IPO Watch: Butn, an $80m market cap BNPL fintech that targets small businesses

Fast-growing fintech company, Butn (ASX:BTN), will become the latest buy-now-pay-layer (BNPL) to list on the ASX.

But there’s a slight difference – the three-year old company provides financing services to the small business sector instead of directly to consumers.

In addition to the BNPL offering, its other services include advances on receivables such as invoices, commissions, as well providing business loans.

The company says its products challenge banks and traditional lending brokers, as it could provide small businesses with financing services within just minutes.

Financing under one ecosystem

The startup company was founded by 38-year-old serial entrepreneur Rael Ross, and 74-year-old former banker Walter Rapoport.

Ross won the 2020 Australian Young Entrepreneur Award in the digital disruption category.

Butn was spun out of a factoring company called the AFC, with the founders then spending two years building additional layers of technology on top of the AFC platform.

The company said it has processed over $600 million worth of funding, and in calendar year 2020 alone, has lent over $166 million to its clients.

Rather than lending directly to business operators however, Butn partners with platforms who add the “Butn button” on their platforms.

This includes partners such as load freight platform Ofload, wine marketplace Winescape, and fintech platform Lend.com.au.

Its technology aims to deliver a simple customer experience, with seamless back-end integration and a five minute registration process where customers can instantly access finance within their own existing ecosystem, without having to go to the Butn website.

Registered clients can then apply for advance payments on their receivables, or loans of up to $75k, the micro segment the company said is being under-served by big banks.

Its BNPL service, meanwhile, lets small businesses pay for goods or services instantly for up to $75k, where they can then choose repayment terms based on a certain schedule.

The Butn IPO

Butn has raised $20 million in the IPO round for 50c a share for a $80 million market cap valuation, as it prepares for a listing on June 28.

The company has already raised $12.5 million in a pre-IPO round earlier this year.

Business management platform MYOB is a strategic partner and shareholder in the business, after announcing a multi-year partnership recently.

The strategic partnership enables MYOB and Butn to deliver a fully integrated invoice funding solution, assisting small businesses in managing cashflow and driving growth.