Fintech Zeller aims to plug business banking gaps
Financial services startup Zeller has secured $6.3 million in a funding round lead by Australian venture capital heavyweight Square Peg Capital, as it takes aim at plugging the gaps in the business banking market.
The seed funding gets the ball rolling for the fintech which will develop products, ranging from payments to financing, that are scheduled for release to market next year.
Zeller co-founder and chief executive Ben Pfisterer said business banking was broken and Zeller would offer small businesses an alternative to the big four banks.
The only new entrant in the space in recent years has been Judo Bank which was valued at over $1 billion in May, indicating the opportunity for Zeller, although Mr Pfisterer said the fintech’s offering was very different and would not include loans.
“We don’t have a banking licence and have no intention of getting one in the forseeable future,” he said. “We think borrowing and debt is great for some businesses, but really not required by others. We’re looking at solutions which every business needs from how do you get paid to growing your product, your service.”
Mr Pfisterer, 45, was formerly the head of payments platform Square for Australia and started Zeller with his former colleague Dominic Yap.
He said businesses needed a low cost and technology savvy alternative to the major banks.
“It hasn’t changed in years, despite the onset of technology and new innovation coming through,” he said. “We put Zeller together predominantly to focus on what we think is an under-served part of the economy at the moment to help those growing into larger businesses.”
Mr Pfisterer said the coronavirus pandemic had made Zeller’s mission to increase competition and offer new services even more relevant.
“We’ve seen time and time again through these crises that there is an increase in the level of entrepreneurship.” “The number of Australians finding new ways to make money, launching their dream business that they’ve been aiming for so many years, that’ll happen like we’ve never seen before,” he said.
Venture Capital fund Square Peg lead the funding round with investment also coming from Apex Capital and Athena.
Square Peg co-founder Paul Bassat said he had his first meeting with Zeller in January and the deal was signed at the end of March when the coronavirus pandemic was taking hold.
“It really didn’t matter, they are building a business for the long term,” Mr Bassat said. “We think it is a very big market opportunity and we think there is room for a new entrant.”
Mr Bassat added that by the time Zeller launches its first product the economic environment will be very different, with businesses much keener to adopt new technology.
“My sense is that 2021 is going to be a year of massive business formation as well as existing SMEs saying ‘How do I do things better?’,” he said. “The timing from that perspective is really good.”