Why the Douugh (ASX:DOU) share price is pushing higher

Here's why the Douugh Ltd (ASX:DOU) share price is pushing higher on Tuesday morning…

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The Douugh Ltd (ASX: DOU) share price is edging higher on Tuesday following the release of an announcement.

At the time of writing, the financial wellness app provider's shares are up 1% to 23.8 cents.

What did Douugh announce?

This morning Douugh revealed that it has successfully completed a $12 million placement to institutional and sophisticated investors. This includes financial services company Humm Group Ltd (ASX: HUM), which was a cornerstone investor with a $2.5 million investment.

These funds were raised a 22 cents per share, which represented a ~24% discount to the Douugh share price at the time of the placement announcement.

Following this placement, Dough now has a cash balance of $16 million. It feels this puts it in a position to significantly accelerate product development measures and customer acquisition initiatives in the United States.

Speaking of which, management also provided an update on its recent performance. No customer numbers have been provided by the company, but management advised that it has been experiencing incremental growth week on week in line with its expectations.

What is Douugh trying to achieve?

Douugh is seeking to provide consumers with a platform that helps them better manage their money and become financially healthier through a smart bank offering.

However, its app doesn't have any game-changing features at present and most can be found across other banking, payment, and finance apps.

Though, it is attempting to add to them in the future. One such offering will be a buy now pay later (BNPL) option in partnership with Humm.

This feature will allow customers to borrow up to $1,000 and repay it in six automatic weekly instalments. This is expected to be launched into the increasingly crowded US BNPL market within the next six months.

Douugh will be responsible for technology, credit decisions, and customer service, whereas Humm will provide warehouse funding, the BNPL technology, and be responsible for credit losses and collections.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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