June 8, 2016 3 MIN READ

Sydney fintech startup zipMoney has announced an oversubscribed placement of $20.6 million to institutional and sophisticated investors. The placement is part of zipMoney’s funding plan to further expand its product offering, rollout new payments product zipPay, and acquire personal finance management startup Pocketbook.

zipMoney stated it has recently entered into a non-binding indicative term sheet to acquire Pocketbook for an upfront consideration of $6 million. The proposed acquisition provides zipMoney with an opportunity to gain more users and valuable data to strengthen its lending and credit algorithms.

Pocketbook has been receiving and growing revenue through the provision of analytics services and zipMoney believes it is highly complementary to its existing business. If the acquisition closes, zipMoney will be able to expand its customer base and offer cross-selling opportunities. The acquisition would also give zipMoney the potential to deliver complementary financial products within the Pocketbook app, enhancing the overall product experience.

“The acquisition of Pocketbook is consistent with the company’s strategy to become Australia’s leading customer-friendly provider in the digitised consumer finance space. The platform provides an exciting way to leverage Big Data to engage with our user base and deliver added value,” said COO of zipMoney, Peter Gray.

Founded in 2013 by Larry Diamond and Peter Gray, zipMoney is a ‘buy now, pay later’ finance product that operates like a payment gateway: online retailers integrate zipMoney into their checkout and customers have the option to pay for their purchase using their zipMoney account, instead of their credit card or PayPal account.

The startup stated it has also recently had some early stage discussions with one of the big four Australian banks in regards to a new securitisation warehouse. The warehouse will have the potential to approximately halve the weighted average cost of capital of zipMoney’s loan book, from 12 percent to six. On a theoretical $100 million loan book, that would equate to an annual interest cost saving of A$6 million that would directly increase zipMoney’s bottom line.

zipMoney’s CEO, Larry Diamond said, “The placement is a clear vote of confidence in zipMoney’s team and business model from the institutional and sophisticated investor community, with leading institutional investors added to our register. We look forward to using these funds to continue to accelerate zipMoney’s growth and provide a superior experience for our customers.”

As zipMoney looks to accelerate its growth patterns, so does Pocketbook, who today has announced a partnership with 1300HomeLoan. The collaboration will help provide everyday Australians with a new way to track and optimise their home loan.

From today Pocketbook will begin to automatically detect users who have suboptimal mortgages and will in turn provide them with the ability to undertake a free “health check-up” of their home loan provided by 1300HomeLoan.

Cofounder of Pocketbook, Bosco Tan said most Australians don’t know their home loan figures off the top of their head, and that is what the collaboration will look to change.

“They don’t know how competitive their loan is against the best in the market, and they don’t know whether or not their bank passes on the RBA rate cuts. This feature will put this information literally at our users’ fingertips. Then, with the help of 1300HomeLoan, we give our users’ a way to optimise right there in the app,” he said.

The new HomeLoan insight feature alerts users when the rate or repayment amount changes over time as it continues to keep track of loan vitals, such as interest rates and repayments.

Managing director of 1300HomeLoan, John Kolenda said he saw plenty of room to help Pocketbook users.

“Too many Australians are paying way too much and complacency is costing them thousands. Over the last few months there’s been a huge amount of movement in out-of-cycle interest rate increases, which means that there are too many Australians paying far more than what they should. We want to help them review their current home loans to get a better deal.”

Image: zipMoney Team. Source: Supplied.