4 min read | 26 Nov 2018

Athena Home Loans, a fintech start-up founded by two ex-National Australia Bank bankers has not even launched its assault on the local property lending market, but that hasn’t stopped it attracting the support of some of the most respected investors in the local VC and superannuation sector, closing a $25 million Series B funding round as it prepares to take on the big banks.

Led by Square Peg Capital, the latest funding round also saw Australia’s biggest venture capital backer Hostplus take a stake, along with Airtree Ventures.

Co-founded by former NAB bankers Nathan Walsh and Michael Starkey, the start-up is taking on the competitive home loans market by creating a platform that lets borrowers get financing from the superannuation sector and non-bank lenders.

Despite only being used by 50 family and friends ahead of an official launch in the first quarter of 2019, its total capital raised has now ticked over $45 million, $40 million of which was banked in the past six months.

Mr Walsh told The Australian Financial Review the start-up still had most of the $15 million it raised in May in the bank, but the funds would be used for continued product development, as well as sales and marketing once it goes live next year.Home loan potential

“There’s lot of exciting fintechs out there, but what we’re doing with home loans has the potential to dwarf all the others in terms of savings,” he said.

“Australians are over paying by $10 billion each year in terms of excess interest costs and only 5 per cent are refinancing, excluding those purchasing, and 80 per cent could get a better deal.

“With Athena there will be no reason to be stuck at a high interest rate.”

In August, ASX-listed HomeLoans Limited announced it would provide an undisclosed amount of debt funding to Athena to support its lending.

But Mr Walsh would not reveal if Hostplus’ move to buy into the business also reflected a commitment to provide funds for home loans.

The start-up claims it is able to help borrowers save more than $100,000 over the life of a loan, thanks to the fact the online platform connects borrowers directly to the superannuation funds, cutting out the banks, so there’s no need to fund branches or pay broker commissions.

During the trial, Mr Walsh said a single mum taking part in the trial was on track to pay off her loan 19 months earlier and save $130,000.

In its first year post-launch, the company has a goal of lending $1 billion in its first year – a small sum compared to the overall $1.7 trillion mortgage market.

“People are busy and it’s easy to ignore the river of money flowing out of the wallet every week, but it’s easy to switch,” Mr Walsh said.

“We have a clear goal and we want to be Australia’s most-loved home lender. Household debt in Australia is higher than it’s ever been and this lets people get a better rate.”

Savings for home buyers

Hostplus chief investment officer Sam Sicilia, who has emerged as one of the most respected voices in tech investment circles thanks to the super fund’s $1 billion-plus investment in the sector, said disruptive tech such as Athena would deliver big savings for home buyers.

“We are a firm believer in the potential for tech-led innovation to deliver future prosperity for Australians and strong risk-adjusted returns to members,” he said.

Square Peg Capital also bought into Athena’s $15 million Series A raise, alongside Macquarie Bank, and Paul Bassat sits on the start-up’s board.

“Having worked with Nathan, Michael and the team over the last year I have enormous admiration for the speed at which they have navigated complex financial systems to develop a robust and customer-centric mortgage service,” he said.

Originally published in The Australian Financial Review on November 26 2018 by Yolanda Redrup.  (Please note that the AFR is behind a paywall).