Why Prospa turned to a Silicon Valley-based lender for its latest funding round
The fintech heavyweight has secured a $20 million debt facility from Silicon Valley-based Partners For Growth.
Small business lender Prospa is no stranger to making waves when it comes to funding. Earlier this year the fintech business, no longer a startup, was the recipient of the largest venture capital (VC) investment deal ever made in an Australian business. The lender received $25 million in capital from AirTree Ventures.
Now, it has again veered off the beaten funding track and secured a $20 million debt funding facility from Partners For Growth (PFG), a commercial lender providing tailored lending solutions to high-growth companies. CFO Ed Bigazzi said PFG and Prospa's similar company ethos meant the funding choice made sense.
"We got introduced to them through one of the investors in our equity. And he identified, and what turned out to be the case, was that we had a lot of common philosophies in terms of how we approach the market," said Bigazzi.
We certainly had to be innovative, and innovation is really in our DNA
"So, what we found was that as a fast growth business which had graduated out of the startup phase, we needed a tailored and flexible funding solution to meet our needs. PFG were able to provide that."
Prospa is in the business of providing tailored and flexible funding solutions, which Bigazzi said has made their funding "journey" more innovative.
"We certainly had to be innovative, and innovation is really in our DNA," he says.
Bigazzi explains how Prospa's funding journey started in 2015 with the establishment of a securitisation warehouse facility, the first of its kind on the Australian market. The Carlisle Group was the original funder.
"Everything gets funded through the warehouse trust. In 2016, we added a second large institutional funder to the capital stack."
Bigazzi says that it's part of Prospa's ongoing strategy to look the company's funding structure, debt or equity, to ensure it can continue to meet the needs of the market. For other businesses considering their funding options outside of Australia, Bigazzi says:
"Capital is a global plate, so it is possible to look overseas. We've been fortunate in as much as we made the right decisions early enough to access that capital. So, I think to access large chunks of capital you have to sometimes think outside the box, and I think that speaks to innovation."
For smaller fintech startups considering their finance options, Bigazzi says it's important to focus on building up your data.
"One thing that funders look at is time in operation and time in trading. It's a very data-driven process, and the longer you've been operating and the more data you have, the better your chances are."
"I guess the advice for aspiring fintechs would be just to keep at it, to keep building your data. Don't neglect your data."
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