Mortgage startup Hero Broker has begun a crowd-sourced funding campaign following the recent fundraising success of digital lender Xinja.
It is the only mortgage company so far that has tried to raise funds through crowd-sourced funding since ASIC licensed seven companies in January to provide CSF services.
Founder Clint Howen told Australian Broker that the company will use the funds to strengthen its business and accelerate growth.
“We have hit a chord with particular demographic segments that are not being served by current broker groups, and we believe there's a huge opportunity there.”
The platform launched last year promising borrowers access to the complete home loan application process.
Howen said the company has seen strong interest from other mortgage brokers, and he expects them to actively participate in the crowdfunding campaign.
“I think the mentality is, hedge your bet. It's better to be onboard any disruption than to sit on the sidelines.”
He said he has received many private messages of support and interest from brokers.
“I think many brokers understand that there is a growing trend of consumers wanting more options," he said. "They understand this more than anyone.”
Howen said that while other platforms such as Uno and Lendi have had a lot of success with their online model, Hero Broker is the first to open up the opportunity for investment from the general public.
Like Hero Broker, Uno and Lendi are online mortgage platforms that have carried out fund raise campaigns. But their funds have generally come from large investors, including Westpac.
Westpac has so far invested a total of $51.5m in Uno, while Lendi has the backing of big shareholder names including Macquarie Bank, investment manager Bailador, and home loan provider Pepper Group. Lendi completed a $25m capital-raising exercise in December.
While Hero Broker’s campaign is meant to raise funds, Howen said it is not only about money, but also about giving its supporters an opportunity to be involved in the business.
Individuals may invest as little as $50, “or a case of beer”, according to Howen. The campaign went live yesterday and runs on ASIC-authorised platform Birchal.