Harmoney has completed a successful NZ$10 million capital raise, which sees it partnering with online marketplace Trade Me.
After a very successful capital fundraise in September, Harmoney has received multiple offers for investment in the equity of the platform from investors in New Zealand, the US and Asia. The highly successful Lending Club IPO has helped in increasing investor interest in the peer-to-peer sector. Neil Roberts, CEO, indicated that Harmoney could have filled this most recent round 3 or 4 times over.
The chosen investors are existing shareholder Heartland Bank, which took a 10% stake in Harmoney last year, and NZX and ASX-listed Trade Me, which becomes a minority shareholder, strategic partner and distribution channel. Trade Me is New Zealand’s leading online marketplace and classified advertising platform, it has invested NZ$7.7 million for a 15% share in Harmoney. The Trade Me platform brings a large consumer audience to Harmoney. Trade Me has over 700,000 domestic browsers each day and significantly a third of Harmoney’s target market logs onto the Trade Me platform and spends an average of 10 minutes there every day.
“The investment is a great endorsement for Harmoney but more importantly we gain a strategic partner and distribution channel with deep domain knowledge of building and running an online marketplace.
“Trade Me operates the country’s most popular online marketplace with more than 700,000 domestic browsers visiting it every day. Combining Trade Me’s experience and distribution with Harmoney’s proven ability to bring innovative financial services products to market is the most exciting part of this transaction.”
Trade Me CEO Jon Macdonald said consumer finance and P2P lending were proving sustainable and successful overseas:
“It is early days but we think there’s a lot of potential for P2P lending to work well in New Zealand, and of course consumer finance is a large and well-established industry here. To us it looks like an area of the market that will undergo a long-term structural shift online – and we believe Harmoney is well-placed to take advantage of this.”
“We [Harmoney and Trade Me] share a common purpose in that we are both all about providing Kiwi consumers with a safe, trusted, scalable, efficient online platform to undertake a transaction – the Trade Me platform is all about items changing hands, and Harmoney’s platform is all about dollars changing hands.”
Macdonald commented on Harmoney’s successful growth and penetration into the market since its launch:
“Harmoney has good momentum. It also has a strong team with a lot of experience in and around consumer finance, and we like their plans for the future too. We’re excited about being involved.”
Neil Roberts added:
“Since launching Harmoney in September we have experienced exponential growth. This recent capital raising, alongside the strategic partnership with Trade Me and the continued support of Heartland Bank means we can rapidly scale our offering, develop new products and gain exposure to a wider range of the New Zealand public.”
The platform is focusing on personal loans for now but we’re currently seeing a trend of platforms across the world diversifying to offer multiple products. All things considered, it’s highly likely that we will see Harmoney offering business loans before long. Especially since the $10 million raised will be used to expand the companies product offering and grow its loan portfolio. Harmoney is also focusing on marketing the business to potential borrowers and lenders. One of the ways it is doing this is through TV advertising. Much of its marketing activity is dedicated to direct mailing campaigns. This is similar to Lending Club, which also uses direct mailing as a method of borrower acquisition.
The platform is currently the only licensed peer-to-peer lender in New Zealand and has made strong progress in the market since its launch in September. Last year it received investment of around $100 million of lending capital; one of the four institutions to invest was Blue Elephant Capital Management, a US firm, alongside Heartland Bank. The platform’s transactional volumes have been beyond solid with NZ$20 million originated in its first 4 months of activity. The platform is on track to hit its target of NZ$100 million lent in year 1, and that’s before you factor in the added origination benefits of the Trade Me platform.