Start-up breaking new ground in US
A FINTECH start-up has opened a new $3.5m-plus funding round to refine and launch its usage-based heavy equipment finance platform to lenders and leasing companies in the US for a slice of the largest market in the world.
CoaXion was launched in Brisbane in late 2018 and its proprietary AI driven technology is focused on financing businesses needing to acquire earth moving and construction equipment, or yellow goods.
It will initiate pilot programs in 2023 and scale up rapidly from late 2024. It has executed a pilot agreement with specialist non-bank lender Yellowgate Equipment Finance and is in talks with other non-bank and bank lenders to join the pilot.
The fintech provides groundbreaking usage-based finance for heavy mobile equipment (HME) lenders, using its proprietary real-time asset degradation and valuation technology. The Australian HME market has about $8bn worth of assets financed, while the US market is worth more than $US113bn, or $166bn.
CoaXion chief executive Colin Armbruster said the technology has been well received with the first $2m of assets financed ahead of plan, and the path to finance another $20m of assets using CoaXion technology on the way.
“CoaXion’s traction with our tech-enabled usage-based lease and chattel mortgage solutions show that lenders can achieve premium pricing by providing a better, flexible outcome for end-user customers,” he said.
CoaXion’s tech is underpinned by machine-learning, artificial intelligence and the Internet of Things (IoT). It is an alternative to traditional fixed fee loans and rental or hire purchase models.
The IoT device can be installed on most operating equipment, providing the start-up with the data to feed the machine learning algorithms that drive the refined degradation model for the asset. The degradation is measured in near real time and is what allows CoaXion to manage the variable-based finance offering.
Going forward, CoaXion will be pivoting from lending.
Mr Armbruster said 2023 would be all about growing revenue in Australia from using their proprietary technology for SaaS (software as a service). To that end, they are in talks with banks, nonbanks, insurers, dealers, rental agencies and other sectors about providing them with their proprietary technology. CoaXion co-founder Chris Maycock said their 12-month focus would be on scale preparation and on-boarding initial SaaS customers and refining the technology and processes to support scale deployment.
“Our proprietary technology comprises IoT hardware, cloud-based machine-learning and a customer-facing app,” he said.
“Beyond lending, there’s the potential for CoaXion’s tech to further disrupt the market and provide additional revenue streams with real-time fleet equity/valuations, usage-based rental pricing and an equity redraw.”