The marquee announcement gives Douugh access to the funding flexibility it needs to build scale in the fast-growing global fintech market.

Leading ASX fintech Douugh (ASX:DOU) has been executing on its global scale-up strategy, as it builds out a banking ‘super app’ for consumers in the US market and prepares to launch in Australia.

And this morning, the company announced a major new strategic funding initiative with New York investment fund Long State.

The landmark deal will provide Douugh with a $20m equity funding facility that will be allocated to scaling its US operations and customer base, whilst also investing in ongoing R&D.

In addition, the agreement gives the company capital backing to pursue its international expansion, beginning in Australia in partnership with international banking-as-a-service (BaaS) provider Railsbank, as well as exploring and capitalising on emerging enterprise B2B licensing opportunities.

For Douugh Founder & CEO Andy Taylor, a key feature of the deal is that it gives the company “tremendous funding flexibility” to achieve those growth objectives.

It also provides Douugh with the capital backing needed “to further develop our banking super app as we transition into Crypto and DeFi services, and scale our business operation to achieve economies of scale”, he said. “Further, it grants us the opportunity to capitalise on emerging B2B enterprise licensing opportunities, allowing potential partners to white-label our technology for their own customers’ use.”

“We remain focused on optimising our conversion funnel and increasing customer activation through targeted growth initiatives and the development of new features. Our goal is to unlock the platform revenue opportunity prior to dialing up paid marketing channels, as we work to accelerate our path to unit profitability.”

“The pending launch of Crypto and Single Stock trading services are crucial to the banking super app positioning in the eyes of consumers to increase the value of our subscription, drive up interchange revenue and increase the number of customers using Douugh as their main financial institution.”


Long State Investments

Long State Investments is a US-headquartered firm with specialises in the provision of funding for growth-orientated companies.

The group’s global portfolio includes investments in Australia, Canada, Chile, the European Economic Area (EEA) countries, Fiji, Singapore, South Africa, the UK and the US.

In that context, the company’s material investment in Douugh is validation of the company’s business model and broader growth strategy.

“With it’s strong banking platform supported by a broad base of global partnerships, plus its pending launch of Crypto investing and high-yield DeFi saving features, we believe Douugh now has the necessary product foundation to unlock it’s revenue opportunity and gain significant market share in the US, AU and beyond.” Long State managing director Philip Ho said.

Ho also described Douugh’s platform as a “purpose-led approach to disrupting retail banking and investing.”

Armed with access to major capital backing from a leading US investor, Douugh is now in prime position to accelerate the growth strategy for its banking ‘super app’ that gives customers a one-stop shop to spend, budget, save and invest.

Taylor explained the strategy in more depth as part of a recent Stockhead interview.


Deal structure

In terms of its application, Douugh will use the Long State funding facility “as a part of its comprehensive funding strategy to support the scaling of its US business and international expansion, and intends to utilise it as and when required”.

The deal gives Douugh to option to nominate Long State to subscribe for newly-issued ordinary DOU shares at any time over a 36-month period, up to the value of $20m.

The timing, quantum and minimum issue price of the shares issued to Long State will be managed entirely at Douugh’s discretion.

“Access to this fully flexible funding facility provides Douugh with the ability to extract the benefit of economies of scale in order to maximise gross margin and profitability, whilst minimise shareholder dilution.”

It marks the latest step forward in Douugh’s transition to a scalable model in a major addressable market in line with the broader trends in fintech.

This article was developed in collaboration with Douugh, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.