Working Capital (Debt) Financing For Entrepreneurs: Mitch Jacobs, Founder And CEO, On Deck Capital (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: All your contacts with businesses seeking financing and all the processes are through the software, right? There are no people-to-people meetings like angel groups have?

Mitch: No. Although, I think increasingly there are businesses where there’s both a technology layer and a business services layer. And we do have people who get on the phone with small businesses owners. Small business is still a contact sport. >>>

Working Capital (Debt) Financing For Entrepreneurs: Mitch Jacobs, Founder And CEO, On Deck Capital (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: How long do they need to be in business?

Mitch: We work with businesses that have typically been in businesses for several years. It’s not a program for startups. It’s a program for businesses that typically have $250,000 to $3 million in revenue and also businesses that tend to have a very high volume of small transactions but tend not have any collateral or hard assets as traditionally defined by a bank. >>>

Working Capital (Debt) Financing For Entrepreneurs: Mitch Jacobs, Founder And CEO, On Deck Capital (Part 2)

By guest authors Irina Patterson and Candice Arnold

Mitch: In general, business owners don’t do a good job of helping a bank to very quickly and readily understand the excellent performance of their businesses. It’s very hard for a bank to assess the performance of a small business. Given the economics of small loans, it ends up with the bank using the credit score as a substitute for any real analysis of business performance. >>>

Working Capital (Debt) Financing For Entrepreneurs: Mitch Jacobs, Founder And CEO, On Deck Capital (Part 1)

By guest authors Irina Patterson and Candice Arnold

This is the ninth interview in our series on financing for entrepreneurs. I am talking to Mitch Jacobs, founder and CEO of On Deck Capital, a small business online lending platform.

Irina: Hi, Mitch. Let’s start with your background and how you arrived where you are today.

Mitch: I began a career in entrepreneurship, somewhat unintentionally, as a junior at Dartmouth College. I launched a company that enabled local businesses to accept the student ID card as a form of payment off campus. It had a different name at every campus. >>>

Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: And how is your network organized?

Padmaja: We were very entrepreneurial in how we started. I don’t think there was much thinking at that time. We didn’t realize it would be so big, to be honest. So, we just started with a private, limited company which is for more administrative purposes, just so that payments can be taken in and expenses can be pushed out. >>>

Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: If you could give one piece advice to angels about how to become more successful, what would your advice be?

Padmaja: That’s a tall order. I must first say this with a bit of a rider. Angel investing in India is very young. It’s not as old as what is happening in the United States or the United Kingdom. So, keeping that in mind, I think per se, angel investing is a new phenomenon for people here. There are very few angels invested in the true sense. So, one thing that does happen – because the VC industry is a decade and a half or more older – the VC lens is sometimes used more than the angel lens.

If you’re a VC coming in with let’s say a $5 million to $10 million investment, you’re obviously looking at a company that’s got a history, that’s got some traction, that’s got some success. So, a VC would invest, looking at the past, and also taking a punt on the future. On the other hand, if you go to a bank that is giving a debt, or any debt financing agency for that matter, it largely looks at the past of the company. >>>

Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network (Part 7)

By guest authors Irina Patterson and Candice Arnold

Padmaja: As another example, there is an entrepreneur who’s doing 46% net profit, and we give him honest feedback: Don’t share equity. You don’t need to. He needs working capital, so we told him we put you on to people who give debt. Maybe that’s a cheaper way for you. Why do you want to share equity? >>>

Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: Do entrepreneurs have to have previous senior executive experience?

Padmaja: No. They need to have two things. One is an understanding of the domain, and the other is a bit of a complementary skills within the team. You don’t want to be investing only in a “CTO,” because he or she may be able to produce the best technology but who’s going to take it to the market, commercialize it, and create the revenue line? There is a bit of the complementarity that we look for. >>>