Fintech startup Xinja has successfully raised more than $2.4 million through crowd-sourced equity funding platform Equitise to close out Australia’s first full retail crowdfunding offer.
The fintech startup, which is seeking to become Australia’s first ‘neobank’ (a bank sitting purely on a digital and mobile platform), sought to raise between $500,000 and $3 million through Equitise, and closed out the round on Saturday, 31 March with $2,443,250 from 1222 investors.
Almost seven in 10 investors (67.67%) committed less than $1000 to Xinja, which Equitise co-founder Chris Gilbert said reflected the accessibility of equity crowdfunding for “everyday Australians”, enabling them to “gain a foothold in cutting-edge companies, an opportunity once only afforded to wealthy investors”.
Xinja CEO Eric Wilson said he and his team were “thrilled” with the outcome of the raise, adding that they had always wanted to offer their customers “a chance to own a piece of the action”. He explained, “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.”
Wilson said Xinja has already launched its prepaid card and app, is on track to deliver home loans within the next couple of months and is hopeful of receiving a banking licence shortly, which would allow it to launch transaction accounts.
“We are aiming to change the banking landscape,” he said. “It is happening in other parts of the world, and it’s time Australians had access to this kind of technology and approach; helping customers make the most out of their money, with less angst. It’s great seeing investors come on board; this is a sign of the appetite for change.”
Investments of $250, the minimum investment package on offer, proved to be most popular and were made by over one in four investors (26.6% of the total). Investments of $10,000 made up almost one third (27.42%) of total investments, indicating interest from traditional Sophisticated Investors, followed by $5,000 which made up 15.98% of all investments in the round.
Gilbert said the average investment in the Xinja round, at $1,876.54, was higher than anticipated, given the highly accessible entry point of $250.
Xinja, who was recently granted its Australian Credit Licence from the Australian Securities and Investments Commission (ASIC), raised the minimum of $500,000 in less than 24 hours of its offer opening and more than $1 million in a week. In terms of demographic, investors aged 25 to 34 accounted for two in five investment made; however, those aged 55 to 64 invested the most in terms of average investment amount ($3842.95).
“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,” Gilbert added.
Asked about the strategic value of engaging Xinja’s customers as investors, Wilson told Dynamic Business that “Xinja’s entire premise is to build a bank with its customers”.
He explained, “We ask our customers what they want and what problems we can solve for them. We engage them in the design process and then, as we roll out, request and incorporate their feedback and ideas iteratively. We launch products at an early stage, so customers can help shape them, rather than delivering products as a fait accompli. As part of this approach, we look for ‘win-win’ opportunities, whereby if our customers do well, we do too – and vice versa. One such opportunity is allowing customers to own a piece of Xinja and benefit from any success we have.
Wilson admitted that having Xinja customers invest in his startup means he and his team have a “serious responsibility to deliver a great experience and a successful business”.
“It is humbling that they have put their faith in us in this way and it holds us very accountable for the quality of service and our overall growth,” he said. “These are not just high net worth people making another investment, but in many cases ordinary Australians investing in a start-up for the first time.
“Our growth is partly dependent on our customers recommending us to their networks – another way in which we are building a bank with our customers – and they will only be prepared to do so if they are convinced that we are doing a great job for them.
“We hope customers who have invested in Xinja will be really engaged with our development and give us load of user feedback. This will help us build better products and services for them, and those same customers will then be more inclined to recommend us to others, which will help us grow, increasing our profitability and their return on investment. This creates a virtuous circle of great outcomes kickstarted by equity crowdfunding.”