B2B transaction funder Butn bounds onto the ASX

B2B transaction funder Butn bounds onto the ASX

Butn co-founders and co-CEOs Rael Ross and Walter Rapoport.

"I've got one goal in mind, and that's to build a long-term, sustainable business," says Butn co-CEO and co-founder Rael Ross.

In just six years the co-founders of business-to-business (B2B) transaction funder Butn (ASX: BTN), Rael Ross and Walter Rapoport, have built a one-of-a-kind company that has financed more than more than $500 million transactions.

Today the Melbourne-based company, which was bootstrapped entirely by the co-founders until recently, can tick another milestone off the vision board: listing on the ASX.

The buy-now-pay-later (BNPL) style company, which gives SMEs (small and medium enterprises) access to capital almost instantly, debuted this morning with a market capitalisation of more than $80 million.

It follows a $20 million IPO - cash that Ross intends to deploy toward satisfying demand for the company's product which is built to solve the headache of cashflow problems for Australian SMEs.

It also marks the formalisation of Butn's strategic partnership with popular accounting software developer MYOB which now holds a 19.9 per cent interest in the listed entity following its contribution to the fintech's $12.5 million pre-IPO raise.

Debuting at a share price of $0.50 per share, early trades saw BTN rise by about 10 per cent, but at the time of writing securities have settled down to the 50 cent-mark again.

While exciting for all involved, today's listing was no ordinary ceremony for Butn - because of COVID-19 restrictions in Sydney the event was conducted virtually, and a hand-made bell was rung to announce BTN's commencement of trade.

"We did what we've always done: build it and they will come," says Ross, the winner of the 2020 Australian Young Entrepreneur Award in the Digital Disruptor category.

"We went out to Bunnings, we bought the wood, we bought a bell, and we did it."

It's this spirit of problem solving the underpins the Butn model.

Butn operates a platform by which, in just one minute, any business in Australia can be funded for any product they may need, all with the push of a button.

By integrating directly on the transaction platforms of clients, and with simple five-minute setup for customers, Butn can be deployed almost anywhere.

Unlike its BNPL contemporaries Zip Co (ASX: Z1P) and Afterpay (ASX: APT), Butn is looking to address a $300 billion market that Ross calls "underserviced": the B2B market.

"We know that the technology we've built is not replicated at this point in time," says Ross.

"We're not arrogant or cocky to think that no one's going to come for us, but we're comfortable in what we've built."

"Our proprietary Butn fintech solution, our proven track record and the successful IPO all position us strongly for future growth alongside our platform partners and shareholders."

MYOB partnership a "match made in heaven"

Of those shareholders and platform partners is leading Australian accounting software platform MYOB.

While the partnership itself was announced in April, today's listing crystalises the interconnectedness of the two companies: MYOB holds a nearly 20 per cent interest in Butn.

For Butn the partnership could be described as a coup - the newly-listed company's proprietary 'button' is built directly into MYOB's own software.

MYOB users can create an invoice within the accounting software and select the Butn option to have the invoice instantly funded.

"It's absolutely a game changer and a first-to-market opportunity," says Ross.

"We're strategically aligned with them and it's a very tight relationship.

"From our point of view it's a match made in heaven."

Becoming indispensable Butn's threats

While Butn has certainly carved its own niche in the funding world, it does have stiff competition from other BNPL players, not to mention the Big Four banks which traditionally service business loans.

Unlike BNPL giants Afterpay and Zip Co, Butn is not so much a household name - and why should it be just yet? It's not funding expensive shoes and gadgets like its peers.

Instead, Ross says the company's unique place in the market comes both through its integrations (like with MYOB) and the digital seamlessness inherent in the product.

"Imagine a scenario where you're transacting on a CRM [customer relationship management] system - you're a business and you need finance because you need to buy stock today," posits Ross.

"You're either going to call the bank which is a headache and will take three weeks or you're going to call the broker, but imagine right now I'm in lockdown and can't get him the information because it's in the office.

"Instead, I'm sitting on a CRM system, I've got a button I can click, do a 10-minute registration, then the next time I press the button I have instant access to finance for my business."

In addition, threats from the likes of Zip Co, which is currently pushing its own B2B BNPL service, are easily brushed aside.

"We've always been a B2B play, we've never touched B2C," says Ross.

"Say I'm a business - I'm going to get a B2B player, or I'm going to go to a B2C player that just so happens to offer a B2B product as well.

"That's really a point of differentiation - we stick to what we do, we stick to our knitting."

Butn's international horizons

Within Butn's prospectus the company details hazy plans for future international expansion.

While nothing is set in stone quite yet, Ross says going overseas would be extremely simple.

"From our point of view, once we plug into a platform partner, if they have the platform overseas it's the same technology that's deployed," says Ross.

"We can easily deploy internationally because our technology is agnostic.

"We've had approached already from overseas, and that's something we'll look at when we're ready. If an opportunity opens up, we'll grab that with both hands."

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