Prospa proves fintech is a prosperous investment, skyrocketing in IPO debut

This week the fintech community in Australia celebrated a new SME success story – the long awaited float of SME online lender Prospa.

After stalling at the IPO finish line last year, the venture backed startup came back with a roar, with shares debuting at $4.50, a significant uplift on the $3.78 IPO price, with a market cap in the $720 million region.

Since launching around 7 years ago, the business has originated an impressive $1 billion in loans to the local SME community. Through a strong sales and partnership model, they have done the unthinkable in business banking – made lending to SMEs work.

Not content with just originating loans, and plugging what it believes is a $20 billion lending shortfall to the sector, the company is also innovating. It recently launched a buy-now, pay-later service, Prospa Pay, for equipment and stock. It’s a savvy move, especially given the shift in personal borrowing behavior amongst millennials, thanks to Australia’s fintech success story Afterpay. More and more of these consumers will become business owners over the next decade, and will be hunting for products that look and feel similar to what they have been initiated in.

Prospa joins a growing group of Australian fintechs in the lending space who have found success listing their businesses, albeit at far earlier stages than Prospa. This group includes Afterpay, which has built a sizeable $6 billion market cap. The company now has its sights set firmly on US expansion. Zip has also cracked the $1B market cap mark, and is making significant inroads into the buy-now, pay-later space.

These are huge milestones for the fledgling industry, and a great reward for early stage investors, who have backed founders and businesses in the face of stiff competition from a well-funded oligopoly.

Zip, Afterpay and Prospa are proof it can be done, and should give other early stage investors’ confidence in taking bigger, bolder bets.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

I have no commercial relationship with the companies or people mentioned. I am not receiving compensation for this post.

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