Why we invested in Lendi
During November 2018 Lendi raised $40m from a large financial institution and existing shareholders.
Lendi is a disruptive business that has utilised technology to deliver an end-to-end online mortgage platform that compares 37 lenders and fundamentally improves the process of obtaining a home loan. Lendi operates its own brand, Lendi, and also powers the Domain Loan Finder product which gives it access to Domain’s 3m+ property audience.
Lendi has performed well over the last 12 months. This is a strong validation of Lendi’s technology-centric operating model and superior proposition relative to the traditional home loan broker service.
The business has spent 2018 successfully scaling up its operations and growing the Domain Loan Finder joint venture. The business has now written over $7.3bn in home loans and grown to a team of over 350 across offices in Sydney, Melbourne and Brisbane.
The business will utilise the newly raised funds to continue scaling up its operations, investing in customer acquisition and delivering its product roadmap.
Bailador’s Investment Philosophy: Lendi
Our investment in Lendi gives a good insight into Bailador’s investment philosophy. Outlined below are some of the hallmarks that attracted us to Lendi and what we look for in a potential portfolio company.
Strong Founder-led management team: The Lendi founding team are extremely well credentialed. The team started Lendi having had experience in building businesses and efficiently acquiring customers at scale at Living Social and the TSA Group. The original founding team of David Hyman, Mark Kalajzich, Sebastian Watkins and Martin Lam all remain intimately involved in the leadership of Lendi across key functional areas.
Revenue scale, product market fit and clear product roadmap: When Bailador made its original investment in 2016 the team had established a home loan lead generation business, ACF, and a white label home loan offering, Click Loans. These businesses were already generating more than $5m in revenue and growing rapidly. As an investor we could see proven revenue scale, product/market fit and supported the founder’s product roadmap for the Lendi platform.
Tech first platform with a superior customer experience: Lendi have developed a very simple, intuitive online platform that allows customers to easily compare 37 lenders, select and then apply for a home loan online. The company has taken a technology first approach in the development of its platform which has enabled it to deliver a market leading consumer proposition.
Large market opportunity with favourable competitive dynamics: The Australian home loan market is a huge market with over $1.7 trillion in home loans outstanding as at September 2018. Despite Lendi’s strong growth it still has less than 1% market share and ample room to grow. The home loan market has historically been slow to innovate resulting in poor consumer experiences and a clear market gap. This presented an opportunity for Lendi to launch its online platform and fill this market gap.
Highly scalable business with attractive unit economics: Lendi’s founders have a strong background in efficient customer acquisition and they have leveraged this experience to develop a highly efficient customer acquisition model at Lendi. The efficient customer acquisition model, combined with the efficiency delivered by the Lendi tech platform, allows the business to generate increasingly compelling unit economics as it scales.
Since Bailador first invested in Lendi we’ve been impressed by the team’s ability to execute and scale the business. This recent funding round will allow the business to continue its impressive growth and capitalise on the opportunities that are likely to emerge in the wake of the Banking Royal Commission.
A version of this article first appeared in the BTI Investor Update for November 2018.
