Fintech coaXion signs equipment finance pilot agreement with non-bank lender, opens new funding round

Fintech coaXion signs equipment finance pilot agreement with non-bank lender, opens new funding round

coaXion has opened a new $3.5m+ funding round to refine and launch its usage-based heavy equipment finance platform to lenders and leasing companies in the US. coaXion will white-label their system, initiating pilot programs in 2023 then scaling rapidly from late 2024.

coaXion plans to test and develop the white-label approach first in Australia. 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.

Yellowgate Group managing director Chris McRae said the pilot program will allow them to offer select customers this new technology to better manage their operations while also providing Yellowgate with insights that improve risk management in their portfolio.

The Australian fintech provides ground-breaking usage-based finance for heavy mobile equipment (HME) lenders, using its proprietary real-time asset degradation and valuation technology.

coaXion CEO Colin Armbruster said this has been well received in Australia, with the first $2m of assets financed ahead of plan, and the path to finance another $20m of assets using coaXion technology is in train.

“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,” Armbruster said.

Industry interest in the investment round has been so strong that coaXion has carved out segments in this funding raise to accommodate investment from stakeholders in the asset finance and civil construction industry.

One area of interest relates to the recent changes in lease accounting via IFRS 16 whereby traditional operating leases models that were treated as off-balance sheet now need to be brought back onto the balance sheet. The usage-based finance model may bring some relief here for those looking to minimize this impact, with the variable portion of the usage-based payments not included in the on-balance sheet calculation of lease liability, thereby remaining classified as operating expenses.

“We’ve delivered on all our validation milestones: our tech is live and working with different asset classes for excavators, dozers and graders and customers are choosing our flexible usage-based solution,” Mr Armbruster said.

“We’ve had strong demand and great engagement from brokers sourcing customers for us, and we’ve been market tested to prove customers value the insights they gain for their business,” he said.

Machine-learning tech behind coaXion

Initial customers will provide a $20 million sandbox to refine the technology solution to enable large-scale deployment to other lenders.

coaXion co-founder Chris Maycock said their 12-month focus will be on scale preparation and onboarding initial SaaS customers, refining the technology and processes to support scale deployment.

“The end-to-end technology solution is now in production and is delivering real-time degraded asset value and usage-based finance analytics,” Maycock said.

“Our proprietary technology comprises IoT hardware, cloud-based machine-learning and a customer-facing app.

“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.

Strong upside in buoyant HME market

The HME finance market is wide open for lenders to innovate, with coaXion’s platform allowing lenders to change the game in the HME finance market, Maycock said.

“The market is buoyant, with new heavy mobile equipment financing growing at above 20% in the last financial year,” he said.

“Under coaXion’s current forecast we will have 4000 assets under finance using our technology by the end of 2025.”

In 2021/22 Australia’s HME market was $AU8b assets financed, with the US market at $US113b+.

“While most fintechs are focused on the origination side of lending, coaXion’s platform means lenders can deliver a new type of finance to the marketplace in a way that reduces risk for all parties and adds real value to the entire asset finance ecosystem,” he said.

About coaXion

coaXion is an Australian fintech start-up offering usage-based finance for heavy earthmoving and construction equipment. Their innovative proprietary technology is underpinned by machine-learning, artificial intelligence, and the Internet of Things (IoT).

coaXion’s leadership team has 30 years of heavy machinery industry experience – this combined with the tech solution allows coaXion to provide a variable payment model based on how much and how a machine is used.

How coaXion’s technology works for heavy machinery business owners

coaXion’s IoT device can be installed on most operating equipment, providing coaXion with the data to feed the machine learning algorithms that drive the refined degradation model for the asset. This calculation of degraded value is measured in near real-time and is what allows coaXion to manage the variable-based finance offering.

This technology gives business owners valuable data they could not previously access, delivering better cashflow management and a clearer understanding of their equity in the equipment.