Timelio has raised $5 million in an equity-funding round and launched Timelio Capital Fund, which provides passive exposure to invoice financing.
The announcements come as the latest in a string of successes for the Melbourne-based fintech startup.
Launched early last year by the husband and wife team Charlotte (pictured above) and Andrew Petris, Timelio provides a P2P platform for invoice financing, which connects SMEs needing liquidity to investors willing to buy their invoices.
Following an in-house risk assessment, its platform allows businesses to sell their invoices to a wide range of investors.
The benefit for invoice sellers is that it helps solve working capital problems cheaply. Interest rates are usually below 2 per cent for higher risk sellers, and below 1 per cent for lower risk sellers.
The benefits for investors are that the returns are generous, at around 7 – 20 per cent on an annualized basis. And while a commercial loan can tie an investor down for years, the average loan tenure on Timelio is 50 days. There have been almost no defaults to date.
“We've managed good risk controls over our transactions to date,” says Charlotte. “Our default rates are expected to remain low as our secured financing platform proves to be an efficient funding model for investors.”
Sometimes known as ‘debt factoring’, the idea is not new.
What is new is the technology Timelio uses, which has made matching buyers and sellers simple and helped grow the invoice financing market. Some 80 per cent of Timelio’s users had never used invoice financing before.
The business idea, says Charlotte, comes from her own experience working in the media industry where she witnessed the creative destruction brought about by the internet.
“Seeing the disruption happening in that industry is very comparable to what we’re seeing happen in fintech. The big media companies are like the big banks: they haven’t adapted quickly."
“It’s just the nature of being a very large company: they have obligations to shareholders not to take risks like trying new technology. I don’t want to get into bashing the banks. They are just inherently slower to adapt.”
And the idea has paid off.
Early last year, the company had only two staff: Charlotte and Andrew. Today, it has 15. “It’s hard to count the numbers because we have staff join almost weekly,” says Andrew.
Judging Timelio’s size relative to other fintech companies is difficult. But staff numbers alone suggest the company has become one of Australia’s larger fintechs. According to a recent industry study by Ernst and Young, the median number of employees for a fintech company is seven—less than half Timelio’s.
Looking forward, the Petris plan to consolidate their growth and build on their strengths.
“We're ramping up growth, adding to our strong team in areas such as sales, marketing and portfolio management. We see this continuing over the medium term as we expand market share and explore new markets.”