On Dec. 8, 2017, I had the honor of ringing the bell on the Australian Securities Exchange. To my ears, the sound of that bell ringing signaled not only the promise of the company I founded, but that big changes are afoot in the U.S. financial services industry.
Consumer preferences are changing and financial institutions are adapting. Marketplaces that can innovate and leverage technology to create better customer experiences will win.
This is a theme that has played out in the travel industry, and I believe we are at the early stages of a similar trend taking hold in consumer financial services.
When I founded Credible in 2012, I had a vision for building a better experience for millennials facing complex financial decisions. Working out of an apartment in San Francisco, our original four-person team focused first on the U.S. student loan industry, which stood out for the confusion and stress it caused for borrowers.
Our marketplace approach — which provides instant, personalized rates from multiple, trusted lenders — has been well-received by the post-financial crisis millennial consumer, who is particularly wary of financial institutions. There have been significant advances in consumer technology over the last decade, and financial institutions are increasingly willing to embrace products and technologies that improve outcomes for consumers.
So our timing was fortuitous. It was the right moment for Credible to establish its consumer finance marketplace to help people make smarter decisions. Our marketplaces for student loans and student loan refinancing were so popular that we’ve broadened our offering to include personal loans and credit cards.
So far, 650,000 people who were looking for a better way to weigh their options have created Credible accounts, and lenders who compete for their business have originated more than $1 billion in loans through our marketplace.
Credible now employs more than 100 dedicated team members, and each of us gets tremendous satisfaction from hearing the stories of the borrowers we’ve helped. We estimate we’ve saved our customers $161 million in interest to date, and we consistently receive high marks on Trustpilot, where we have earned a TrustScore of 9.5/10.
We’ve always put our customer at the center of everything we do, and we are committed to providing a marketplace that presents fair and unbiased solutions for consumers.
As we continue to grow, we’re accelerating the development of the technology and partnerships that power our consumer finance marketplace, and preparing to open it up to other financial products.
To do that, we recently faced a complex financial decision of our own: How to fund our next stage of growth.
Today, Credible is raising $50 million ($A67 million) in an initial public offering on the Australian Securities Exchange (the “ASX”). It’s the biggest tech IPO on the ASX this year, valuing Credible at $240 million (A$300 million).
The money we’re raising will allow us to hire more top-notch engineers, product managers, and talented business development, customer success, and marketing professionals.
If you’re not familiar with the ASX, you might be wondering why a company that was founded in the U.S. (and which will continue to be based here) would choose to go public overseas.
The simple answer is that the ASX offers growth-stage companies with an Australian nexus earlier access to public capital than other major stock markets. Further, I am Australian and spent close to 10 years in the capital markets down under, and most of Credible’s investors to date are also Australian.
You typically need to be a little bigger than we are today to go public on the NASDAQ or the New York Stock Exchange. So the decision Credible faced wasn’t whether to go public in the U.S. or Australia. It was whether to seek our next round of funding from public investors (via the ASX), or from private sources.
Having previously raised $23 million in venture capital from private investors, we could have pursued that path again. We’ve built a track record of strong growth, and still had $10 million in cash in the bank. So we were in the fortunate position of having options.
Why an IPO
A growing number of growth-stage tech startups are listing on the ASX and tapping public investment capital in Australia and Asia.
The ASX is the ninth-largest stock exchange in the world, right behind Tokyo. There were almost three dozen tech IPOs on the ASX last year, and the exchange attracts companies from around the world, including the U.S., Israel, Ireland, Singapore, Malaysia, and New Zealand. Some technology companies that trade on the exchange you might be familiar with include Xero, Seek, and Updater.
The reason I rang the bell at the ASX today is that, for Credible, there are two distinct advantages to going public in Australia:
- Flexibility to grow. As a publicly traded company, we’ll be able to raise additional capital in just days, rather than months or years. Although we have no plans to do so at the moment, there’s a competitive advantage to being able to move quickly if we see an opportunity to make an acquisition or pursue other avenues to grow our business. Our core technology has been built in a robust, deliberate and flexible way to enable us to continue to pursue our growth strategy beyond our current marketplace offerings.
- We control our destiny. An IPO allows Credible to raise money without worrying about complications like investor covenants or the special rights and privileges of preferred shareholders. We will drive long-term shareholder value by making long-term investment decisions. The interests of our customers will always drive decisions on how to build the best product and user experiences, or the suite of loans we make available on our platform.
Marketplaces: a key to the future of financial services
Credible’s IPO is about more than one company’s success. It’s about a the rise of consumer financial marketplaces, and a transition by the financial services industry to a customer-centric model.
Marketplaces provide some critical advantages, not only to consumers who are trying to navigate complex decisions, but for innovative companies that are trying to provide them with the best solution for their needs:
- Marketplaces can match consumers with products and services that are the best fit for their own, unique circumstance, using algorithms, machine-learning and other forms of artificial intelligence. You’re analyzing client characteristics and helping consumers discover more options and make better decisions.
- Anywhere there are complex choices that are difficult to evaluate, we think we can bring transparency, choice, simplicity, and privacy.
- Marketplaces are great for financial services providers, because they provide access the customers that are the best fit for them, and help them build relationships with those customers based on their needs.
- Marketplaces can also scale rapidly, lowering technical and cost barriers for companies that are eager to provide goods and services through them.
While we’re excited to have reached a milestone that many tech startups never achieve — going public — our eyes are focused not on what’s behind us but on the road ahead.
We are investing for the long term
By the time companies go public in the U.S., it’s often an opportunity for founders and early investors to cash out. That’s not the case with our offering.
I will not be selling any of my shareholding in the company, and neither will our executive team or chairman, Ron Suber. In fact, 92 percent of our investor base is coming along for the ride.
We are thankful for the continued support of our early investors. In addition to the initial funding that allowed us to bring our marketplace to so many consumers, they’ve provided expertise and insights that helped us spend their money wisely.
In the last 6 months, we have added 10 new partners to the Credible marketplace. As we continue to grow, being a publicly traded company allows us to demonstrate to potential partners that our business processes and procedures meet the high standards required by the Australian Securities and Investments Commission (ASIC), the ASX, and our investors..
We believe in building long-term shareholder value by making long-term investment decisions. Our success will be dependent on our ability to build market share quickly and sustainably, to continue to innovate for our customers and partners, and to stay nimble. We’ve demonstrated our ability to balance our growth ambitions with responsible capital management, and we will continue to do so.
I am incredibly proud of what the Credible team has achieved to date, and grateful for all of the people who have supported my vision.
Stephen Dash is the Founder and CEO of Credible. He founded Credible because of sheer disbelief at the burden student debt placed on young Americans (a problem that does not exist in his native Australia).