Small business lending is an extremely important finance function that is full of sand in the gear.
Lendio is working on smoothening the process and adding velocity into the ecosystem. We discuss the future of this corner of FinTech in this fascinating conversation.
Sramana Mitra: Let’s start by introducing our audience to yourself and to Lendio.
Brock Blake: I’m the founder and CEO of Lendio. Lendio is a small business loan marketplace. We are helping small business owners across the United States get access to capital. We’re like the Expedia or the Kayak for business loans, which means we’re not a lender ourselves. We have 75 lenders on our platform. We’ve created an opportunity for a business owner to go and come to one place so that one application can get access to many loan options.
What drives or motivates us is fuelling the American dream where business owners may have a dream to grow their business, hire employees, purchase equipment, or expand to other locations. They need capital to be able to make that happen. Without us, they may go bank to bank to apply for a loan and get declined. What we’re trying to do is make that process easy with a great customer experience and help the business owners accomplish their goals.
Sramana Mitra: As we discuss in some of the communication leading up to this call, we are huge believers in debt being a central strategy to small business expansion much more so than equity. If you read the popular entrepreneurship press, people would start believing that everybody is raising huge amounts of venture capital.
The truth is venture capital, as a model, doesn’t apply to most businesses out there because hyper growth isn’t an actual state. Most businesses don’t cater to billion-dollar market opportunities. In our work, we are very much believers in also enabling the other 99%, assuming or given the fact that more than 99% of the equity applications that come through VC doors get rejected. But that doesn’t mean that all these companies aren’t good companies or can’t build successful businesses just because they’re rejected by venture capitalists.
Debt is a really vital piece of the equation. Either you bootstrap or if you need working capital to grow, you’re much better off going for debt because you may not qualify for venture capital. That’s the philosophy of the 1Mby1M program. What you’re doing is extremely relevant for our audience. You said 75 lenders are on your platform. Could you give us some color on what kind of lenders they are? What are they looking in the companies that they want to lend to?
Brock Blake: Can I just make a comment on your previous comment before we deep dive into the lenders? Venture and angel investors are the sexy conversation and get all the press. Before I started Lendio, I actually was helping entrepreneurs get access to angel and venture capital. We were doing speed pitch events. It would be like speed dating, but you’d have three or four at a table.
As the entrepreneur, you would go table to table pitching these angels and VC’s about your business. We also had an angel list or a dating website where business owners could come post their business plan and angels would respond to them. My previous life was all about helping entrepreneurs get access to angel venture capital.
What I learned during that experience is the exact message that you just shared, which is so many business owners want access to angel and venture capital because it’s like, “That sounds so awesome.” It is only a very small percentage. Like you said, maybe 0.5% or 1.5% of business owners will qualify or need or get angel venture capital. I was seeing this real-time – all these business owners coming in that were good businesses and they felt like they needed to raise capital.
I was like, “You don’t need to raise capital. You don’t need to give up equity for your business. You have a good business and maybe you need $50,00 or $100,000. But you don’t need $1 million or $5 million or $10 million to do that.” That’s the exact reason why we started Lendio because I saw that firsthand. We said, “Let’s help all these business owners get access to the loans.”
It’s a much bigger market. You’re helping a lot more businesses. They can qualify for it easier. They’re not giving up equity. There are so many benefits to it. That was really the premise of us starting Lendio. It was seeing that pain point that you hit on so eloquently previously.
Sramana Mitra: Perfect. So we’re completely in alignment.