David Goldin, Capify (US)
At the end of the day, lenders are lenders and if you can’t show performance of your portfolio and you’re not acting responsibly people are not going to want to invest with you. If your model doesn’t work, your model doesn’t perform.
Capify is a global SME business that helps SME businesses grow by providing simple, quick and responsible access to capital. It comes as no surprise that Founder, President and CEO David Goldin, knows just how it feels, precisely what it means and exactly takes, to get ahead. This Global Retail Banker - Thought Leader Interview seeks to not only shed a little light on to the capital lending world, but also to explore Goldin’s own success. Goldin has perfected his model, enabling Capify to become one of the most successful businesses in a saturated market.
During a bitter New York winter in 2002, Goldin, saw a gap in the market and launched his first business, AmeriMerchant. Looking back today, the highly bandied terms, ‘Alternative Finance’ and ‘FinTech’, barely existed. It was Goldin who created one of the first alternatives to the banks, as a provider of capital to small businesses and SME’s in the US.
In 2007 his team began to see similar patterns begin to play out globally: “There was a surplus of capital, and a surplus of people getting into the industry who really didn’t know what they were doing.
We'd give a restaurant [US$] 50 thousand and a challenger would be right on our tail to give them 70. What we’ve battled though, is the reason we didn’t give them 70 isn’t because we didn’t have the extra 20, we knew our underwriting model, but regardless, we were losing business. We had a responsibility to protect our capital and knew there was a sure chance that lending in this unrealistic and irresponsible way, would result in serious losses. It was far too strenuous on the business, as well as practicing completely irresponsible lending.”
Rather than “compete in the craziness”, Goldin decided to take the business model out of the US and test his technology, underwriting platform and scoring model in neighbouring Canada, creating True North Capital. Goldin was again one of the first in the market to provide capital to businesses against their future credit sales. Roll on 2008, and on great returns Goldin wanted to become a global provider using the model. They piloted in Australia (with AUSvance) and the UK (with United Kapital), becoming the first company in the world operating in these four markets, providing these products.
As the business matured, two things happened: Goldin’s businesses introduced a business loan product and, as the FinTech world began to evolve, began to really leverage technology.
Fast forward to today and Goldin employs approximately 220 staff with offices in the US, Australia, Canada and the UK. As the first alternative SME lender in Australia, the business possesses an advantage that he proudly tells us, nobody else can ever catch up to. “Our performance data is the longest in the Australian market. We will always be 7+ years ahead of everyone else, as well as being one of the few providers that has been through the GFC, in all four markets… and survived!”
Goldin knows that in today’s market competition is fierce. Each player in the market has technology, squaring models, and extensive sales and marketing functions. “At the end of the day, lenders are lenders and if you can’t show performance of your portfolio and you’re not acting responsibly people are not going to want to invest with you. You won’t attract the right lenders, least the right buyers of your collateral. If your model doesn’t work, your model doesn’t perform.”
With all the hype around the alternative lending space, Goldin reveals that almost anybody can originate and fund businesses and consumers, it’s really not that hard. “The business and the real talent, honestly, is in collecting the money back - which we've always been known for.”
Goldin has always been a firm believer in bringing products to countries where they have never existed before. His choice of marketplace is obviously strategic, selecting all English speaking countries for ease of business dealings and the simplicity this brings to his first mover advantage.
“Access to capital is a global problem and the biggest misconception is that its credit based, which is not necessarily true. It’s honestly only half the story.” The other half, Goldin feels, is the ability for banks to compete on similar grounds. “Their overheads are too high and the way they underwrite is too manual to give out loans typically under 100,000 USD.”
Due to the highly competitive nature of the space, Goldin’s four businesses deliberately operated separately – and very successfully – until just last year when they united to become Capify. “We didn’t tell the world we were one, but now the cat’s out of the bag, the opportunities are endless.”
“I can only speak for my world, but there’s a common theme in all four markets I cover across financial services. We all have technology –you can debate who is better – but we all have it. What we have found though, is that technology can be quite a way ahead of the comfort level of the average customer. Yes, you’re going to find those millennials selling on eBay who aren’t going to want to talk to anyone, they want an end-to-end digital solution, however I have found that’s not the majority view in the market places, especially if you start going outside of the big cities. Although technology can make things more efficient, what you also have to realise is that it takes years to get technology up and running correctly – it is part of the reason banks find it so challenging to move quickly.”
Put simply, Goldin knows that not every individual has the same level of comfort in the digital space and it’s incredibly important to recognise. It’s a question of the right solution for the right customer, from product to application process.
“We are constantly educating our customers and that, to us, is very important. We have paved the way in emerging markets for this product and for us, it is far often more of an educational piece.”
Capify has experienced a true, yet very fine tuned, organic growth of which Goldin is understandably proud. “Helping people grow their own business, create jobs and fulfil their dreams is incredibly satisfying. I feel we are a true trusted partner with one company brand, message and culture. We have a fantastic employee morale and values and a mission statement we hold true in everything we do.Our business changes more every year now than it has in the last 5 and if you don't disrupt, you will be disrupted.” With that we close on his last piece of advice – “Continuously reinvent yourself, I will just say that, if you don’t, you just won’t make it.”