Fintech startup Tic:Toc raises $11.5 million to take the hassle out of home loan approvals

Aussie fintech startup Tic:Toc has raised $11.5 million in Series B funding in its bid to improve the customer service around home-loan approvals.

The funding round was led by Genworth Mortgage Insurance Australia and La Trobe Financial, and also included some existing shareholders.

Based in Adelaide, Tic:Toc digitises the process of home loan approval, allowing customers to get loans approved, and documents generated and delivered, within one interaction that can take less than half an hour.

Having previously worked as a banking executive at Bendigo and Adelaide Bank, Tic:Toc founder and chief executive Anthony Baum launched the fintech in 2015 to change the very traditional processes around home loans.

Baum “found it frustrating that the customer really was enduring quite outdated customer experiences, particularly in the home loan space”, he tells StartupSmart.

Tic:Toc’s latest capital raise follows $4.1 million in Series A funding in March 2017, prior to the product’s launch in July the same year. In 2016, the startup received seed funding from Bendigo and Adelaide Bank, which took a stake in the business.

While Baum doesn’t reveal the company’s current revenue figures, he say Tic:Toc is facilitating $40 to $50 million in home loans every month, and his original team of six people has grown to 43.

According to Baum, this investment comes at a time when the platform is ready to move to the next level and “has the capacity to process significant growth”.

Baum says the funds will be used to further develop the technology and refine the platform, “broadening the proposition”.

Tic:Toc will also “increase marketing spend to bring on more and more customers”, he says.

Although the company has seen growth over its first year of trading, “to date, we’ve only done modest marketing”, he adds.

Baum’s growth strategy is also pinned around some lucrative platform-as-a-service partnerships, details of which will be released in the next few weeks.

“Platform apps in financial services is something that’s going to be here very soon,” he says.

The changing face of fintech

Tic:Toc isn’t the first fintech to address shortcomings in the traditional property space. In May, cloud-based digital home loan platform Athena, which offers home-buyers lower-interest loans backed by super funds, raised $15 million in Series A funding.

Also this year, startups such as LocalAgentFinder, ActivePipe and Soho have raised millions for tech-based offerings intended to make the processes of buying a home simpler and smoother.

The fintech sector is also seeing plenty of startup activity of late, with SME-focused cross-border transaction startup Airwallex securing $109 million earlier this month, in the biggest venture capital raise in 2018 so far.

New chair of FinTech Australia Alan Tsen recently told StartupSmart we’re currently in a “perfect storm” for fintechs.

Tsen cited the banking royal commission; changes to authorised deposit-taking institution licensing; the advent of ‘open’ banking; and the launch of the New Payments Platform as among the reasons why it is becoming easier for startups to emerge and scale.

“We’re seeing a number of things coming together that are going to make the financial services landscape ripe for disruption,” Tsen said.

Baum suggests Tic:Toc, and other property-finance startups, represent something of an evolution in the fintech space.

“The first phase of fintech was really some of the low-hanging fruits,” he says, with startups initially focusing on payments, unsecured loans, small-ticket loans and the underbanked SME segment.

“We thought about what is possible in the major asset classes, and really home loans stood out to us … the home loan space in Australia represents about half of industry profitability,” he says.

The reason the property sector is so attractive to startups is because it’s “the most relevant from a consumer perspective”, while also being profitable.

“We saw with the reaction to Tic:Toc that the market is crying out for a much better customer experience in the home loan space,” says Baum.

“We saw the opportunity and we’ve gone for it.”

That said, Baum doesn’t necessarily consider Tic:Toc an industry disruptor. Rather, he sees the fintech working “in partnership with banks”, collaborating with the institutions to change the disintermediated way in which the home-loan approval process has previously been managed.

“Our philosophy on fintech is that the most successful fintechs disrupt … the current distribution landscape and customer experience, but still actually partner with banks,” he says.

Tic:Toc is a “disruptor of the process and the poor historical practices,” Baum adds.

Be clear on your strategy

For founders hoping to raise some capital and kick-start their startup growth, Baum’s advice is to understand what you want to get out of an investment, and to target the right investors to provide it.

“Be clear on your strategy, [on] who are the right types of shareholders for you to focus on bringing on to your register, and why they may be interested in you,” he says.

“Ensure that you’re able to add value to them.”

In Tic:Toc’s case, because the startup has the potential to change the way the home loan industry works, Baum says he focused on people who understand the market and “understand what a platform like ours is capable of achieving in the industry”.

An investment is about more than money; it’s about “the broader opportunities of mutual benefit, and added value”, he says.

NOW READ: Small and mighty: Meet the challenger banks nipping at the heels of the big four