Can you tell us a bit about your background and why you decided to start the platform?
I started my career as an investment banker on Wall Street at UBS and then Centerview Partners advising Fortune 500 companies on mergers and acquisitions and received my MBA from The Wharton School. When I moved back to Toronto, Canada I realized that Canadian businesses were struggling to get the capital they needed to grow their business so decided to create FundThrough to use technology to make it easier for small business owners to get working capital funding.
Can you give us a brief introduction to FundThrough?
FundThrough is a marketplace lender that uses technology to provide quick, flexible and convenient lines of credit against outstanding invoices and recurring monthly revenue contracts to growing B2B businesses.
Why is there a need for FundThrough in the Canadian market?
Small and medium sized businesses who don’t qualify for traditional bank loans have few simple alternatives to access capital to grow. Using technology, FundThrough is able to significantly reduce the time and stress of applying for a loan and getting an approval response while making the process of borrowing simple and transparent for borrowers.
Tell us about the regulatory framework that applies to peer-to-peer lending in Canada.
The current regulatory framework is evolving as regulators such as the Ontario Security Commission evaluate peer-to-peer lending.
Looking at the specifics of the platform – what are the borrowing rates, fees and average interest yields?
FundThrough focuses on the credit strength of the customers that our clients sell to and therefore the pricing is based on the customers and not the financial or credit history of the borrower. Rates range from 0.8% - 1.25% per month (or 10-15% per annum). FundThrough’s loans are short term, very flexible and can be repaid whenever the client wants with no penalties. Fees range from 0.75 – 1.25%. Average yields are in the low-mid teens.
What type of company and investor are attracted to your platform?
The companies that are attracted to FundThrough tend to be too new, too small or too fast growing to qualify for traditional banks but who sell to high quality business customers and are looking to grow.
The investors that are attracted to FundThrough tend to be family offices, high net worth individuals, hedge funds and financial institutions that are looking for access to a new, short term, uncorrelated asset class with yields in excess of comparable market rates.
How do the investors pick their loans? Is it via an auction model or are the funds auto-diversified?
The funds are auto-diversified.
What are the minimum and maximum loan sizes you can accommodate?
FundThrough has no minimum or maximum loan size. We have funded invoices ranging in size from $20 - $700,000.
What is the minimum investment amount?
Minimum investment amount is $150,000.
Where do you see the platform in a year’s time?
We believe FundThrough has the potential to change the entire small business funding landscape and to become the standard way of funding short term working capital with hundreds of thousands of invoices passing through our platform.