According to National Australia Bank (NAB), the collaboration would allow tech start-ups to gain access to Lighter Capital’s debt capital and banking services, and financing solutions such as revenue-based financing, term loans and lines of credit.
The major bank added that businesses will also be provided, with a dedicated NAB small-business specialist who will be assigned to the account, as well as industry insights, resources and networking events.
In order to be eligible to access Lighter Capital’s products, businesses must be:
- A tech-based start-up (for example, software, software-as-a-service (SaaS), tech services);
- Have at least $20,000 monthly recurring revenue;
- Operational for at least 12 months, with at least six months of recurring revenue; and
- Based and incorporated in Australia.
The relationship between NAB and Lighter Capital is not commercial, and operates on a referral model, according to the major bank.
Lighter Capital provides founders with tranches of up to $1 million of non-dilutive growth capital, with an average loan size of $300,000.
Rather than take equity, NAB explained that Lighter Capital takes a percentage of monthly revenue over the life of the loan and adjusts monthly payments based on a company’s performance.
Commenting on the collaboration, NAB executive for small business Ana Marinkovic said: “Now more than ever, it’s critical to back Australian small businesses – not only do they bring innovation and competition to our marketplace, they are the backbone of our economy.
“With small businesses citing access to finance as one of their major barriers to growth, today’s announcement is great news for digital entrepreneurs with vision and a determination to maintain control of their venture. Lighter Capital is a unique offering that provides entrepreneurs the opportunity to keep their equity, board seats and vision intact.”
Lighter Capital CEO Melissa Widner also spoke of the collaboration, stating that Australia “represents an exciting market opportunity” for the fintech lender.
“We believe that our services, combined with those of NAB, will provide start-up founders with a powerful range of debt capital offerings,” Ms Widner said.
“As we have seen in the US and in Canada, founders are discovering that they don’t have to give up equity to fuel the long-term growth of their companies and that there are financing options that better complement their exit strategies.”
Ian Gardiner, a partner at Sydney’s Jelix Ventures and co-founder of Australian networking and angel investment group for start-ups Innovation Bay, has been working with Lighter Capital to broker introductions to start-up founders.
Speaking about NAB’s partnership with Lighter Capital, Mr Gardiner said: “There is myriad of founders here who either aren’t ready yet for VC money or would simply prefer to build their companies with debt capital.
“Lighter Capital will really help to fill a void in the Australian start-up ecosystem.”
Lighter Capital was founded in the US in 2010 and has a presence in Canada and Australia. It has provided up to $4.25 million revenue-based financing for early stage tech-enabled companies.
NAB’s announcement has followed ANZ’s investment in Auckland-based fintech Aider, which will enable small-to-medium enterprises access to data-based insights into their cash flow, staffing and accounting needs.
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.