Cape looks to disrupt cashflow dealings

Cape’s Ryan Edwards-Pritchard is hoping the financial services start-up can disrupt the status quo in the domestic market.

Cape co-founder Ryan Edwards-Pritchard. Picture: Britta Campion / The Australian

The structure of Australia’s business cashflow management and banking products “is archaic”, contributing to small and ­medium companies being time poor and facing a $130bn working capital funding gap.

That’s the view of Cape co-founder and chief Ryan Edwards-Pritchard, who is hoping the financial services start-up can disrupt the status quo in the domestic market.

Cape will push into the business corporate card, line of credit and expense management industry starting this quarter, and is aiming to shake things up. It is drawing on a platform and software to help automate a company’s ability to track and control spending.

“Cape is not a bank, but we are building something better,” Mr Edwards-Pritchard said.

“On average five days a month is spent on closing the books for your average small business owner. That is a huge amount of time, and that’s where we are looking to bring automation into the accounting process.

“It’s about reliably predicting how much money a business will receive and pay out over a set ­period of time.”

Mr Edwards Pritchard, a former managing director at London-based business finance firm Funding Options, said Cape would draw on machine learning and predictive data. It was aiming to offer services such as virtual and physical cards, receipt matching, reconciliation and a line of credit to businesses more quickly and efficiently via an integrated platform.

But Cape is among a host of fintechs that are hoping to chip away at the market share of large incumbent payments and banking players. And if trends in the digital banking sector are anything to go by, it will be a challenging task.

Fintech payments group Zeller, founded early last year, and Melbourne-based Archa are just two examples of those also trying to make inroads in the business payments and card sector.

At the larger end, payments and corporate card giant American Express is dominant and is now offering unsecured business loans in Australia.

However, Mr Edwards-Pritchard argues that many of the existing products in the business card, expense and cashflow management space are not serving the sector well.

“The problem we’ve got right now is the structure of products that are out there is archaic and isn’t actually built for the digital age,” he said.

The local small and medium business sector is hoping the strong rebound in 2021 continues after the COVID-19 turmoil of last year, despite pockets of weakness following the winding back of support measures such as JobKeeper payments.

That comes as the federal government has just revised and extended its COVID-19 small and medium business loan scheme, after slow take-up. The changes include the government guaranteeing 80 per cent of the loan amount and terms of up to 10 years.

In NSW, Cape was awarded a Minimum Viable Product grant by the state government, as part of a program that has supported about 800 businesses and provided more than $17m in funding since 2013.

“The MVP grant is designed to support promising start-ups like Cape progress from product development to first sale,” state Jobs, Investment and Tourism Minister Stuart Ayres said.

“While many NSW start-ups have been impacted by COVID-19 because their early-stage capital has fallen, the MVP grant is providing a much-needed financial boost.”

After being funded entirely by the co-founders since inception last year, Cape is also now kicking off a funding round that it aims to rule off in coming months.

Cape has an Australian Financial Services Licence in place.

Mr Edwards-Pritchard said American Express was incentivising spending with reward points.

“We feel that’s irresponsible. We would rather a help our customers spend less and help their financial position,” he said.

Cape’s other co-founder is Edo Omoniyi, formerly of consultancy 11:FS, and the group counts Spaceship Capital chairman Paul Dortkamp as an adviser.

Cape last month appointed former Pepper Money and Westpac manager Tanya Ward as ­finance boss.