Xinja raises $2m via equity crowdfunding platform

According to the crowdfunders, the average investment amount was $1,850, while investments of $250 proved to be most popular among investors, with more than a quarter opting for this amount.

There was also interest from sophisticated investors, with investments of $10,000 making up 27.8 per cent of the total amount raised.

Equitise co-founder Chris Gilbert commented: “We’re thrilled to have worked with Xinja to showcase the excellent potential of equity crowdfunding, with everyday Australians all having a share in creating Australia’s very first neobank.”

Xinja CEO Eric Wilson added: “From the word go, we have always said we wanted to offer our customers a chance to own a piece of the action, and this is what we were able to do.

“The launch of equity crowdfunding in Australia created an opportunity for Founding Xinjas to benefit from any success we have in the future, which is all part of our building a bank with our customers.”

Xinja’s capital raise was the first retail equity crowdfunding offer to go live in Australia, according to the aspiring bank, after amendments were made to the Corporations Act 2001 late last year.

Under the Corporations Amendment (Crowdsourced Funding) Act 2017, unlisted public companies with less than $25 million in assets and annual revenue can raise up to $5 million per year by selling ordinary shares to retail investors through licensed equity crowdfunding platforms.

Previous legislation limited the scope of equity crowdfunding to wholesale or sophisticated investors who earn at least $250,000 a year or have $2.5 million in assets. Under the amended bill, retail investors are able to invest up to $10,000 per company per year once they have completed the prescribed risk acknowledgement.

The lender recently launched its prepaid card and app, and it expects to be in a position to offer home loans in the next couple of months.

Xinja was granted a credit licence from the Australian Securities and Investments Commission last month, and it is hopeful of receiving a restricted banking licence (RADI) in the upcoming months, which will allow it to launch transaction accounts.

In its submission to the Productivity Commission’s draft report into competition in the Australian financial system, Xinja said that it wants analysis of the impact of deposit restrictions on RADIs and the impact those restrictions have on a new entrant’s ability to compete with existing banks.

“With a credit licence, Xinja can issue mortgages to the extent we have funds to lend,” the lender said.

“Our first challenge is access to wholesale funding. The second challenge is that even where we can access wholesale funding, a restricted ADI would limit our ability to offer offset accounts with those mortgages.

“This means we have to make difficult choices around how we split our $2 million cap on deposits between offset accounts to provide a better outcome for home loan customers, which means a small number of mortgage customers would be sufficient to absorb that cap, thereby limiting overall how fast Xinja can grow until that cap is lifted — which limits how quickly we can access wholesale funding and investment funding.”

[Related: Xinja outlines challenges with mortgage play]