The burn rate at Xinja Bank is white hot, surpassed by the electric optimism of its board and management.
Xinja yesterday kicked off a "series D" funding round aiming to drum up A$50 million in capital. This is almost equal to its accumulated losses over three years.
In the year to June 2018 Xinja made a loss of $6.6 million followed by a loss of $21.8 million in the next year. Over the half year to December 2019 the loss was $17.6 million.
The primary use of funds in the current round "is for technology build, lending product launch and employee costs," the bank said in a presentation published yesterday on the Equitise crowdfunding platform.
"Approximately 50 per cent of the planned capital investment is for regulatory capital, based on FY20 projections."
In an overview, CEO Eric Wilson shared the surprising news the bank "may well choose to limit further deposits as we focus our attention on the asset side of the balance sheet.
"Only 47 days after we launched to the market [as a full-fledged bank] Xinja has the privilege of holding over A$300 million in deposits for 25,000 customers.
"We are fortunate to continue to receive more than five times the PR and media coverage of our nearest competitor.
"Our customers tell us they choose Xinja because we have no connections to existing banks, our products have no tricky conditions to them, and they love our brand being both for profit, but also for purpose.
"These growth numbers are far in excess of our and anyone else's expectations."
Wilson said Xinja "now needs to raise more capital to allow us to capitalise on these early successes and to continue to bring the other side of the balance sheet to market."
The bank plans to have unsecured lending products out in the middle of the year, followed by secured lending and home loans, and later " a number of other subscription based products also planned for delivery".
In the manner of every Neobank, the medium term projections are all blue sky.
By 2025, Xinja projects 900,000 customers.