E049: When Regulation Meets Runway: How Policy Shapes Startup Survival with James Robson

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Language: en
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[Music]
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If you're a business owner or senior
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manager, you probably had more than
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enough about all the wonderful
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opportunities awaiting you in the era of
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digitalization. Whether it is big data,
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cloud, data science, or whatever
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buzzword is currently trendy. If you
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would like to hear someone dissecting
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these claims and showing you what it
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actually takes to improve business
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processes, you're in the right place.
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This is between data and risk where we
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discuss real life examples of what works
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and what doesn't in the world of
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business
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operations. Hello, I'm your friendly
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neighborhood data guy Dr. Marian Shivak
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and with me is my co-host Arur Guy,
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cognition shared solutions chief risk
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and strategy officer. Welcome to between
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data and risk. Today we'll take a look
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at different aspects of business funding
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and we have with us James Robson of
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Fandon who agreed to share some of his
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experiences with us. Hello James. Hi
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Marian Hayato. Great to be on the show.
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Thanks so much for having me. Thank you
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very much. Great to great to have you
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with us. You are, I think, a well-known
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figure in uh the UK uh kind of startup
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funding business policy world. You've uh
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spoken to MPs. You've had your articles
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published in the Times. You've engaged
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with directly with the government on SMP
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policy. So, let's start with with with
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something uh with your your kind of
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input into the SMS policy. what was the
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the kind of the most surprising insight
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or or most surprising reaction you had
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when when you've been dealing with these
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conversations? Yeah, thanks Arthur. I
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suppose in the in the time that we've
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been getting involved I guess in the
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policy side of things formeme because
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obviously for the UK market is
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absolutely massive. If you think about
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um the fact thatmemes generate around
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52% of UK private sector turnover, if
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the government can find a way to move
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that dial by just one percentage point,
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you're unlocking roughly 28 billion
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pounds. So there's a huge huge huge
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amount of um of upside for the
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government if they properly engage
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withme. I think that uh you know what
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we've seen I suppose speaking in terms
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of some of the historic efforts for the
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government to get engaged with SME
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what's really surprised me particularly
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is everybody particularly in the
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treasury as well people are people are
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um in agreement generally that the bank
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referral scheme has not done what it
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really set out to do. 5% of firms um
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being rejected by their bank are
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actually getting all the way through the
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scheme and we're now gosh we must be
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about eight years in when you're looking
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at I guess the Treasury findings which
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we had last year and I had a
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conversation with um uh the business
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secretary Mr. Reynolds regarding this
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issue we're just not really seeing the
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implementation of all of the amazing
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technology that we have here in the UK
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for open finance being adapted into
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those systems. So if we look now at open
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banking, the UK is one of the leading
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jurisdictions in the in the world in
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terms of open banking access and we see
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that through Fundion. So through Fund
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onion, a lot of the lenders that we're
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working with, they're actively using
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technologydriven processes, open banking
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to um to to speed up and uh supercharge
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their approvals process. And I think one
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thing that is I suppose what's
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surprising to me is the malaise the kind
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of malays of the government. They know
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that there's a really really great
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opportunity here just to crack open and
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work withmemes in terms of finding
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funding. People talk about it. They love
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to kind of come to the table and have a
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conversation about theme finance, but
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actually taking action, there's not
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really much going on. But actually, I
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think the point I'm getting to is that
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I'm surprised at the the kind of the
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clear position about the market. People
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know there's not much really happening
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in it, but they don't seem to take take
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that action. for a lot of the guys out
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there, you know, SMB access to finance
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is still kind of an oxymoron and West
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Minister really needs to know that we
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need like a reboot. We don't need just a
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tweak on it. Why do you think that is?
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Is it is it because they don't know what
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could be done or don't they don't
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believe you know we don't see the the
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need really or it's like lack of the
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wheel or lack of the knowledge? Uh it's
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a good question. I think that there is
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there is a foundational issue in my
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opinion about the termme. So, SME, you
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know, small and mediumsiz enterprise or
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SMB for any of your American American
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audience, you know, a term coined in
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the, I believe it was the 60s or the 70s
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by the government to try and refer to
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this amorphous
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uh blob of the economy effectively. But,
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you know, I can give you a couple of
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examples. We get very different kinds of
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companies. People come to us and they
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say, who are you really working with a
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fund on you and what are they what's the
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kind of profile? What is an treat like
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there's all there all one blanket? I
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don't agree with that characterization.
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You need to look at businesses
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uh potentially in a different life cycle
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or a different stage or set up for a
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different purpose. Now to give a kind of
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an example, you might have a you know a
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CIC, a community interest company. That
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business has different stakeholder
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interests versus your standard private
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limited company, but even that's just to
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get into the legal the legal formalities
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of it. I can give you an example
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recently of a um familyowned business.
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They are a roofing constructor. They're
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based just outside of Manchester. on
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their financials. Interestingly, you're
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looking at a six million pound turnover
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with about a 400k bottom line. They've
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been in business for about 25 years.
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Husband, wife, two sons operate the
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business. Now, that's an equally at the
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same time, I was on the phone about 3
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weeks ago with um two younger guys based
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out in Chumsford, Essex, and they've
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been selling um I think it's like, you
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know, trainers or retail items on a
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Shopify store. They've been doing that
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now for three and a half years on their
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P&L. six million pound turnover, give or
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take 400k profit. But when you look at
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the intentions and the directions behind
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these two companies, that construction
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family-owned roofing company I mentioned
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outside Manchester, their goals, their
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intentions are keep the business. In the
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current state, it is potentially a
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little bit of growth, but they're really
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when it comes to looking at cash um cash
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flow support. They're saying we're being
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held back. We need some kind of invoice
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finance solution. They're being more I
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guess more sorry conservative. Well,
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it's more like their their desire for
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growth is not the same because they have
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their established business. They have
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their place in the market. They know
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what they're doing. But when I talk
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about the two guys that are out out in
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Essics with the Shopify store, I said to
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the the CEO, I said, "What are you
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looking to do?" And he said, "I want to
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get this business to 10 million pounds
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in the next 18 months." Now, that goes,
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I guess, to my point about the reason
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why the government struggled to do this,
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because I think there's a foundational
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misunderstanding about what anme is, and
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there's no such thing per se. Uh and I
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actually mentioned this to the minister
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Justin matters during our conversation
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about the employment rights bill with
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regards to the fact that you need to be
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proportionate with your policy about
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employment legislation and not causing a
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chilling effect for smaller businesses.
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But I think that at the end of the day
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the government they're very much stuck
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to this idea of theme as a whole and
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they want to treat this myriad of
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businesses within the economy with a
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blunt tool. And that's where obviously
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for a shameless plug platforms like
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Fundion come in because we try and
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create more tailored relevant outcomes
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for our for our clients using using data
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but also using market information and
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understanding what they're doing. And I
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don't think that the government really
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has the the the wherewithal or the drive
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to make those subtle distinctions to
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then um to then create effective policy.
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Just to mention, please be shameless. We
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invited you because we think that you
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you you are doing absolutely amazing and
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necessary work and please please
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whenever you feel like what we discuss
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actually is reflected in what you are
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doing be shameless with us. I worked
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with European funding for some time just
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one one one sentence after I know you
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have a question I just want to drop
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because it fits here. I'm sorry bear
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with me I thought this through. I worked
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with European funds and we were writing
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some support schemes for R&D in
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uhmemes andmemes go up to 200 million.
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So we worked withmemes
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uh with you know 150 180 million
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turnover they were barely you know uh in
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the in the bracket. So what you say is I
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know it from experience that the idea of
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single organism as you know as a
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taxonomy is a misunderstanding. Well,
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it's out of date and it needs it needs
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dramatic um upgrading especially I would
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also comment in in you know I personally
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believe there's a large macro change
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happening across the world now largely
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driven by technology. the the firepower
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of some young businesses now that they
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have armed only with a laptop is now the
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equivalent of what you know large large
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mega corporations might have had back in
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the 50s in terms of global supply chain,
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marketing ability, communications,
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technology and data. So I do feel like
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that that term is going to become more
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and more outdated as the global economy
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progresses. And we do see you know we
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now see businesses going from zero to
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billion pound valuations in a very very
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short period of time in a couple of
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years nowadays which which 50 years ago
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would have been absolutely unthinkable.
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Um I think I think it's I think it's I
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think it's a real problem and I think
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that um the government need to address
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that in their line of policym and if
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they don't they're going to run into
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some some real issues. You mentioned the
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valuations now which opens another big
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kind of worms that obviously the the
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valuations that they achieve and that
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may not actually reflect the cash flow
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that's underneath in in in any way just
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hopes and dreams but uh before we we
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touch on that I wanted to refer to your
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your earlier statement where you
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mentioned technology and you know I've
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worked with a couple of banks I worked
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in a number of banks that uh had various
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credit approval models and there's a lot
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of discussion about using AI for credit
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approval models. My impression there is
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that very often it's not to enhance the
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access to credit but actually to say no
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faster. So uh you know we'll we'll be
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able to decline your your loan not in 3
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weeks but we will be able to tell you no
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in 5 minutes. Obviously for for formemes
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this is as you mentioned this is this is
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not really the way to go. They want to
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they they want to to get access to the
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funding based on their specific
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circumstances. Do you see any drive to
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actually on the bank side because we've
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discussed that on policy side it may be
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a bit stagnant but on on the bank side a
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bit more enhanced understanding and do
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you see any difference between
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approaches from different banks because
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there are obviously now very different
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tiers of banks there's the old guard you
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know the likes of and you know that
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probably will always be in the in the
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medieval times and then there's HSBC
00:10:46.800 --> 00:10:48.389
which tries to be a bit more modern then
00:10:48.399 --> 00:10:50.630
you've got the the the revolutes and
00:10:50.640 --> 00:10:53.030
those banks that try to be very very
00:10:53.040 --> 00:10:55.910
forward. So do you see any any of those
00:10:55.920 --> 00:10:57.509
differentiate the approach? Yeah, I
00:10:57.519 --> 00:10:59.069
think it's
00:10:59.079 --> 00:11:01.670
um I think it's less of an approach and
00:11:01.680 --> 00:11:03.590
more of a structural issue because of a
00:11:03.600 --> 00:11:04.870
lot of the regulations surrounding the
00:11:04.880 --> 00:11:06.230
bank provision of banking services
00:11:06.240 --> 00:11:08.790
today. For example, the capital adequacy
00:11:08.800 --> 00:11:11.829
requirements, they are pricing the
00:11:11.839 --> 00:11:13.750
margin of a lot of these larger banks
00:11:13.760 --> 00:11:15.829
out ofme market in terms of providing
00:11:15.839 --> 00:11:17.750
their service. particularly when you mix
00:11:17.760 --> 00:11:20.630
that with larger institutions which
00:11:20.640 --> 00:11:22.949
maybe are not as agile in their thinking
00:11:22.959 --> 00:11:24.870
about adopting new technologies and
00:11:24.880 --> 00:11:26.829
maybe have a slightly lower risk
00:11:26.839 --> 00:11:30.069
appetite. Um I mean in in from our side
00:11:30.079 --> 00:11:32.150
on the fund onion point we typically
00:11:32.160 --> 00:11:35.030
don't tend to work with the larger banks
00:11:35.040 --> 00:11:37.430
in securing credit facilities. Our kind
00:11:37.440 --> 00:11:39.910
of space at the moment although we're
00:11:39.920 --> 00:11:41.350
looking potentially to increase this but
00:11:41.360 --> 00:11:42.870
our current space is on the million
00:11:42.880 --> 00:11:45.350
pound or or less market in terms of
00:11:45.360 --> 00:11:46.870
funding. We would like to go up to that
00:11:46.880 --> 00:11:48.230
10 million pound or less which I think
00:11:48.240 --> 00:11:50.389
is a really interesting space just
00:11:50.399 --> 00:11:52.030
underneath that lower mid-market
00:11:52.040 --> 00:11:54.949
indicator. But what we're seeing now is
00:11:54.959 --> 00:11:56.630
that there is still a huge amount of
00:11:56.640 --> 00:11:59.030
demand from investors including
00:11:59.040 --> 00:12:01.509
institutions such as banks or pension
00:12:01.519 --> 00:12:03.190
funds or hedge fund whatever it might be
00:12:03.200 --> 00:12:05.110
for private credit. And what they are
00:12:05.120 --> 00:12:07.269
doing effectively is they're moving
00:12:07.279 --> 00:12:09.190
their prior underwriting and their
00:12:09.200 --> 00:12:11.990
deployment capability away from say HSBC
00:12:12.000 --> 00:12:13.509
and they're placing it into the likes of
00:12:13.519 --> 00:12:15.590
a fintech or an alternative lender. So
00:12:15.600 --> 00:12:17.269
now to take an example of that you might
00:12:17.279 --> 00:12:20.389
look at um Uland who are owned by a
00:12:20.399 --> 00:12:22.550
banking circle. They have a a credit
00:12:22.560 --> 00:12:24.470
line and this public publicly known
00:12:24.480 --> 00:12:25.910
publicly public publicly known knowledge
00:12:25.920 --> 00:12:27.750
they have credit line with JP Morgan but
00:12:27.760 --> 00:12:29.350
a lot of the people that we're working
00:12:29.360 --> 00:12:30.870
through at Fund onions their credit
00:12:30.880 --> 00:12:33.190
backers are JP Morgan they are Barclays
00:12:33.200 --> 00:12:35.829
they are Goldman they are um hedge funds
00:12:35.839 --> 00:12:38.150
based in the US or large asset managers
00:12:38.160 --> 00:12:40.310
so there's a lot of appetite I think I
00:12:40.320 --> 00:12:42.790
believe this will continue to grow for
00:12:42.800 --> 00:12:45.190
private credit particularly credit and
00:12:45.200 --> 00:12:46.949
we're now seeing as well in the market a
00:12:46.959 --> 00:12:48.870
lot of the lenders coming in that were
00:12:48.880 --> 00:12:50.870
four or five years ago really looking at
00:12:50.880 --> 00:12:54.150
doing average ticket sizes of 15k 50k
00:12:54.160 --> 00:12:55.910
they're now looking to put out money
00:12:55.920 --> 00:12:57.430
which previously would have been the
00:12:57.440 --> 00:12:59.590
domain of the banks million pound loan 2
00:12:59.600 --> 00:13:01.829
million pound loan and I think from fund
00:13:01.839 --> 00:13:03.350
onion from a strategic point of view we
00:13:03.360 --> 00:13:05.430
want to carry on and grow with that
00:13:05.440 --> 00:13:08.310
market as a as a as a as as a funding
00:13:08.320 --> 00:13:11.350
platform for for ourmemes but I kind of
00:13:11.360 --> 00:13:12.870
liken it very much to kind of a SAS
00:13:12.880 --> 00:13:15.350
model you know the the banks the larger
00:13:15.360 --> 00:13:17.110
banks they want to continue to serve
00:13:17.120 --> 00:13:18.949
enterprise clients and they want to do
00:13:18.959 --> 00:13:21.670
it on a individualistic basis and that
00:13:21.680 --> 00:13:22.870
goes in line with the regulatory
00:13:22.880 --> 00:13:24.470
requirements around them. And then in
00:13:24.480 --> 00:13:26.069
terms of the alternative finance for the
00:13:26.079 --> 00:13:28.629
non-banking market, they have built very
00:13:28.639 --> 00:13:31.389
very effective technologydriven
00:13:31.399 --> 00:13:34.069
underwriting and deployment machines so
00:13:34.079 --> 00:13:36.629
that they can plug you know a 500
00:13:36.639 --> 00:13:38.550
million or a billion or a2 billion pound
00:13:38.560 --> 00:13:41.509
credit line into that and then operate
00:13:41.519 --> 00:13:43.110
relatively quickly. I mean that's that's
00:13:43.120 --> 00:13:45.190
a lot of the the success that I've seen
00:13:45.200 --> 00:13:47.670
in the merchant cash advance market. I
00:13:47.680 --> 00:13:49.269
mean it was then it was then trendily
00:13:49.279 --> 00:13:51.350
rebranded as revenue based finance but
00:13:51.360 --> 00:13:52.470
people have come back to calling it
00:13:52.480 --> 00:13:54.310
merchant cash cash advances again where
00:13:54.320 --> 00:13:55.590
they're funding through the through the
00:13:55.600 --> 00:13:57.430
payment systems because now you can have
00:13:57.440 --> 00:13:58.870
embedded finance you can get a lot of
00:13:58.880 --> 00:14:00.710
money out the door really quickly so I
00:14:00.720 --> 00:14:02.710
think that in terms of the approach
00:14:02.720 --> 00:14:05.269
perhaps the approach is more finding a
00:14:05.279 --> 00:14:07.509
way to get more wholesale money out the
00:14:07.519 --> 00:14:09.910
door maybe lower quantum but to do the
00:14:09.920 --> 00:14:12.069
approvals quickly and I think that the
00:14:12.079 --> 00:14:14.470
banks right now as in the historical
00:14:14.480 --> 00:14:16.230
banks the old guard as you mentioned it
00:14:16.240 --> 00:14:17.590
they're not quite the right people to be
00:14:17.600 --> 00:14:18.949
doing that because they don't
00:14:18.959 --> 00:14:22.030
necessarily have the right mentality.
00:14:22.040 --> 00:14:24.949
Um, and equally on top of that, they are
00:14:24.959 --> 00:14:26.550
able to partner with the right kind of
00:14:26.560 --> 00:14:28.870
techn techdriven, younger, more agile
00:14:28.880 --> 00:14:30.870
institutions to to source those
00:14:30.880 --> 00:14:32.790
customers and to deploy the the capital
00:14:32.800 --> 00:14:34.550
that they want to. And would you would
00:14:34.560 --> 00:14:36.629
you see it going all the way down to
00:14:36.639 --> 00:14:38.870
peer-to-peer financing? you know, people
00:14:38.880 --> 00:14:42.230
chipping in their uh NK into a into a
00:14:42.240 --> 00:14:46.470
pot and then financing 100K loan for a
00:14:46.480 --> 00:14:50.389
promising uh promising theme in in in
00:14:50.399 --> 00:14:52.470
the vast majority of cases. No, I think
00:14:52.480 --> 00:14:55.590
that we've seen peer-to-peer financing
00:14:55.600 --> 00:14:58.470
obviously in the heyday when was it 12
00:14:58.480 --> 00:15:00.310
15 years ago or so? I think Funding
00:15:00.320 --> 00:15:01.910
Circle in the UK came out with a lot of
00:15:01.920 --> 00:15:03.269
the peer-to-peer financing which
00:15:03.279 --> 00:15:04.710
obviously caused a bit of a regulatory
00:15:04.720 --> 00:15:07.670
stir. Even regulation aside, my personal
00:15:07.680 --> 00:15:09.269
opinion with pit pit financing is
00:15:09.279 --> 00:15:10.790
commercially it's very difficult to make
00:15:10.800 --> 00:15:13.590
it work because you would then end up as
00:15:13.600 --> 00:15:15.430
the funding platform in the middle,
00:15:15.440 --> 00:15:17.030
you're fighting two fights, right?
00:15:17.040 --> 00:15:18.389
You're trying to get customers in the
00:15:18.399 --> 00:15:19.990
door. You're trying to do a credit
00:15:20.000 --> 00:15:22.550
approval on them, KYC them, get the
00:15:22.560 --> 00:15:24.150
transaction closed, pay them out,
00:15:24.160 --> 00:15:26.230
monitor the loan book. On the other
00:15:26.240 --> 00:15:28.230
side, you're also constantly searching
00:15:28.240 --> 00:15:31.509
for um investors to come in and and add
00:15:31.519 --> 00:15:33.910
liquidity and you just do not have the
00:15:33.920 --> 00:15:35.430
business stability that you need with
00:15:35.440 --> 00:15:38.230
that credit line to be able to to
00:15:38.240 --> 00:15:40.069
adequately and put money out on a whole
00:15:40.079 --> 00:15:41.350
scale basis. So, you know, we've seen
00:15:41.360 --> 00:15:44.310
quite a lot of the platforms. I don't
00:15:44.320 --> 00:15:46.550
believe I know of any platform in the UK
00:15:46.560 --> 00:15:48.910
right now that's that's that's um
00:15:48.920 --> 00:15:51.189
distributing money on a large scale
00:15:51.199 --> 00:15:52.470
basis, particularly through debt
00:15:52.480 --> 00:15:54.389
finance, doing it through through crowd
00:15:54.399 --> 00:15:56.069
peer-to-peer crowdfunding. And even
00:15:56.079 --> 00:15:57.350
that, I think it's kind of lost a little
00:15:57.360 --> 00:15:59.030
bit of it shine in the equity markets as
00:15:59.040 --> 00:16:01.269
well. So I do continue to believe that
00:16:01.279 --> 00:16:04.150
private private credit like multis like
00:16:04.160 --> 00:16:06.629
longerterm facilities 24 month 36 month
00:16:06.639 --> 00:16:08.389
large scale facilities will be the main
00:16:08.399 --> 00:16:10.150
source of capital for these lending
00:16:10.160 --> 00:16:12.710
institutions. People usually want to
00:16:12.720 --> 00:16:15.269
listen about themselves and most of our
00:16:15.279 --> 00:16:17.990
audience is managers rather than people
00:16:18.000 --> 00:16:20.550
who give credits. So I would like to ask
00:16:20.560 --> 00:16:23.030
your opinion about spending habits. Did
00:16:23.040 --> 00:16:25.910
you notice any changes lately? The world
00:16:25.920 --> 00:16:28.230
is changing like crazy. And I wonder if
00:16:28.240 --> 00:16:31.030
you noticed people seeking money for
00:16:31.040 --> 00:16:33.790
different things now. I don't know, you
00:16:33.800 --> 00:16:36.550
mentioned this guy with laptop being
00:16:36.560 --> 00:16:38.629
able to do more than 10 guys with Tommy
00:16:38.639 --> 00:16:41.430
guns or old old school management.
00:16:41.440 --> 00:16:43.670
What's your take on generally on
00:16:43.680 --> 00:16:45.910
spending and maybe technology spending
00:16:45.920 --> 00:16:48.230
in particular? Yeah, sure thing. I guess
00:16:48.240 --> 00:16:51.509
that from again from our side are we are
00:16:51.519 --> 00:16:53.670
a large volume player in the market. So
00:16:53.680 --> 00:16:56.269
we see a significant number of credit
00:16:56.279 --> 00:16:59.110
applications every month both from you
00:16:59.120 --> 00:17:00.629
know new clients making inquiries with
00:17:00.639 --> 00:17:02.790
us as well as as well as people we've
00:17:02.800 --> 00:17:05.270
worked with previously. I think it's
00:17:05.280 --> 00:17:07.189
quite interesting because I suppose my
00:17:07.199 --> 00:17:08.789
answer is going to be a bit spread and
00:17:08.799 --> 00:17:10.870
also a little bit of an anecdotal which
00:17:10.880 --> 00:17:12.309
which I quite like actually. In fact,
00:17:12.319 --> 00:17:13.510
what I would say is what I've seen
00:17:13.520 --> 00:17:15.429
probably in the past six months
00:17:15.439 --> 00:17:16.789
particularly with rising inflationary
00:17:16.799 --> 00:17:19.909
pressures in the market um and kind of
00:17:19.919 --> 00:17:22.150
like uh you know slightly worsening
00:17:22.160 --> 00:17:23.829
economic situation. Although I remain to
00:17:23.839 --> 00:17:25.510
be an optimist about the global the
00:17:25.520 --> 00:17:26.789
global economy, I just think right now
00:17:26.799 --> 00:17:28.710
we're in a little bit of a a bumpy bumpy
00:17:28.720 --> 00:17:29.750
road, but we should be fine in a few
00:17:29.760 --> 00:17:30.870
months time. We'll get better in a few
00:17:30.880 --> 00:17:33.830
months time. But I've certainly seen
00:17:33.840 --> 00:17:35.830
business business businesses coming in
00:17:35.840 --> 00:17:37.590
right now looking to stabilize their
00:17:37.600 --> 00:17:39.669
cash flow just for additional costs
00:17:39.679 --> 00:17:41.190
coming up. They've had rising cost of
00:17:41.200 --> 00:17:43.590
inventory, rising costs even even right
00:17:43.600 --> 00:17:44.950
now with the Labor government with
00:17:44.960 --> 00:17:46.950
bringing in rising costs in terms of tax
00:17:46.960 --> 00:17:48.549
pressures and also pressure in terms of
00:17:48.559 --> 00:17:50.710
employment costs. But what I see is they
00:17:50.720 --> 00:17:52.070
do that they come in they stabilize
00:17:52.080 --> 00:17:53.669
their cash flow then people are coming
00:17:53.679 --> 00:17:55.350
in trying to look to buy their
00:17:55.360 --> 00:17:56.950
productivity or improve their
00:17:56.960 --> 00:17:58.310
productivity. And we have had
00:17:58.320 --> 00:17:59.909
conversations with a number of clients
00:17:59.919 --> 00:18:01.669
who've come in and said, "I'm looking at
00:18:01.679 --> 00:18:04.150
finding ways to incorporate AI into my
00:18:04.160 --> 00:18:05.909
business. I'm looking at finding ways to
00:18:05.919 --> 00:18:07.909
incorporate more technology into my
00:18:07.919 --> 00:18:09.510
business." And you're getting a lot of
00:18:09.520 --> 00:18:10.789
like I think you're getting a lot of
00:18:10.799 --> 00:18:12.950
appetite now particularly from younger
00:18:12.960 --> 00:18:15.909
entrepreneurs in the UK who are entering
00:18:15.919 --> 00:18:17.990
maybe like those those more traditional
00:18:18.000 --> 00:18:20.070
boring markets and they want to go and
00:18:20.080 --> 00:18:22.150
buy you know they want to go buy an HVAC
00:18:22.160 --> 00:18:23.669
company and then they want to make the
00:18:23.679 --> 00:18:25.190
website a little bit nicer and stick a
00:18:25.200 --> 00:18:26.630
chatbot on it and make sure that
00:18:26.640 --> 00:18:29.029
customers are getting WhatsApp daily
00:18:29.039 --> 00:18:31.510
which is you know pretty pretty standard
00:18:31.520 --> 00:18:32.950
kind of bread and butter stuff but you
00:18:32.960 --> 00:18:34.310
can go and take a company you can raise
00:18:34.320 --> 00:18:37.750
the EBIT D by 35%. um you know in a
00:18:37.760 --> 00:18:39.190
six-month period. So we're seeing them
00:18:39.200 --> 00:18:41.350
stabilize cash flow by productivity
00:18:41.360 --> 00:18:43.190
which often will be some kind of
00:18:43.200 --> 00:18:45.270
investment into technology and then
00:18:45.280 --> 00:18:47.029
after that then you're seeing them
00:18:47.039 --> 00:18:48.390
coming in and they're they're wanting to
00:18:48.400 --> 00:18:50.310
add heads into the business. So that's
00:18:50.320 --> 00:18:51.669
when we're also seeing people come in
00:18:51.679 --> 00:18:53.830
and look to make investment in the human
00:18:53.840 --> 00:18:55.990
capital side of things. But I do think
00:18:56.000 --> 00:18:58.390
it's interesting because the latter two
00:18:58.400 --> 00:19:00.070
make sense to me. Obviously you look to
00:19:00.080 --> 00:19:01.750
optimize your internal processes where
00:19:01.760 --> 00:19:03.669
you can but right now I think in the
00:19:03.679 --> 00:19:04.950
current the current economy there's
00:19:04.960 --> 00:19:06.070
quite a couple of businesses right now
00:19:06.080 --> 00:19:07.750
who are really looking to stabilize
00:19:07.760 --> 00:19:09.510
their current cash flow position just
00:19:09.520 --> 00:19:13.350
with with going up but I but you know I
00:19:13.360 --> 00:19:16.470
would say that the we're expecting this
00:19:16.480 --> 00:19:18.230
is not fundion by the way but I think in
00:19:18.240 --> 00:19:20.150
the UK we're expecting to see about 60
00:19:20.160 --> 00:19:22.630
billion pounds spent on auto automation
00:19:22.640 --> 00:19:26.310
AI and uh digital tools this year. So
00:19:26.320 --> 00:19:28.150
the companies that are investing right
00:19:28.160 --> 00:19:30.630
now capital, whether it be capital from
00:19:30.640 --> 00:19:32.390
their own balance sheet, debt capital,
00:19:32.400 --> 00:19:34.710
equity capital into tech, they're the
00:19:34.720 --> 00:19:36.230
guys seeing the really quick fast
00:19:36.240 --> 00:19:37.909
payback on every on every pound and
00:19:37.919 --> 00:19:42.070
dollar. How do how the the preparedness
00:19:42.080 --> 00:19:45.909
of uh of of the applicants uh that come
00:19:45.919 --> 00:19:48.230
to you? Do they actually have a sane and
00:19:48.240 --> 00:19:50.950
and reasonable view of the the current
00:19:50.960 --> 00:19:53.029
market? And you say that that the the
00:19:53.039 --> 00:19:55.590
conditions the the forecast or are they
00:19:55.600 --> 00:19:58.710
rather kind of hoping for an optimistic
00:19:58.720 --> 00:20:01.270
uh boom in the market and then are faced
00:20:01.280 --> 00:20:03.350
with the bleak reality of of today's
00:20:03.360 --> 00:20:07.270
very I would say you know market almost
00:20:07.280 --> 00:20:10.150
yeah in in in many senses. Do do you see
00:20:10.160 --> 00:20:12.230
that down to earth attitude or is it
00:20:12.240 --> 00:20:14.230
more kind of let's get some money and do
00:20:14.240 --> 00:20:16.789
something with it? Um I mean we
00:20:16.799 --> 00:20:17.909
definitely see I think I think
00:20:17.919 --> 00:20:19.110
definitely from the customers I'm
00:20:19.120 --> 00:20:20.870
speaking to we see a very like a very
00:20:20.880 --> 00:20:22.870
down to earth attitude really with any
00:20:22.880 --> 00:20:24.390
kind of small business owner if you give
00:20:24.400 --> 00:20:25.990
them those three things of cash flow
00:20:26.000 --> 00:20:28.789
visibility you give them the tools to
00:20:28.799 --> 00:20:30.710
implement scale their process and then
00:20:30.720 --> 00:20:31.909
you give them some kind of wiggle room
00:20:31.919 --> 00:20:33.270
as well on their hiring cost and
00:20:33.280 --> 00:20:35.190
investments in people they'll get out
00:20:35.200 --> 00:20:37.430
and do and do the rest but I would say
00:20:37.440 --> 00:20:39.590
that you know when I look at a se it's
00:20:39.600 --> 00:20:40.789
probably more interested kind of by
00:20:40.799 --> 00:20:42.549
sector if I look at a sector say like
00:20:42.559 --> 00:20:44.470
e-commerce I remember a couple of years
00:20:44.480 --> 00:20:46.549
ago go very very very frothy, a lot of
00:20:46.559 --> 00:20:47.830
people coming into the market,
00:20:47.840 --> 00:20:50.070
especially postcoid, and then had a
00:20:50.080 --> 00:20:51.909
little bit of a depression on it. And
00:20:51.919 --> 00:20:53.590
then now, probably in the last 6 months,
00:20:53.600 --> 00:20:54.710
we're starting to see some people coming
00:20:54.720 --> 00:20:56.070
back out into market and looking to
00:20:56.080 --> 00:20:58.310
raise capital uh you know, for their for
00:20:58.320 --> 00:21:00.070
their e-commerce shop, but they're
00:21:00.080 --> 00:21:02.270
probably a little bit more
00:21:02.280 --> 00:21:05.510
um well experienced maybe of some of
00:21:05.520 --> 00:21:07.110
those business owners that we're seeing.
00:21:07.120 --> 00:21:09.830
But typically in terms of like uh you
00:21:09.840 --> 00:21:11.830
know like heavy industry or maybe the
00:21:11.840 --> 00:21:14.149
property market, we're seeing pretty
00:21:14.159 --> 00:21:15.830
pretty am pretty ambitious, pretty
00:21:15.840 --> 00:21:18.070
aggressive um business owners every day
00:21:18.080 --> 00:21:21.190
coming in looking for for for capital. I
00:21:21.200 --> 00:21:23.110
hope I guess difficult to be honest
00:21:23.120 --> 00:21:24.230
difficult kind of question to kind of
00:21:24.240 --> 00:21:26.390
capture the whole mood of the of the
00:21:26.400 --> 00:21:28.710
market but um I hope that gives you a
00:21:28.720 --> 00:21:29.830
little bit of a flavor of what we're
00:21:29.840 --> 00:21:31.830
hearing. Yeah, this is you know what
00:21:31.840 --> 00:21:34.149
we're we're interested mainly in in our
00:21:34.159 --> 00:21:35.909
moto is you know we are what works and
00:21:35.919 --> 00:21:37.029
what doesn't in the world of business
00:21:37.039 --> 00:21:39.510
operations. So we are interested in in
00:21:39.520 --> 00:21:42.789
in this outlook into or actually insight
00:21:42.799 --> 00:21:45.270
maybe into mode of operation. I like
00:21:45.280 --> 00:21:47.350
what you said it actually touches on our
00:21:47.360 --> 00:21:49.510
other activities that is people need
00:21:49.520 --> 00:21:51.750
technology and then you know headcount
00:21:51.760 --> 00:21:53.350
because you need people to to run
00:21:53.360 --> 00:21:55.430
business. We wrote a book about using CH
00:21:55.440 --> 00:21:57.830
GPT for optimizing data analytics as a
00:21:57.840 --> 00:21:59.430
business process and we don't believe
00:21:59.440 --> 00:22:01.669
people can be replaced. So so let's be
00:22:01.679 --> 00:22:03.990
clear on that. I encounter sometimes
00:22:04.000 --> 00:22:06.230
people believing that techn technology
00:22:06.240 --> 00:22:08.870
can replace do do stuff for them. How
00:22:08.880 --> 00:22:11.669
much of this optimism do you see in your
00:22:11.679 --> 00:22:14.070
work? People saying yeah we want to you
00:22:14.080 --> 00:22:15.830
know get this technology and it will do
00:22:15.840 --> 00:22:18.070
every everything for us. Because I I
00:22:18.080 --> 00:22:19.830
wholeheartedly agree with what you said
00:22:19.840 --> 00:22:22.390
that like you need to have technology
00:22:22.400 --> 00:22:23.990
but you also need to have people behind
00:22:24.000 --> 00:22:26.070
this technology. We deal with the people
00:22:26.080 --> 00:22:27.830
who implement the technology. So we are
00:22:27.840 --> 00:22:29.990
somewhere in the middle. But like this
00:22:30.000 --> 00:22:33.110
excitement like how close to to to this
00:22:33.120 --> 00:22:34.870
wakeup call do you think we are? How
00:22:34.880 --> 00:22:37.350
many people need this wakeup call and
00:22:37.360 --> 00:22:39.590
stop listening to marketing? And this
00:22:39.600 --> 00:22:41.510
connects to what areas about this down
00:22:41.520 --> 00:22:43.190
to earth approach. I know that
00:22:43.200 --> 00:22:45.430
technology can lift people sometimes
00:22:45.440 --> 00:22:47.270
maybe too high. What's your what's your
00:22:47.280 --> 00:22:49.350
take? I'm I'm I'm so sorry. What do you
00:22:49.360 --> 00:22:51.750
mean exactly? I mean I mean many people
00:22:51.760 --> 00:22:55.270
believe that AI equals magic unicorns
00:22:55.280 --> 00:22:58.549
and magic wands. And uh in in our
00:22:58.559 --> 00:23:00.470
experience uh they don't understand that
00:23:00.480 --> 00:23:03.430
it's a you know investment that also
00:23:03.440 --> 00:23:04.850
requires
00:23:04.860 --> 00:23:07.070
[Music]
00:23:07.080 --> 00:23:10.950
u pretty much a lot of work to properly
00:23:10.960 --> 00:23:13.190
in introduce it into into into the the
00:23:13.200 --> 00:23:16.870
operations. Do do you see this pink uh
00:23:16.880 --> 00:23:19.430
pink glasses or are people aware of the
00:23:19.440 --> 00:23:21.350
limitations of technology too? I see.
00:23:21.360 --> 00:23:23.430
Yeah, I think I think from our side and
00:23:23.440 --> 00:23:24.870
again it's it's useful because we have
00:23:24.880 --> 00:23:27.350
such a broad spectrum of of of
00:23:27.360 --> 00:23:29.270
businesses coming in. I think that I
00:23:29.280 --> 00:23:31.029
think still at this relatively nent
00:23:31.039 --> 00:23:33.669
stage for the the ease of implementation
00:23:33.679 --> 00:23:36.310
and the ease of operability of of you
00:23:36.320 --> 00:23:38.390
know AI or machine learning and
00:23:38.400 --> 00:23:40.070
obviously AI as people always point out
00:23:40.080 --> 00:23:42.390
it's been around for a long time but
00:23:42.400 --> 00:23:45.669
currently a lot of people the the extent
00:23:45.679 --> 00:23:47.909
of their ability to use that is crafting
00:23:47.919 --> 00:23:49.070
some some
00:23:49.080 --> 00:23:51.830
some you know in ineligate prompts on
00:23:51.840 --> 00:23:54.149
chat GPT or whatever LLM they might be
00:23:54.159 --> 00:23:56.390
using that day but I think that first of
00:23:56.400 --> 00:23:58.310
all there's a really big broad step I
00:23:58.320 --> 00:24:00.070
see in a lot of the business communities
00:24:00.080 --> 00:24:01.350
particularly here in London about
00:24:01.360 --> 00:24:03.590
education for business owners on AI. So
00:24:03.600 --> 00:24:04.950
I think for a lot of them that I'm
00:24:04.960 --> 00:24:07.270
seeing right now I get invitations quite
00:24:07.280 --> 00:24:09.029
frequently to you know a breakfast
00:24:09.039 --> 00:24:11.190
meeting or like a you know a day
00:24:11.200 --> 00:24:12.549
conference whatever it might be about
00:24:12.559 --> 00:24:15.750
how to use and implement AI within your
00:24:15.760 --> 00:24:17.350
business. And so I think for a lot of
00:24:17.360 --> 00:24:18.950
people it's still at that awareness
00:24:18.960 --> 00:24:20.710
stage. They're not necessarily going to
00:24:20.720 --> 00:24:22.390
be those first movers and they're still
00:24:22.400 --> 00:24:23.830
looking to make an awareness or have an
00:24:23.840 --> 00:24:24.950
understanding about how they could do
00:24:24.960 --> 00:24:26.630
it. I think the second challenge there
00:24:26.640 --> 00:24:28.230
and obviously it does depend on on the
00:24:28.240 --> 00:24:29.350
business. You know we talked earlier
00:24:29.360 --> 00:24:32.149
about that broad amorphous term for you
00:24:32.159 --> 00:24:34.230
know to an extent if you're a plumber
00:24:34.240 --> 00:24:35.590
how much are you going to be able to use
00:24:35.600 --> 00:24:37.750
AI in your business it's perhaps a
00:24:37.760 --> 00:24:39.909
little bit a little bit more limited but
00:24:39.919 --> 00:24:41.269
you know if it's something you know such
00:24:41.279 --> 00:24:43.029
as such as yourselves guys like working
00:24:43.039 --> 00:24:45.029
a lot with data there is a probably a
00:24:45.039 --> 00:24:46.470
lot of like spec capacity or loose
00:24:46.480 --> 00:24:47.990
capacity that you can start wrapping up
00:24:48.000 --> 00:24:50.310
there. So we we see it quite a bit. I
00:24:50.320 --> 00:24:51.830
would say that again because I think the
00:24:51.840 --> 00:24:53.750
technology is a bit nent still to be
00:24:53.760 --> 00:24:55.669
applied on mass to a lot of theme
00:24:55.679 --> 00:24:57.110
population. I'm do I'm definitely seeing
00:24:57.120 --> 00:24:58.549
a lot of business owners talking about
00:24:58.559 --> 00:25:00.789
it and we see it sometimes people will
00:25:00.799 --> 00:25:02.549
send in like a pitch or a business plan
00:25:02.559 --> 00:25:04.070
with their funding application which is
00:25:04.080 --> 00:25:06.070
not always necessarily required because
00:25:06.080 --> 00:25:08.149
of the nature of the of the product that
00:25:08.159 --> 00:25:09.430
we do which is predominantly debt
00:25:09.440 --> 00:25:11.510
finance. But within that, we see
00:25:11.520 --> 00:25:12.950
companies particularly people like in
00:25:12.960 --> 00:25:15.269
the marketing or the SEO space and
00:25:15.279 --> 00:25:17.269
they're wanting to learn more about how
00:25:17.279 --> 00:25:20.310
they can get into AI or get into AI, how
00:25:20.320 --> 00:25:21.990
they can leverage AI and enter that
00:25:22.000 --> 00:25:23.350
market a bit more. So, I think we're
00:25:23.360 --> 00:25:24.950
still kind of an awareness point for
00:25:24.960 --> 00:25:26.549
business owners, which I think to me
00:25:26.559 --> 00:25:27.669
makes sense because you need to
00:25:27.679 --> 00:25:30.149
understand what it is before you try and
00:25:30.159 --> 00:25:31.909
uh you know, put a square peg in a
00:25:31.919 --> 00:25:33.590
square hole as it were. You again
00:25:33.600 --> 00:25:35.510
touched on the on the type of finance
00:25:35.520 --> 00:25:37.990
that you deal with with Fononian and
00:25:38.000 --> 00:25:40.230
obviously we've uh we've dealt with
00:25:40.240 --> 00:25:43.190
quite a few startups who deal with very
00:25:43.200 --> 00:25:44.789
different type of funding. You know they
00:25:44.799 --> 00:25:47.350
want the the venture capital equity type
00:25:47.360 --> 00:25:49.909
or mixture of equity and debt. Your your
00:25:49.919 --> 00:25:51.990
clients if I understand correctly you
00:25:52.000 --> 00:25:54.549
you you do business loans, you do asset
00:25:54.559 --> 00:25:57.190
finance, you do invoice finance, more
00:25:57.200 --> 00:25:59.110
traditional kind of types of of
00:25:59.120 --> 00:26:01.269
financing for businesses. Where do you
00:26:01.279 --> 00:26:03.350
see the connecting line? Or do you at
00:26:03.360 --> 00:26:05.350
all see a connecting line where certain
00:26:05.360 --> 00:26:07.830
businesses come to you that would kind
00:26:07.840 --> 00:26:10.470
of more benefit from from more startup
00:26:10.480 --> 00:26:13.430
type financing or ones where you you
00:26:13.440 --> 00:26:16.070
find you have a niche that where
00:26:16.080 --> 00:26:17.830
businesses are desperately looking for
00:26:17.840 --> 00:26:19.430
startup finance but they would actually
00:26:19.440 --> 00:26:22.310
benefit more by coming to you and not
00:26:22.320 --> 00:26:24.230
lose all that control over their
00:26:24.240 --> 00:26:26.310
business to to to venture capital. How
00:26:26.320 --> 00:26:27.990
do you see the demarcation? Is that the
00:26:28.000 --> 00:26:29.990
demarcation between debt and equity
00:26:30.000 --> 00:26:32.710
generally or startup type financing
00:26:32.720 --> 00:26:34.870
which is which is a combination of of of
00:26:34.880 --> 00:26:37.269
debt and equity and more traditional you
00:26:37.279 --> 00:26:39.590
know because you know to to get to get a
00:26:39.600 --> 00:26:42.230
startup type finance what in whatever
00:26:42.240 --> 00:26:44.230
for it comes you need a pitch tech you
00:26:44.240 --> 00:26:47.190
need a great idea you need kind of a lot
00:26:47.200 --> 00:26:48.710
of bells and whistles you don't
00:26:48.720 --> 00:26:50.710
necessarily need cash flow apparently
00:26:50.720 --> 00:26:53.269
the the practice shows whereas for for
00:26:53.279 --> 00:26:55.510
your type of financing you need a solid
00:26:55.520 --> 00:26:56.950
balance sheet you need business
00:26:56.960 --> 00:26:59.110
projections. You need something that is
00:26:59.120 --> 00:27:01.350
very very much down to earth and
00:27:01.360 --> 00:27:03.430
represented almost in brick and mortar,
00:27:03.440 --> 00:27:05.029
right? Yeah, I mean that's correct. I
00:27:05.039 --> 00:27:07.430
mean I mean obviously the I mean
00:27:07.440 --> 00:27:08.789
typically I mean you're correct. I mean
00:27:08.799 --> 00:27:11.190
we we we look right now mainly at all
00:27:11.200 --> 00:27:13.269
kind of standard uh cash flow business
00:27:13.279 --> 00:27:15.190
loan here. We do asset finance, trade
00:27:15.200 --> 00:27:16.710
finance, you know, stock finance, all
00:27:16.720 --> 00:27:18.390
the rest. Equally on the flip side, if
00:27:18.400 --> 00:27:19.110
you're going to look at equity
00:27:19.120 --> 00:27:21.110
investment, be that angel, be that you
00:27:21.120 --> 00:27:23.750
know venture, be that private equity and
00:27:23.760 --> 00:27:24.950
kind of in the middle there you have
00:27:24.960 --> 00:27:26.710
like you know venture debt. I mean these
00:27:26.720 --> 00:27:28.470
products all exist for a reason right
00:27:28.480 --> 00:27:30.870
and again really kind of a running theme
00:27:30.880 --> 00:27:32.310
that I think about a lot guys it's like
00:27:32.320 --> 00:27:34.950
this issue aboutme this amorphous blob
00:27:34.960 --> 00:27:37.430
at the end of the day though there is no
00:27:37.440 --> 00:27:39.830
special rule book for what makes a good
00:27:39.840 --> 00:27:41.269
business and I think this always comes
00:27:41.279 --> 00:27:43.430
down to the thing personally now this
00:27:43.440 --> 00:27:44.630
has kind of been swimming around in my
00:27:44.640 --> 00:27:46.070
head for a while I always define a
00:27:46.080 --> 00:27:48.789
business as any is a is a repeatable
00:27:48.799 --> 00:27:50.950
process for the purpose of profit if you
00:27:50.960 --> 00:27:53.350
have that you have a business so that
00:27:53.360 --> 00:27:54.630
does therefore mean you could be
00:27:54.640 --> 00:27:56.310
repeating your process for the purpose
00:27:56.320 --> 00:27:57.830
of profit. You make absolutely no pro
00:27:57.840 --> 00:27:59.350
profit. You may not even make any
00:27:59.360 --> 00:28:01.510
turnover in which case maybe equity. But
00:28:01.520 --> 00:28:02.470
what we're definitely seeing in the
00:28:02.480 --> 00:28:04.070
market on fund onion side right now,
00:28:04.080 --> 00:28:07.190
there is a lot easier access to some
00:28:07.200 --> 00:28:09.830
form of capital on the debt side even
00:28:09.840 --> 00:28:12.230
for businesses with a lower turnover,
00:28:12.240 --> 00:28:13.669
but typically you are going to require
00:28:13.679 --> 00:28:15.510
some turnover. In any event, you're
00:28:15.520 --> 00:28:18.190
going to have to be servicing that that
00:28:18.200 --> 00:28:21.029
that facility in some way. Angel
00:28:21.039 --> 00:28:23.190
Capital, I still think this is a really
00:28:23.200 --> 00:28:25.110
super fragmented market. It's very
00:28:25.120 --> 00:28:26.710
difficult, but it does kind of sit in
00:28:26.720 --> 00:28:28.389
that sweet spot where businesses maybe
00:28:28.399 --> 00:28:30.070
don't need that shoot the lights out
00:28:30.080 --> 00:28:31.750
concept or that shoot the lights lights
00:28:31.760 --> 00:28:33.350
out idea to get some kind of capital,
00:28:33.360 --> 00:28:34.950
but it's only going to get you so far.
00:28:34.960 --> 00:28:36.470
But then I think the problem with VC
00:28:36.480 --> 00:28:38.510
right now is that
00:28:38.520 --> 00:28:42.310
um the the I mean a the kind of the
00:28:42.320 --> 00:28:44.310
returns on VC as an asset class in any
00:28:44.320 --> 00:28:46.389
event have not been particularly uh
00:28:46.399 --> 00:28:48.549
appetizing I think for LPs and for
00:28:48.559 --> 00:28:51.750
investors generally. And then the the
00:28:51.760 --> 00:28:52.950
market's becoming more and more
00:28:52.960 --> 00:28:54.990
competitive. More VCs are entering into
00:28:55.000 --> 00:28:59.149
it. And like it's it's
00:28:59.159 --> 00:29:01.909
it's one of those products for a
00:29:01.919 --> 00:29:04.389
business that can kind of either put a
00:29:04.399 --> 00:29:06.470
real rocket up the back of the company
00:29:06.480 --> 00:29:09.269
and then bur extreme growth, but you do
00:29:09.279 --> 00:29:11.190
that at a high risk of, you know, kind
00:29:11.200 --> 00:29:13.190
of crashing and failing. Because at the
00:29:13.200 --> 00:29:14.230
end of the day, if you're going to have
00:29:14.240 --> 00:29:16.870
a VC come along and put 5 or 8 million
00:29:16.880 --> 00:29:19.350
quid into your bank account at a series
00:29:19.360 --> 00:29:21.190
A or whatever it might be, you need to
00:29:21.200 --> 00:29:23.190
deploy that capital quickly and you need
00:29:23.200 --> 00:29:25.110
to have a route to get that capital out
00:29:25.120 --> 00:29:27.269
the door. And not every business I
00:29:27.279 --> 00:29:28.870
suppose this is why historically it
00:29:28.880 --> 00:29:32.549
worked so well for um you know SAS SAS
00:29:32.559 --> 00:29:34.470
companies and the guys like Anderson and
00:29:34.480 --> 00:29:36.310
Horowits and stuff they they love those
00:29:36.320 --> 00:29:37.669
businesses because you can just put more
00:29:37.679 --> 00:29:40.070
money out on marketing on Google ads.
00:29:40.080 --> 00:29:42.789
Your scale scalability is massive. So I
00:29:42.799 --> 00:29:44.389
think there's a little bit of a
00:29:44.399 --> 00:29:46.549
misunderstanding perhaps among founders
00:29:46.559 --> 00:29:48.230
nowadays. They think that venture
00:29:48.240 --> 00:29:49.909
capital is the right route for them
00:29:49.919 --> 00:29:52.230
because they see you know good kind of
00:29:52.240 --> 00:29:54.149
announcements or notifications about you
00:29:54.159 --> 00:29:56.149
know capital raising. It can work but
00:29:56.159 --> 00:29:57.750
you need to have a massively scalable
00:29:57.760 --> 00:29:59.110
model. It doesn't have to just scale but
00:29:59.120 --> 00:30:01.110
it has to scale quickly. But on the flip
00:30:01.120 --> 00:30:04.789
side the the the ability to service your
00:30:04.799 --> 00:30:06.870
debt is going to determine whether or
00:30:06.880 --> 00:30:08.310
not you can be deemed creditw worthy
00:30:08.320 --> 00:30:10.470
enough to have a facility. So, I think
00:30:10.480 --> 00:30:12.710
like I said, you have to have that that
00:30:12.720 --> 00:30:14.230
repeatable process for a purpose of
00:30:14.240 --> 00:30:15.750
profit. And depending on where you're at
00:30:15.760 --> 00:30:17.350
in that cycle, you're going to have
00:30:17.360 --> 00:30:19.430
better eligibility or or not for for a
00:30:19.440 --> 00:30:21.029
different product. But I think there is
00:30:21.039 --> 00:30:23.110
plenty of cash out there right now, both
00:30:23.120 --> 00:30:25.590
on equity and and on the debt side for
00:30:25.600 --> 00:30:27.350
deployment. You just got to find it. You
00:30:27.360 --> 00:30:29.669
also mentioned uh you know scaling up
00:30:29.679 --> 00:30:33.029
Fondonion to to 10 million per loan. And
00:30:33.039 --> 00:30:35.430
so what where's where's Fondonion going
00:30:35.440 --> 00:30:37.510
in in kind of high level terms? what's
00:30:37.520 --> 00:30:39.909
the next big thing uh for Fundion to
00:30:39.919 --> 00:30:41.990
achieve? Um yeah, thanks. I guess I
00:30:42.000 --> 00:30:44.389
guess like our our our goal is really
00:30:44.399 --> 00:30:46.909
simple is that you know no no no no
00:30:46.919 --> 00:30:49.350
viablememes should should fail to have a
00:30:49.360 --> 00:30:51.190
one of like timely and transparent
00:30:51.200 --> 00:30:52.789
capital and I think one thing that this
00:30:52.799 --> 00:30:54.789
goes down to in terms of our product is
00:30:54.799 --> 00:30:56.870
we have a concept internally known as
00:30:56.880 --> 00:30:59.350
predictive capital. So what I noticed in
00:30:59.360 --> 00:31:02.870
the market is that uh any intermediary,
00:31:02.880 --> 00:31:05.430
any platform, um indeed any kind of
00:31:05.440 --> 00:31:06.870
lender what you might be looking at.
00:31:06.880 --> 00:31:08.950
Everybody can tell you typically how to
00:31:08.960 --> 00:31:10.950
raise capital if they've been working in
00:31:10.960 --> 00:31:12.389
this space for a little bit of time. As
00:31:12.399 --> 00:31:13.669
I mentioned before, there's different
00:31:13.679 --> 00:31:15.190
products. You can learn what they are in
00:31:15.200 --> 00:31:16.549
theory and maybe a little bit in
00:31:16.559 --> 00:31:18.149
practice. A lot of people can tell you
00:31:18.159 --> 00:31:20.070
who to raise capital from. Again,
00:31:20.080 --> 00:31:21.830
typically if you look at the debt space,
00:31:21.840 --> 00:31:23.350
the liquidity providers are always going
00:31:23.360 --> 00:31:25.430
to be the same. We all know who HSBC is,
00:31:25.440 --> 00:31:26.950
right? We all know who Funding Circle
00:31:26.960 --> 00:31:29.350
is. But I think the the real kind of
00:31:29.360 --> 00:31:32.070
value ad for that platform, for that
00:31:32.080 --> 00:31:33.750
intermediary, for that broker, however
00:31:33.760 --> 00:31:35.350
you call it, is going to be to address
00:31:35.360 --> 00:31:37.909
that question of when. So really what we
00:31:37.919 --> 00:31:40.389
can do is we at Fundion, we're we're
00:31:40.399 --> 00:31:41.990
looking to ship additional technology
00:31:42.000 --> 00:31:43.750
and product on our side that helps
00:31:43.760 --> 00:31:45.509
businesses figure out not just how and
00:31:45.519 --> 00:31:47.269
from who to raise capital, but exactly
00:31:47.279 --> 00:31:49.909
when. And yes, we want to expand into
00:31:49.919 --> 00:31:52.789
that market of up to the£10 million
00:31:52.799 --> 00:31:54.789
because equally at that point then you
00:31:54.799 --> 00:31:56.870
start to have the ability to weave in
00:31:56.880 --> 00:31:59.029
different types of financing. It's not
00:31:59.039 --> 00:32:01.750
just simply 100k unsecured loan but at
00:32:01.760 --> 00:32:03.750
that point you can look to mix and blend
00:32:03.760 --> 00:32:05.269
a little bit of angel investment with
00:32:05.279 --> 00:32:07.509
equity with some venture debt maybe with
00:32:07.519 --> 00:32:09.830
a invoice finance line to support that
00:32:09.840 --> 00:32:11.350
business with it capital structure in a
00:32:11.360 --> 00:32:13.190
in an intelligent way. But I think for
00:32:13.200 --> 00:32:14.389
us that's a really really really
00:32:14.399 --> 00:32:16.549
exciting point is that we're moving away
00:32:16.559 --> 00:32:18.230
from
00:32:18.240 --> 00:32:20.950
uh you know broker platform intermediary
00:32:20.960 --> 00:32:22.789
market towards becoming an investment
00:32:22.799 --> 00:32:25.190
bank formemes but a technologydriven
00:32:25.200 --> 00:32:27.029
investment bank and neo investment bank
00:32:27.039 --> 00:32:28.630
and the way we do that is really with
00:32:28.640 --> 00:32:30.389
this predictive capital technology which
00:32:30.399 --> 00:32:32.630
we can feed predominantly through open
00:32:32.640 --> 00:32:35.190
banking um and through other public data
00:32:35.200 --> 00:32:37.190
sources and equally when I talked before
00:32:37.200 --> 00:32:39.110
about you know the larger banks looking
00:32:39.120 --> 00:32:40.950
at enterprise accounts we can also take
00:32:40.960 --> 00:32:42.710
and aggregate a lot of the data that we
00:32:42.720 --> 00:32:44.710
have and ideally we're looking to get to
00:32:44.720 --> 00:32:46.549
a point where you know you can have a
00:32:46.559 --> 00:32:48.549
business and they get pinged on a
00:32:48.559 --> 00:32:50.310
Tuesday and it simply says you know
00:32:50.320 --> 00:32:52.470
extend your runway for an additional 500
00:32:52.480 --> 00:32:55.750
days at XY Z interest a month with like
00:32:55.760 --> 00:32:58.470
real timely personalized prompts and you
00:32:58.480 --> 00:33:01.110
know our our our partly as well our AI
00:33:01.120 --> 00:33:02.549
technology will be able to ping those
00:33:02.559 --> 00:33:04.310
businesses with relevant with relevant
00:33:04.320 --> 00:33:05.909
products with the relevant time for
00:33:05.919 --> 00:33:08.070
instance you were paid uh the past 3
00:33:08.080 --> 00:33:10.310
months 52 days late here is your
00:33:10.320 --> 00:33:11.990
pre-approval for an invoice finance
00:33:12.000 --> 00:33:15.389
facility. Um, and I think that question
00:33:15.399 --> 00:33:18.950
of thinking about when that temporal
00:33:18.960 --> 00:33:21.750
value of money is massively, massively
00:33:21.760 --> 00:33:23.350
important because typically when people
00:33:23.360 --> 00:33:25.750
approach the capital raising market,
00:33:25.760 --> 00:33:27.750
they're being very reactive just saying,
00:33:27.760 --> 00:33:29.269
"Yeah, we need to raise this company, we
00:33:29.279 --> 00:33:30.950
need to raise these guys, this this
00:33:30.960 --> 00:33:32.870
business 100k, a million pound, 5
00:33:32.880 --> 00:33:35.110
million pounds." And I guess from from
00:33:35.120 --> 00:33:37.029
our side, we're asking that question,
00:33:37.039 --> 00:33:38.950
what if there was a time a way to figure
00:33:38.960 --> 00:33:41.669
out how time interacts with that money?
00:33:41.679 --> 00:33:43.509
Because in any event, um I mean it
00:33:43.519 --> 00:33:44.870
depends how theoretical you want to get,
00:33:44.880 --> 00:33:46.630
but you cannot have money without the
00:33:46.640 --> 00:33:48.870
concept of time in any event. So I think
00:33:48.880 --> 00:33:50.230
for us that's that's kind of really
00:33:50.240 --> 00:33:51.430
exciting internal project that we're
00:33:51.440 --> 00:33:53.110
looking to to get shipped in the next
00:33:53.120 --> 00:33:55.909
next 90 days or so. 90 days, I would
00:33:55.919 --> 00:33:59.110
hope so. Yeah. Wow. It already requires
00:33:59.120 --> 00:34:02.149
a lot of proactivity from your from from
00:34:02.159 --> 00:34:04.549
the prospective loan takers, from the
00:34:04.559 --> 00:34:06.950
prospective clients on your sides.
00:34:06.960 --> 00:34:09.430
Thinking about this, you know, if
00:34:09.440 --> 00:34:11.510
someone is listening to this podcast and
00:34:11.520 --> 00:34:12.790
they they're thinking, "Oh, yeah, this
00:34:12.800 --> 00:34:14.869
is this is a great platform and and we
00:34:14.879 --> 00:34:17.109
we want to get along." What is the the
00:34:17.119 --> 00:34:19.909
number one spin or the number one
00:34:19.919 --> 00:34:22.069
failing that you see that you could you
00:34:22.079 --> 00:34:23.829
can tell people if you do that, you
00:34:23.839 --> 00:34:26.389
raise your chances of getting positive
00:34:26.399 --> 00:34:28.629
answer. what would be the the number one
00:34:28.639 --> 00:34:30.069
thing that people need to improve when
00:34:30.079 --> 00:34:32.550
they're approaching uh you or or banks
00:34:32.560 --> 00:34:34.950
for finance? I mean probably to be more
00:34:34.960 --> 00:34:37.190
helpful because because fundamentally
00:34:37.200 --> 00:34:38.310
again as we talked about it the
00:34:38.320 --> 00:34:40.149
different kind of credit or or financing
00:34:40.159 --> 00:34:41.829
product is going to be based on the life
00:34:41.839 --> 00:34:43.190
cycle or the stage of that of that
00:34:43.200 --> 00:34:44.550
business. The main thing I would say
00:34:44.560 --> 00:34:47.909
would just be time I always I always uh
00:34:47.919 --> 00:34:49.349
I always say the view that time kills
00:34:49.359 --> 00:34:51.349
deals. Equally this goes again back to
00:34:51.359 --> 00:34:53.829
my point about this predictive capital
00:34:53.839 --> 00:34:55.829
technology. you know, we've taken a view
00:34:55.839 --> 00:34:57.829
to focus on that rather than trying to
00:34:57.839 --> 00:35:00.150
speed up that process. I've noticed in
00:35:00.160 --> 00:35:01.990
the six years I've been in this industry
00:35:02.000 --> 00:35:03.510
that you you end up with a diminishing
00:35:03.520 --> 00:35:05.190
law of return when it comes to just
00:35:05.200 --> 00:35:06.630
simply trying to put the capital out
00:35:06.640 --> 00:35:09.190
quick enough because no business owner
00:35:09.200 --> 00:35:11.910
should neither nor really do they take a
00:35:11.920 --> 00:35:13.270
loan every two days. It's not like
00:35:13.280 --> 00:35:15.190
buying a buying a hamburger, right? So,
00:35:15.200 --> 00:35:17.109
you get to a point where that approval
00:35:17.119 --> 00:35:18.790
can be had quick enough and you get this
00:35:18.800 --> 00:35:20.069
diminishing law of return because if you
00:35:20.079 --> 00:35:21.430
say, "Oh, great. We can get an approval
00:35:21.440 --> 00:35:23.270
in 24 hours." spending millions and
00:35:23.280 --> 00:35:24.950
millions of dollars be it on the
00:35:24.960 --> 00:35:26.710
intermediary side or on the lender side
00:35:26.720 --> 00:35:28.790
to make that 23 hours. I mean, we're
00:35:28.800 --> 00:35:29.829
talking about an hours difference,
00:35:29.839 --> 00:35:31.349
right? Like it's it's it's typically
00:35:31.359 --> 00:35:33.829
that. But I would say that sorry, the
00:35:33.839 --> 00:35:35.270
reason I mentioned this is because there
00:35:35.280 --> 00:35:37.430
is this human element in there. And
00:35:37.440 --> 00:35:39.109
business owners typically don't seem to
00:35:39.119 --> 00:35:41.910
recognize that the banks, the lenders,
00:35:41.920 --> 00:35:44.630
they still have a heavy human part in
00:35:44.640 --> 00:35:46.310
terms of dispersing capital. And
00:35:46.320 --> 00:35:47.750
business owners that come in, they're
00:35:47.760 --> 00:35:50.470
looking for capital. they, you know,
00:35:50.480 --> 00:35:52.069
don't promptly turn around information,
00:35:52.079 --> 00:35:53.829
they kind of disappear, they come back.
00:35:53.839 --> 00:35:55.589
It's fine. We can still work with that,
00:35:55.599 --> 00:35:57.910
but it can just sour the relationship a
00:35:57.920 --> 00:35:59.430
little bit, particularly on the lender
00:35:59.440 --> 00:36:01.510
side. So, my kind of top tip would just
00:36:01.520 --> 00:36:04.470
be, you know, be be quick and responsive
00:36:04.480 --> 00:36:06.310
with with your financing partner because
00:36:06.320 --> 00:36:07.910
at the end of the day, that's the best
00:36:07.920 --> 00:36:09.190
chance you're going to have of an
00:36:09.200 --> 00:36:11.109
approval. Yeah. Come prepared. That
00:36:11.119 --> 00:36:13.670
completely comes with with my experience
00:36:13.680 --> 00:36:17.670
in uh in in in banks where the the the
00:36:17.680 --> 00:36:20.630
common uh chant of all credit officers
00:36:20.640 --> 00:36:23.030
was was why why don't the clients come
00:36:23.040 --> 00:36:24.950
prepared? You know, you're you're coming
00:36:24.960 --> 00:36:27.349
to the bank asking for for millions and
00:36:27.359 --> 00:36:29.910
you you come essentially with a hope
00:36:29.920 --> 00:36:31.990
that someone will approve it and zero
00:36:32.000 --> 00:36:33.670
preparedness. It's an absolutely
00:36:33.680 --> 00:36:35.670
fascinating topic and we we probably
00:36:35.680 --> 00:36:37.750
could go on for hours but in terms of
00:36:37.760 --> 00:36:41.109
practical advice. We obviously urge uh
00:36:41.119 --> 00:36:43.589
the the the listeners to look at the
00:36:43.599 --> 00:36:46.550
website of fun there's a whole blog of
00:36:46.560 --> 00:36:50.230
very interesting articles about how to
00:36:50.240 --> 00:36:52.550
go about preparing for for funding what
00:36:52.560 --> 00:36:54.950
different funding uh even what happens
00:36:54.960 --> 00:36:57.510
if you if you miss that payment or you
00:36:57.520 --> 00:36:59.190
know how to how to deal with different
00:36:59.200 --> 00:37:01.430
situations. So you're already providing
00:37:01.440 --> 00:37:03.829
providing a wealth of of information and
00:37:03.839 --> 00:37:06.470
obviously I guess if the clients want to
00:37:06.480 --> 00:37:09.270
contact Fondonion it is is through the
00:37:09.280 --> 00:37:11.349
website. So yeah that's correct either
00:37:11.359 --> 00:37:13.750
through the website. Yeah. Okay. So is
00:37:13.760 --> 00:37:17.510
that either sorry Marian
00:37:17.520 --> 00:37:19.109
because I couldn't hear and I'm not
00:37:19.119 --> 00:37:22.550
sure. No it's it's fine. So
00:37:22.560 --> 00:37:24.710
we we're having a bit of a of of a
00:37:24.720 --> 00:37:26.550
network issue but that's that that's
00:37:26.560 --> 00:37:28.150
fine. That's technology for you. you
00:37:28.160 --> 00:37:29.349
know, we need to invest more in
00:37:29.359 --> 00:37:31.030
technology. Maybe we'll we'll need to
00:37:31.040 --> 00:37:33.430
get a loan to to to cover it. Summing
00:37:33.440 --> 00:37:35.750
up, you come prepared. Don't don't worry
00:37:35.760 --> 00:37:37.829
about asking for finance, but come with
00:37:37.839 --> 00:37:41.510
a with a very very firm uh you know, and
00:37:41.520 --> 00:37:44.069
obviously there is a as as you said,
00:37:44.079 --> 00:37:45.990
James, there's a huge opportunity there.
00:37:46.000 --> 00:37:47.670
There's huge opportunity formemes,
00:37:47.680 --> 00:37:49.349
there's huge opportunity for lenders and
00:37:49.359 --> 00:37:50.710
there's huge opportunity for the
00:37:50.720 --> 00:37:53.589
country. So hopefully the powers that be
00:37:53.599 --> 00:37:55.990
are also going to to take heed at at
00:37:56.000 --> 00:37:58.470
some point and uh obviously uh you know
00:37:58.480 --> 00:38:00.470
make the marketplace more accessible
00:38:00.480 --> 00:38:03.750
more um uh more more any kind of final
00:38:03.760 --> 00:38:05.270
thought that you want to share with the
00:38:05.280 --> 00:38:07.190
with the listeners? I mean, I guess that
00:38:07.200 --> 00:38:09.190
I guess like on a on a on a personal
00:38:09.200 --> 00:38:10.950
note, you know, I see I see really
00:38:10.960 --> 00:38:13.190
really strong businesses coming in um
00:38:13.200 --> 00:38:14.950
over the course of our time at Fundion
00:38:14.960 --> 00:38:17.270
and I would say and again this is just
00:38:17.280 --> 00:38:20.069
my objective view. Don't be afraid of
00:38:20.079 --> 00:38:21.910
your own business and what it might be
00:38:21.920 --> 00:38:24.390
capable of. Sometimes taking on capital
00:38:24.400 --> 00:38:25.990
is the right thing. Sometimes it's not
00:38:26.000 --> 00:38:27.430
as well of course but the kind of
00:38:27.440 --> 00:38:28.630
general advice I would say is you know
00:38:28.640 --> 00:38:30.230
the business that you have is a repres
00:38:30.240 --> 00:38:31.829
representation of who you are and
00:38:31.839 --> 00:38:32.950
sometimes you have to go out and take
00:38:32.960 --> 00:38:35.270
risks if you want to grow. So make sure
00:38:35.280 --> 00:38:37.750
that you believe in yourself. As cheesy
00:38:37.760 --> 00:38:39.510
and as commonplace as it might sounds, I
00:38:39.520 --> 00:38:41.109
think it's very very true even today.
00:38:41.119 --> 00:38:42.950
Yes, take calculated risk. The risk
00:38:42.960 --> 00:38:45.190
manager in immediately thought analyze
00:38:45.200 --> 00:38:47.190
it, you know, mitigate them as much as
00:38:47.200 --> 00:38:49.190
possible, but do take risks. There is no
00:38:49.200 --> 00:38:51.829
business without risk. Who agree with
00:38:51.839 --> 00:38:54.630
that. Thank you very much for uh for for
00:38:54.640 --> 00:38:57.109
your time and for those insights. And as
00:38:57.119 --> 00:38:59.589
we always say, let's uh hope it was of
00:38:59.599 --> 00:39:00.950
use to someone. Pleasure, guys. Thanks
00:39:00.960 --> 00:39:02.310
for having me on. I appreciate it to
00:39:02.320 --> 00:39:06.359
speak to you as well. Heat. Heat.