Getting cash into the hands of SMEs: Fintech Earlytrade closes $6 million round

Sydney fintech Earlytrade has secured $2.5 million from new venture fund Shearwater Growth Equity, to close off its $6 million funding round.

The latest investment makes Shearwater the lead investor in the round, which also includes high-net-worth individuals including former Fortescue Metals Group chief Nev Power, Former Westpac executive Bob McKinnon, and John Widdup, the former chief operating officer of Westfield.

Founded by Guy Saxelby and Piers Symons in 2016, Earlytrade is a marketplace connecting suppliers with corporate clients, and allowing them to offer discounts for early payment.

“No one likes being paid late,” Saxelby tells StartupSmart.

“We’re trying to build an ecosystem that incentivises early payments.”

As an accountant, Saxelby says he saw firsthand the strain late payments could put on small business. At the same time, large companies are incentivised to keep cash on their balance sheet, to accrue the interest.

For small- and medium-sized businesses, the benefit is fairly clear.

“If they’re not being paid on time, they can’t hire, they can’t invest, they can’t buy the things they need to grow their businesses.”

But holding cash isn’t necessarily good for big business either, Saxelby says. The money is sitting in low-interest accounts, and could be earning more elsewhere.

“There’s a real motivation to help these two parties work better together,” Saxelby says.

It also just good corporate citizenship, he adds.

“It’s a nice thing to do, to pay your suppliers early.”

Currently, about 27,000 small businesses are using the platform, and over the past three years, those businesses have saved a total of 3.5 million days of waiting for payment, Saxelby says.

“You can’t keep pushing it under the rug”

Established late last year, Shearwater Growth Equity was founded by Charles Gibbon and Mike Gregg — both non-executive directors of WiseTech Global — along with Zac Zavos, founder of Conversant Media.

All of the firm’s founders have now joined the Earlytrade board.

The funding will partly fuel the Sydney startup’s expansion into Melbourne.

However, Saxelby says it will also go towards tackling the founders’ “biggest challenge to date”: educating the market.

Corporates often don’t understand the benefits of using technology to pay suppliers early.

“They’re a fickle bunch,” he adds, and the startup spends a lot of time trying to help them innovate and collaborate with the supply chain.

The funding will also go towards raising awareness about the issues late payments cause.

“You can’t keep pushing it under the rug. [Late payments] exist and are a constraint on our economy.”

Of course, Earlytrade will also be shouting about its own solution to this problem — showing it can get cash into the hands of small businesses, without them having to borrow it.

“We’re really looking to grow our ASX 100 client base, and consequently grow the number of suppliers using our platform,” Saxelby explains.

“As that grows, there’s a really good network effect in the ecosystem.”

Friends with integrity

When it comes to heading up a startup, Saxelby’s main piece of advice centres on the people you have around you.

It’s not only a case of hiring great talent or bringing good investors on board, it’s about “having people with integrity that can help you”, he says.

From a psychological point of view, it’s important to talk about your issues.

“It can become really hard in the business sharing everything, because you’ve got to be at the front of it,” he says.

So, he advises finding other founders you can build trust with — founders who have been there before, and who you can talk to.

“That will take a lot of the weight off your shoulders,” he says.

Being a startup founder can get pretty lonely, Saxelby says, especially when things aren’t exactly going as planned.

“We’re fortunate enough to be doing well at the moment, but there are businesses that aren’t,” he says.

“That can really take a stressful toll on the psychology of founders.”

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