Fintech Sail Funding launches with $8 million and an algorithm it says will change how small businesses get loans

The founder of fintech Sail Funding says he is “very, very lucky” to have secured $8 million in funding for his business, but the SME lender doesn’t let luck play any part in delivering money to clients.

Yanir Yakutiel has watched the Australian fintech space for the past five years and witnessed an opportunity for rigorous algorithms and security features in the increasingly crowded market of small lenders. With a background in shipping and logistics, Yakutiel saw the fintech space take off in Israel before turning to Aussie SMEs as an obvious market for growth.

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The company’s first capital raising, which closed earlier this year, secured $8 million in funding. The startup’s backers include Sydney-based investors Messrs Marc and Gideion Lubotzky, who have joined the Sail board.

The funds will be put towards further product development and expanding the lender’s tech talent pool, which is a pricey but important part of Sail’s plans for dominance, says Yakutiel.

“I’ve been very very lucky in the ability to build a strong team – and that costs money. It’s needed for nailing the product and the user experience,” he says.

With several other small lenders already approaching their second birthdays, the business is looking to differentiate itself with an algorithm that uses machine learning to deliver better risk analysis, and security software AU10TIX BOS, which lets clients upload personal documents safely.

The local market has seen phenomenal growth for lending fintech platforms over the past two years, but Yakutiel says the Sail team believe there’s still room to take the biggest slice – and developing software that become more intelligent as the loan book grows can only speed up that growth.

“We’ve developed a completely proprietary backend system that allows us to launch additional products,” he says.

“I think the market is ripe for disruption and like in any sort of business, if you develop a competitive customer value proposition to a big enough market, you do well.”

The Sail team has also had the chance to see what others in the space are up to as part of the NSW government’s Landing Pad program in Israel, which it was selected for along with seven other startups.

“The people that are setting up these companies in Australia are phenomenally talented – and I think some of them will do very very well,” Yakutiel says.

Sail officially launched in Sydney this week, but with a team of 10 developers based in Israel and a founder who has watched the market from afar and been in Australia just five years, the team have been watching the local startup ecosystem with interest.

“There is a great paradigm shift in terms of the eagerness of people to be involved in startups [in Australia],” Yakutiel says.

“But I think there’s a lot of work still to be done on the culture side. There’s not the urge to go and do it like other countries.”

Yakutiel says the prospect of entering the world of business by taking control of a startup is “still not like a driving force like it is in Israel,” where he says many young people exit studies or military service eager to get a stake in a brand new venture.

“I think there’s still young people [in Australia] who come through the tertiary education system and into very comfortable jobs,” he says, adding that this can make the startup scene a less attractive proposition.

But there’s always room for the ecosystem to grow, and all it might take is a few more homegrown successes.

“With two or three more success stories of big companies going public and wealth being created for employees, that will help,” he says.

 This article was first published by StartupSmart.