By Cara Waters
Accounting software firm MYOB is partnering with fintech Valiant Finance to turn up the heat on major rival Xero in the lucrative small business loans space.
The deal will let MYOB offer “predictive financing” where its software will indicate to customers if they need a loan or any other form of finance and then serve up potential offers through Valiant, which links small businesses with lenders.
Valiant’s lending panel includes ANZ, NAB, Westpac and CBA alongside smaller fintechs offering term loans, business overdrafts, commercial and development lending, fit-out financing and asset finance. Founded in 2015, Valiant is backed by ANZ, Salesforce and Westpac’s venture capital fund Reinventure.
MYOB chief executive Greg Ellis has secured a partnership with fintech Valiant.Credit: Eamon Gallagher
Both Xero, which has a market capitalisation of $21 billion, and MYOB launched invoice financing offerings in the past year but MYOB’s partnership with Valiant is the first foray by one of the platforms into the broader small business lending space.
MYOB chief executive Greg Ellis said financial services was “massive” in the Australian economy and the partnership enabled MYOB to tap into this market.
“We don’t want to be in the balance sheet holding business for term loans and what Valiant offers us is a platform that integrates a huge plethora of viable commercial lenders who have expertise in commercial lending,” he said.
Mr Ellis said small-to-medium-sized businesses, ranging from sole traders to companies with a 1,000 employees, were feeling a “tremendous frustration” with traditional methods of lending.
“The banks are not fast enough and good enough at effectively handling that mid-market to the small market,” he said. “We think there’s a tremendous demand, but it’s still a relatively intensive process so our objective is to smoothen that process in terms of admin, in terms of efficiency.”
MYOB left the ASX when it was bought by private equity firm KKR in 2019 and has 628,000 customers on its platform. Records filed with the regulator for 2020 show an annual revenue of $402.5 million and a loss before tax of $4.4 million.
In comparison, ASX-listed Xero last year reported a base of 2.74 million customers, revenue of $NZ848.8 million ($787 million) and a profit of $NZ19.8 million ($18.4 million).
Mr Ellis said the new offering distinguished MYOB from Xero’s platform which has “lots of third party plug-ins” and some core functionality.
“It’s a one stop platform that will have a range of solutions in it, that reduces the systems integration cost and the running costs for the customer, relative to the Xero platform,” he said.
Valiant co-founder and chief executive Alex Molloy said the fintech was able to aggregate offers from different providers to overcome the fragmentation in the small business loan space.
“MYOB has an incredibly trusted brand and has that incredible dataset to help inform product matching with Valiant,” he said. “We’ve spent five years now building our product set, which is the broadest in the Australian market, and a system that can match any kind of customer profile against hundreds of products.”
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