A venture capital investment firm, industry partners and private investors have contributed to a $2.65 million over-subscribed pre-Series A funding round for fintech coaXion.
The Brisbane start-up has developed proprietary artificial intelligence (AI) and internet of things (IoT) technology to enable ‘pay as you use’ equipment financing. CoaXion’s is initially targeting providers of finance for heavy construction equipment. Financing based on coaXion’s technology will ensure borrowers who use equipment infrequently will retain low repayments but if their use increases so will their repayments. This will result in them paying off the equipment faster.
CoaXion was founded by chief executive Colin Armbruster and chief technology officer Chris Maycock in 2020. After 18 months of development, they are now launching their product.
Maycock said Australian lenders had been slow to introduce overseas technologies which benefited borrowers.
Buyers of trucks in Europe and the US were already able to obtain finance with repayments based on kilometres travelled or fuel used, he said.
He expected coaXion would shake up local equipment financing.
“CoaXion’s machine learning algorithms deliver variable pricing and variable terms based on how, and how much an asset is being utilised,” he said.
Armbruster said the technology would provide benefits to borrowers and lenders in the $9 billion a year Australian heavy construction equipment finance sector and could be extended to other areas of equipment financing.
“The customer benefits with improved cashflow, term flexibility and being able to redeploy capital,” he said. “The financier benefits from better asset risk management and being able to offer an innovative product.”
While many technology start-ups seek to disrupt industries by taking business from incumbents, the CoaXion founders are taking more of a ‘picks and shovels’ approach. They are currently seeking to partner with construction equipment dealers and asset finance brokers to introduce their technology.
Armbruster said coaXion had sought investment of $1.5 million for initial commercialisaton of its technology but had accepted a further $1.15 to accelerate product development in Australia with a view to later entering the $US215 billion US heavy construction equipment financing market.
The company plans to seek a Series A financing round towards the end of the current year.
Image: CoaXion co-founders Colin Armbruster and Chris Maycock with the sort of equipment their technology will help finance.