Sydney-based fintech Rich Data Co completes $37m capital raise
Westpac-backed Rich Data Co has secured $9m from Acorn Capital to complete its Series B raise as it eyes signing up more US banks to its tech that uses AI to accelerate lending decisions.
A fintech backed by Westpac that uses artificial intelligence to give bankers “rapid access to more detailed data” to help them decide whether to lend to businesses has secured $9m from Acorn Capital and now has its sights on expanding deeper into the US.
The investment completes a $37m Series B raise for Sydney-based Rich Data Co. Co-founder and chief executive Ada Guan said the process, which began 12 months ago, was a “difficult race”.
Westpac kickstarted the raise last year, tipping in $28m with Nasdaq-listed cloud banking provider nCino.
Ms Guan said the funds would accelerate the company’s expansion across the US. It has already signed M&T Bank, America’s sixth-largest commercial bank.
Ms Guan said the US had about 5000 banks.
“Applying AI in that space is actually quite difficult, so we see ourselves as a leader in the space globally on how to apply AI for business lending and commercial lending in the credit decision space,” she said.
Before co-founding the company, Ms Guan had a 20-year career including senior roles at Oracle, Westpac, Woolworths and Macquarie. She started Rich Data Co in 2016 after finding that the gap in understanding between borrowers and the banks was often an impediment to businesses obtaining credit. Ms Guan said Rich Data Co’s technology not only helped banks with lending decisions but also regulatory requirements, saying it presented a “movie” versus a “static picture” of a customer.
“We like to say the credit assessment is almost a point in time. The bank takes a snapshot at the time of opening the account and then annually APRA (Australian Prudential Regulation Authority) requires the banks to do an annual review process.
“So you snapshot at origination and then snapshot every year looking back at the past transactions, past financial statements. What we enable banks to do is pull that transaction data about the customer on a monthly basis so instead of a static picture you have a movie around customers – the ups and downs, the way they are facing issues, so the banks can support them.”
The data a bank used to make traditional credit assessment could be up to 18 months old, Ms Guan said.
She said that with a “past, present and future view of a business’s performance”, AI could help bankers look through any seasonal volatility to get a more holistic view.
“If you’re thinking about a business today versus where they were 18 months ago, they’re quite different, and especially given the post-Covid economic environment, it changes a lot. It tends to be not that accurate, and you don’t have that ongoing view.
“For us, we come with a pre-packaged solution which allows you to use your data to understand your customer better in order to understand and service them better. It just a complete paradigm change.”
Rich Data Co is the first Australian business that Acorn has encountered which is successfully commercialising AI in this way in the financial services sector.
“Acorn seeks to invest in emerging Australian companies that demonstrate a strong product-market fit, possess a sustainable competitive advantage and are highly scalable. RDC is a clear market leader in developing and commercialising AI that enables banks to drive both stronger growth in lending and efficiency in credit management,” Acorn Capital investment director Andrew Burt said.
The company faced challenges in securing the $37m Series B raise. Ms Guan said it took about 12 months to complete the funding.
“It has been a very long-running race. It’s a difficult race. I wouldn’t sugar-coat it. For any start-up, it is not an easy journey.
“But we went through it relatively well. We attracted strategic investors and the one we have announced now, Acorn Capital, we have huge respect for.”
Ms Guan said Rich Data Co was now regaining the international traction it lost during the Covid-19 pandemic, which led to it “pulling everything back to Australia”.
“You’ll see us continue expanding in the Australia, New Zealand market, and also, to a degree, expanding into Singapore as the first step in terms of expanding in the Asia-Pacific. And we categorise US and Canada as the North American market,” Ms Guan said.
“We have had conversations with banks in the US and Canada.”
But Ms Guan said the plan was alway to have Rich Data Co’s base operations in Australia. “From a global business perspective, you always have a majority of the development team here and executives here. We have been operating like this for eight years.”
Westpac managing director of business lending Shane Howell said the bank invested in Rich Data Co to streamline the credit assessment process.
“We want to give our customers fast decisions and provide a simple and informed experience. This work gives us a deeper understanding of our customers, so that we can support and provide insights as and when they need it,” Mr Howell said earlier this year.
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