A Swiss SME start-up chooses Melbourne over Sydney for its global expansion, could the regional government do more to help foster a fintech ecosystem, asks Glenn Hodgeman.
The Zurich based cashflow lender Tradeplus24 has opened an Australian operation based in Melbourne, because of the stronger Victorian Government support. Tradeplus24 was founded in 2016 by Ben James and Steve Pike to provide cashflow lending solutions for Swiss SME’s. With a team skilled across Corporate Finance, ABS and Insurance, Tradeplus24 was formed.
Tradeplus24 has been able to raise both equity and debt support from Credit Suisse. The Swiss bank decided they would exit their cashflow lending business and entered into a referral scheme with the start-up to service any of their existing bank customers. While in February of this year, the company raised CHF 120m from SIX Group and Berliner Volksbank, part of this raise was to support the opening of the Australian operation.
Adam Lane is the Australian MD, like many in the fintech start-up scene comes from the local National Australia Bank where he was a business banker GM. Adam worked earlier in his career with Ben and Stephen.
The attraction of the Australia market for Tradeplus24 according to Adam is the use of cloud-based accounting software which provides the company readily accessible financial data on their debtors. Given the heavy reliance on paper work by the established bank lenders, Adam feels this gives them an enormous opportunity, for superior credit assessment. The local fintech start-up TradeLedger provides their technology architecture.
Their target is to be lending between $500k to $10m, using a company’s receivables as security. They also use insurance to enhance the protection of any loss, which is underwritten by Euler Hermes, part of the Allianz group. Enabling the borrower to access cheaper funding on the back of the credit enhancement from the insurer.
According to Adam, Tradeplus24 decided to base themselves in Melbourne, over Sydney due to the Victorian Government’s far greater commitment to tech initiatives, its global recognition as the tech epicentre of Australia, and a superior ability to attract talent. Possibly it might also have been that Adam and his tea are all from Melbourne. But I do know from personal experience where each year I run my AltFi Australasia Summit on On-Line and Non-Bank Lending. The NSW Government never seem to be interested in participating nor supporting in any manner. In fact, at this year’s event the NSW Premiers Office called me during the conference to just confirm that the Premier would not be attending – I told them I kind of gathered that. So, the Tradeplus24 team seem to have identified where the State Government support will be greatest.
Acting Minister for Economic Development, Robin Scott, has welcomed Tradeplus24 to Melbourne, saying the investment is yet another accolade for Australia’s top tech city: “Melbourne is the leading destination for tech companies and this investment by Tradeplus24 is a strong vote confidence in our tech capabilities and talented workforce.”