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Capital to be used for product development, business expansion and go-to-market
Australian digital home loan provider Verteva has hauled in AUD 33 million (around US$21.4 million) in its Series A round, according to a statement from the company. The round was backed in entirety by New Zealand-based private investment fund Bolton Equities.
Investment bank Clavell Capital and law firm Herbert Smith Freehills also supported Verteva’s capital raise, the statement noted.
“Many Fintech companies conduct smaller, more frequent capital raises. We took a different path and found a partner who sees beyond the immediate business interruptions and values long-term opportunities for transformation in the banking and finance sectors,” Verteva Co-Founder and CEO Andrew Walker said in the statement.
The funding will be directed towards product development and market launch in Australia, Walker tells Jumpstart via email.
Walker adds that the home loan industry in Australia is currently outdated and not customer-friendly. Founded in 2019, the Sydney-headquartered startup applies fintech to its home loan services through digital technology and data analytics.
“The vast majority [of home loans in Australia] are initiated face-to-face, the meetings take hours, the forms run to 50 pages, and they rely on customers’ estimations of their own spending habits, which the lender then verifies over the course of a number of weeks against data sources,” he says.
“We believe that where data already exists, it should be allowed to tell the story. This can bring the customer experience entirely online, make it frictionless, and reduce the timeline from weeks to less than an hour,” Walker continues.
He further notes that operating in this way will allow lending rates to reflect the true risk profile for low risk customers – in other words, bringing down interest rates for those who are more likely to repay their loans – rather than the standard practice of “subsidizing the riskier loans on the lender’s book.”
Walker said in the statement that any changes to the current distribution model within the home loan market are likely to be digital, in line with the trend in the United States and Europe. He adds that traditional lenders have yet to catch on to some of these digital shifts.
Verteva was founded by Walker and Chris Lumby, both of whom worked in executive roles at Australian bank and financial services provider Westpac. CEO at Boston Equities Chris Dineen has also held directorial roles at Westpac.
“The transaction structure provides Verteva with the runway to focus and deliver on the already exciting progress made to date. We are very proud to partner with the team and to help create a service which will genuinely rewrite the way we bank,” Dineen said in the statement.
86 400, another Australian digital mortgaging platform, also secured a hefty funding round this quarter through a US$34 million Series A led by Morgan Stanley.
An inquiry by the Australian Competition and Consumer Commission discovered that customers face more difficulty and undertake higher expenses when opting for a home loan from large Australian financial institutions, creating ample opportunity in the market for lending platforms such as Verteva and 86 400.
Header image courtesy of Verteva