Business lending fintech Fundabl has raised $3.2 million in an equity round as it looks to increase its venture debt business as alternative capital for startups.
Fundabl was founded by Ethan Singer and David Salkinder in 2021 before launching in March 2022, going on to raise $16 million in a mixture of equity and debt in October of that year.
The new cash comes from several family offices and strategic investors, including existing investor Matt Leibowitz, founder of Stake, and will be used to grow the portfolio and product range, offshore expansion, including New Zealand, and building the team and marketing capabilities.
Fundabl has also expanded its warehouse facility via local institutional investors. The fintech offers three types of business finance: bridging loans of up to 12 months; growth capital and venture debt, worth up to $5 million for up to three years.
Its clients include startups such as Lyka, T-Shirt Ventures, Safewill, Tank Stream Labs, Nudge Group and Amber Electric.
Ethan Singer sees opportunity for Fundabl to complement equity investment at a time when venture capital funding has slowed post-pandemic, launching their venture debt fund with a focus on the $500,000 – $5 million range.
“We’ve seen many founders leveraging debt to achieve their ambitions, or as a means to preserve their equity,” he said.
““We truly believe we can sit alongside the likes of Blackbird, Airtree, OIF and Square Peg, as a driving force for entrepreneurs in Australia, albeit with a model that ensures founders own more of their own company.”
Singer said equity dilution “is always a very sensitive topic for founders”, especially when their startup’s value is growing rapidly.
We are not an alternative, but complementary to equity capital. There is more than one way to construct the capital stack and raising the all-equity model might not be the most efficient and optimal approach for some founders at that point in time,” he said.
Fundabl general manager Nathan Ryba sees the fintech as meeting demand for businesses, especially scaleups at the midway point, which are overlooked by traditional lenders.
“Australia is brimming with innovative companies poised for breakout growth, but too many are facing challenges when it comes to raising capital on good terms. When you look at the funding landscape in Australia, there aren’t many lenders focused on mid-range deals at the $500,000 to $5 million mark,” he said
“We’re here to break down that wall. We want to partner and empower founders with flexible capital options to achieve their ambitions. Growth, they can truly own.”
Venture debt remains an emerging option in Australia amid the headlines around venture funding, while in Europe, the most recent analysis of the debt v equity split found that 40% of funding came from debt.