Tech start-up Cashnomix, founded in the Dubai Silicon Oasis, has been acquired by ApexPeak. The 100 percent acquisition will provide the alternative finance firm ApexPeak a footprint in the Middle East and will complement its presence in other emerging markets, such as Southeast Asia and Africa.
Cashnomix has been in the spotlight after receiving several accolades in the Dubai region in late 2014. Cashnomix recently completed a prototype credit scoring algorithm for invoices, as well as growing a deal book in the United Arab Emirates (UAE) worth USD1.2 million in small business receivable purchases.
Cashnomix is a cloud-based platform that enables small businesses in the UAE to ease short-term cash by receiving early payment on invoices.
'Everybody thinks the Middle East is flush with cash. While it is true to some degree, that cash does not readily reach small businesses. The process for small businesses to get short-term finance is difficult and, furthermore, the cost of borrowing from traditional lenders is very high, between 18-30% per annum', says Sujith Kurup, Founder and Chief Executive Officer of Cashnomix.
Sujith Kurup, former Operations Director of Aztec Money, decided to headquarter in Dubai, as the UAE is a fast growing market where short-term capital is impeded. Today, small enterprises in the UAE comprise 94 per cent of the total number of companies and 90 per cent of the total workforce.
'The Cashnomix risk model solves a dilemma that has troubled the UAE for years. Credit data on companies are sparse, so making an underwriting decision is labour-intensive. The algorithm we have built collects signals from a large variety of sources to determine a score and a confidence index for each invoice', says Sujith Kurup.
Several alternative finance companies have implemented automated credit scores; for instance, Lenddo, LendUp, Moven and Kabbage derive a score from social media, such as from Facebook.
'The credit scoring application has far reaching consequences for Southeast Asia and Africa. The result is faster underwriting. Today, we can provide SMEs with an answer in five days. Tomorrow, we will be able to approve transactions in a fraction of the time', says Gakim Solomons.
Sujith Kurup will assume the role of managing director of Middle East operations, and roll out ApexPeak's suite of working capital products in the Dubai market first, before exploring growth in other parts of the UAE
"Small-enterprises in Dubai will be able to upload an invoice onto the ApexPeak platform, and get a rapid decision supported by our scoring algorithm. We will bring alternative finance to a part of the world where finance for small-enterprise owners is desperately needed'.