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Ben
MBA
Bain Capital PE
Yale (Physics)
Intelligent Lending
By Verix
Dan
JD
Goldman, HFA
UChicago (Econ)
David
MBA
Bain, Berkeley CS
Brown (Math)
Soumya
MS&E
Visa
IIT (EE)
Interviews: 107
Existing Market,
Low-Cost Entrant
Verix ENGR 245 Lean LaunchPad Stanford 2018
Then and Now...
Start: Cash Mgmt Finish: Loan Processing
Betterment for SMBs
(origin: Ben’s
optimization paper)
Process loan apps for
banks (underwrite in
minutes, not months)
Original BMC: Cash management
KEY ACTIVITIES
1) Infer recurring cash
needs from ERP data
2) Know latest rates /
terms for short term
securities universe
3) Recurring portfolio
optimization (first advise,
LT vision invest)
KEY RESOURCES
1) Treasury mgmt & short-
term investing know-
how/domain exp.
2) Data for predictive
analytics / time-series
modeling, optimization
back-end
VALUE
PROPOSITION
Arima offers
sophisticated
outsourced cash
management for
SMBs. Using
predictive analytics to
determine recurring
cash needs (e.g. rent,
payroll, etc), Arima
robo-advises / invests
in an optimized
portfolio of short-term
securities on behalf of
SMB clients.
COST STRUCTURE
Cost Summary: relatively fixed development costs to build product, one-time CAC but
believe low attrition (e.g. Betterment), cost to serve onboarded customer very low (highly
automated)
1) (ST) SW Dev: engineers, web dev tools, hosting, hardware
2) (LT) CAC: one-time to bring customers on platform, low attrit.
4) (LT) Custodian / Banking Back-End Partner: revenue share
agreement (Bment/Wfront -> they are web f-end on bank b-end)
3) (LT) Cust. Svs: some req’d ongoing CS / manual account oversight
PARTNERS
Partners for Near-Term
(Free Robo Cash Mgt
Advice)
1) Securities data
providers (e.g. Bloomberg,
Bankrate)
2) Banks (CD providers)
Partners for Long-Term
(For-Fee Auto Cash Mgt
Investment)
3) Custodian back- end
(e.g. Apex)
4) Securities brokers
REVENUES
Revenue Summary: cash mgmt robo adv. tool low cost in ST, LT vision for %
AUM-based fee on robo-invest platform
1) One-Time App Fee (ST): QuickBooks app store (~$50)
2) Bank Fee (ST): Banks who grow their CD book through Arima, fee size TBD
3) SMB Mgt Fee (LT): 25 bps of AUM per yr. (vs. ~35bps for Wealthfront or
Betterment)
CUSTOMER
RELATIONSHIP
Two Key Tenets to
Customer Rln.
Fiduciary: customers
expect Arima to act in
their financial interest
Seamless: SMBs want
frictionless, auto
experience -> no work
CHANNELS
Delivery Channel:
MVP: Concierge/email
with web app
ST: QuickBooks app store
LT: Independent SaaS
CUSTOMER
SEGMENTS
SMBs
-Allow SMBs to earn more
interest on cash otherwise
in low/zero interest
checking acct.
-Automate any current in-
house solution & free up
that employee’s time
- Early stage tech &
small prof. services
firms
Banks
-Helps banks looking to
grow their CD book /
longer-term financing
sophisticated
outsourced
cash
management
for SMBs.
Early stage tech
& small prof.
services firms
QuickBooks
app store
% Assets Under Management
based fee on robo-invest platform
Stories of our Journey
Three Key Pivots
Cash
Mgmt
Loans
SMBs Banks
Intake Process
What market are we competing in?
What customer are
we serving?
What product are we building?
CustomerProductPainPoint
Week 2
We tested our cash management MVP, and
customers hated it
“To be honest, we’re not really
interested in any reworking of our
financial processes for what
amounts to small dollars of
incremental interest.”
- COO & Co-Owner @ $50M revenue New
England distributor
Cash Management MVP Week 2 Feedback
So we asked ourselves, what are small
businesses actually complaining about?
Pain Point Pivot (Week 2): Moved from
a “vitamin” to a “painkiller”
“Getting our first loan was a
nightmare. The paperwork
was endless and the bank
took forever to approve it.”
- Co-Owner @ NYC e-Commerce Co.
Loan Applications MVP Customer Insights
Three Key Pivots
Cash
Mgmt
Loans
SMBs Banks
Intake Process
What market are we competing in?
What customer are
we serving?
What product are we building?
CustomerProductPainPoint
Week 5
We tried building our “common app for loans” for
SMBs, but ran into a wall...
Customer
Acquisition
Get Data /
Complete App
Processing
Underwriting
Tools
SMB Customer Bank Customer
No Digital Integration of Supply & Demand for Loans
Pivot to building digital intake for banks
We learned banks know they have broken tech
and are eager for sol’ns
“We’re not in the business of building every solution
ourselves, nowadays. Startups succeed with UX and
data, banks struggle there. Fintech needs to work with
large banks.”
- EVP of Innovation @ .
Customer Pivot (Week 5): New MVP white-
labeled digital intake for banks
Three Key Pivots
Cash
Mgmt
Loans
SMBs Banks
Intake Process
What market are we competing in?
What customer are
we serving?
What product are we building?
CustomerProductPainPoint
Week 7
Loan intake MVP Week 7 Feedback
Banks liked our loan intake MVP, but no “rip it
out of your hands” moment
1. A “nice to have” but not
biggest pain point
2. Some direct competition
(Mirador)
3. Major software
implementation for bank
“I have four analysts sitting in our Palo Alto office who just
do spreading. That’s the bottleneck—I’m waiting for them to
finish the spreads so we can underwrite these loan
applications.”
- Senior Managing Director @ .
(Literally leapt out of his chair to show us this step)
What was the big pain point for lenders? →
Processing
We set out to better understand the
spreading process
We mapped out competitors to see if anyone
was offering this service
Customer
Acquisition
Get Data /
Complete App
Processing
Underwriting
Tools
SMB Customer Mid-Size Bank Customer
Market Gap
No software products
automating processing for
mid-size banks
We built our new MVP to automate the
spreading process
We got a 10x better response when we
when mentioned spreading
“Can I send this to my credit analyst friends?”
“We have analysts making $80k a year who sit in an office
in downtown LA just doing this.”
“Of course spreading should be automated.”
“Let me send you the template we use right now.”
Where We’re Heading
Next
Business model canvas
VALUE
PROPOSITION
Remove major
process bottleneck
Make credit analysts
more efficient / cost
effective
PARTNERS
3rd party Software
integrations
SMB promoters
REVENUES
Per application fee (fixed $ amount) [e.g. Mirador]
CUSTOMER
RELATIONSHIP
Initial customization and
integration (white label)
Continuous feature
improvement
Long-term support
CHANNELS
Direct salesforce targeting
bank
System integrators (e.g.,
Accenture)
CUSTOMER
SEGMENTS
VP of Small Business
Lending
- Employed at bank with $1-
50B in AUM
-Trying to expand their loan
book
- Non-score based lender
- Banks outside the “top 50”
(outsource SW to many
vendors)
Must oversee underwriting
dept. → not loan officer
Bank Head of IT
(Same bank characteristics
as above)
Remove major
bottleneck in
loan
processing
COST STRUCTURE
1) SW Dev: engineers, web dev tools, hosting, hardware
2) Fintech API partners
3) Cust. Svs: some req’d ongoing CS / manual oversight
KEY ACTIVITIES
Build integrations, be
data intermediary
KEY RESOURCES
OCR expertise
UX design expertise
Banking process domain
knowledge
Direct
Salesforce
Banks $1-50B in
assets
Fixed $ / loan application
Pilot Customer Pipeline: High-impact
demos with mgmt over next 1-2 weeks
Spreading is just the beginning
Tax data
processing
All
financial
data
Adv. under-
writing
Year 1 Year 2
SMB loan applications currently take 2 months to process,
underwrite, and close.
We believe it should take hours, or even minutes.
Target market is $1.8B; SAM $8B
Target: $1.8B
SAM: $8B
TAM: $30B
TARGET ASSUMPTIONS
3k banks in segment
x
500 commercial loans per bank
x
4 apps/approved loan
x
$300 price/app (spread + UW)
$1.8B PER YEAR
Going forward
YES, we ARE continuing, gathering more product feedback and piloting
with an initial bank/credit union partner
• Ben & David will work on this
full time through the summer
• Dan & Soumya are continuing
part time
QUESTIONS?
APPENDIX
Loan Applications MVP Week 5 Feedback
We couldn’t build our MVP because banks
can’t accept electronic apps
1. Borrowers would love a
“common application” for SMB
loans…
2. ...But banks aren’t
integrated to handle electronic
applications
We learned more about the nuances of serving
SMBs versus banks
Customer
Acquisition
Get Data /
Complete App
Intake /
Processing
Underwriting
Tools
SMB Customer Bank Customer
1. Antiquated tech makes
lending slow
2. Expensive to acquire, but
high LTV
1. No bank integration → hard
to scale SMB-facing biz
2. Expensive to acquire, low
LTV
We then asked, which of these pain
points is most interesting?
Are SMBs Complaining
About Same Issues?
Are Other Startups Trying
to Solve?
Lending / Credit Similar Complaints Some Competition
Bookkeeping Varied Complaints Some Competition
A/R Collection Similar Complaints Direct Competition
Competitor leaf diagram
Internal loan
processing
teams
* Currently only do consumer
mortgages
Lending
front-end
(digital
loan
app)
*
Lending CRM
Underwriting
tools
Data-driven direct
lenders
Customer Type Description Interviews
Gov’t / Other SBA, IRS, Industry Assc’ns 4
Competitors Direct Lenders, SW Providers 20
SMBs $250K - $50M in Revenue 27
Small Banks < $10B of Deposits 25
Mid-Size Banks $10 - 250B of Deposits 11
Large Banks > $250B of Deposits 16
Our Interviews This Quarter
103
Cost breakdown ($K)
($K) Year 1 Year 2 Year 3 Year 4
Physical Company offices $10 $34 $67 $163
Software
OCR (DocParser) $7 $35 $175 $350
S3 $0 $1 $4 $7
Web hosting $1 $5 $25 $50
Misc. SW $5 $10 $15 $20
Human
Capital
Engineering $300 $600 $1,400 $3,500
Design $- $130 $280 $560
Sales $- $360 $600 $1,500
Total $323 $1,174 $2,566 $6,150
Key resources
Physical ● Company offices
Software
● Document processing service (DocParser)
● Cloud document storage (S3)
● Web hosting (Heroku)
Human
● Engineers (2 at first—one frontend UX, one backend)
● Designers (founders only at first)
● Salespeople (founders only at first)
● Mentors / technical advisors (one banking, one general
technology/web)
IP
● Brand/trademark/logo
● Integration expertise (e.g., with LaserPro)
● Spreading software
Activities: Product, sales, fundraising
● Work with bank IT team/loan officers to understand inputs and outputs of
bank’s spreading process
● Design and build user experience for loan officer and SMB data input
● Identify API partners (DocParser, QuickBooks) and set up their services
Product
Development
Customer
Development /
Selling
Fundraising
● Identify sources of funding and programs
● Complete applications and manage interview processes
● Create marketing and sales collateral customized to individual banks
● Source leads for sales through LinkedIn and founder networks
● Present (demo) product to bank credit officers and processing managers
● Draft contracts and close
Insights: Charge $50 per Loan Application
Benchmark vs. Current
Approach
Test WTP DirectlyMain Value Props
20 minutes per tax return
Assuming no screw ups
x 6 returns per loan app
3 business, 3 personal
______________________________
= 2 hours per tax return
x $50 per hour labor
$70K salary, $30K benefits, 40 h/w
______________________________
= $100 per loan app
Note: Umpqua Bank Example
60 loans per center per month
x 20 centers
x 12 months
x 2 hours per loan
___________________________________________________
_
= 28.8K hours or ~$2.9M labor
(1) Remove Process Bottleneck
“I have a stack of applications on my desk
I can’t review yet because our analysts
haven’t spread the numbers.”
-Senior Loan Officer @ First Republic
“Doesn't matter what bank you go to, they
never hire enough credit analysts. They
are always cranky, they are always
backlogged. They are the only thing
standing between you and the loan
approval.”
Loan Officer @ CDC Finance
(2) Time / Cost Efficiency
“My credit analysts could spend more time
analyzing the financials instead of
transcribing them.”
-Senior Loan Officer @ Heritage Bank
Q: Would your bank pay $500
per loan for this product?
- Goal to start high, test down
- 3 potential buyer banks (mid-
sized)
- (Senior) Loan Officers, no mid-
sized bank CIOs (yet)
Responses:
● (2x) “I don’t know”
● (1x) Mental math of credit
analyst cost of time +
bottleneck pain → $40-50
Partnerships
Integration partners SMB promoters
SF Small Business Commission
● The bank’s core system (ex FIS) holds all
of their client and transaction data
● Their spreading program is used to make
underwriting decisions
● Use organizations that help small
businesses
● They connect with existing SMB lenders
and complain about the completion time
(30-60 days) and complexity
Products / Services
-Intuitive platform
- Upload applicant tax
return data
-Single view of all tax
returns and spread
financials
-Validate tax return data
Pain relievers
-Less paperwork/emails
-Less manual data
transformation
-Lower risk of
incorrect/fraudulent data
Gains Creators
-Increase number of loan
applications that bank
can process
Value Proposition: Streamlined Loan Application Customer Segment: Commercial Banks
Pains
-Lengthy intake process
-Risk of incorrect data →
invalidates SBA guarantee
Gains
-Low application
abandonment
-High data accuracy at
intake
-Quicker decision cycle
- Auto “spread the
financials”
Customer Jobs
-Intake loan app data
-Process loan app data
(validate all correctly
formatted/valid), request
updated information if
needed
-Underwrite loan (provide
a quote)
-Close loan (final approval
process)
-Send loan data to SBA
Updated Value Proposition
Pilot Customer Pipeline: High-impact demos with
management over next 1-2 weeks
Bank Progress Last Week Steps Next Week(s)
Heritage Bank Discussed solution with head of lending
Demo next week w/ CIO, COO,
& CFO
Sterling Bank
Solution validated with SVP SBA
Lending
Demo with EVP, CIO, &
network manager
Torrey Pines
Bank
Demo’ed with from former SVP
Implementing changes, then
demo w/ head of SBA
First Republic Re-engaged with lending SVP Scheduling demo next week
Union Savings Auto spreading inbound
Demo with commercial lending
AVP
18 Q2 18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2 20 Q3 20 Q4 2021
Operations & fundraising plan
Customer acquisition
Series A
$ 800KSeed
$ 7M
Product v2.0
launch
Product development
Official product
launch
Prototype Next 3 cust.
Dev.
activities
S&M
activities
Pilot with 1 bank
Sales and Marketing to other mid-sized banks
Scale infra.
Costs
Integration/support
Develop relationships with risk analytics providers
Loan intakeAdv. underwriting
First 100 customers!
Fund-
raising

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Verix ENGR 245 Lean LaunchPad Stanford 2018

  • 1. Ben MBA Bain Capital PE Yale (Physics) Intelligent Lending By Verix Dan JD Goldman, HFA UChicago (Econ) David MBA Bain, Berkeley CS Brown (Math) Soumya MS&E Visa IIT (EE) Interviews: 107 Existing Market, Low-Cost Entrant
  • 3. Then and Now... Start: Cash Mgmt Finish: Loan Processing Betterment for SMBs (origin: Ben’s optimization paper) Process loan apps for banks (underwrite in minutes, not months)
  • 4. Original BMC: Cash management KEY ACTIVITIES 1) Infer recurring cash needs from ERP data 2) Know latest rates / terms for short term securities universe 3) Recurring portfolio optimization (first advise, LT vision invest) KEY RESOURCES 1) Treasury mgmt & short- term investing know- how/domain exp. 2) Data for predictive analytics / time-series modeling, optimization back-end VALUE PROPOSITION Arima offers sophisticated outsourced cash management for SMBs. Using predictive analytics to determine recurring cash needs (e.g. rent, payroll, etc), Arima robo-advises / invests in an optimized portfolio of short-term securities on behalf of SMB clients. COST STRUCTURE Cost Summary: relatively fixed development costs to build product, one-time CAC but believe low attrition (e.g. Betterment), cost to serve onboarded customer very low (highly automated) 1) (ST) SW Dev: engineers, web dev tools, hosting, hardware 2) (LT) CAC: one-time to bring customers on platform, low attrit. 4) (LT) Custodian / Banking Back-End Partner: revenue share agreement (Bment/Wfront -> they are web f-end on bank b-end) 3) (LT) Cust. Svs: some req’d ongoing CS / manual account oversight PARTNERS Partners for Near-Term (Free Robo Cash Mgt Advice) 1) Securities data providers (e.g. Bloomberg, Bankrate) 2) Banks (CD providers) Partners for Long-Term (For-Fee Auto Cash Mgt Investment) 3) Custodian back- end (e.g. Apex) 4) Securities brokers REVENUES Revenue Summary: cash mgmt robo adv. tool low cost in ST, LT vision for % AUM-based fee on robo-invest platform 1) One-Time App Fee (ST): QuickBooks app store (~$50) 2) Bank Fee (ST): Banks who grow their CD book through Arima, fee size TBD 3) SMB Mgt Fee (LT): 25 bps of AUM per yr. (vs. ~35bps for Wealthfront or Betterment) CUSTOMER RELATIONSHIP Two Key Tenets to Customer Rln. Fiduciary: customers expect Arima to act in their financial interest Seamless: SMBs want frictionless, auto experience -> no work CHANNELS Delivery Channel: MVP: Concierge/email with web app ST: QuickBooks app store LT: Independent SaaS CUSTOMER SEGMENTS SMBs -Allow SMBs to earn more interest on cash otherwise in low/zero interest checking acct. -Automate any current in- house solution & free up that employee’s time - Early stage tech & small prof. services firms Banks -Helps banks looking to grow their CD book / longer-term financing sophisticated outsourced cash management for SMBs. Early stage tech & small prof. services firms QuickBooks app store % Assets Under Management based fee on robo-invest platform
  • 5. Stories of our Journey
  • 6. Three Key Pivots Cash Mgmt Loans SMBs Banks Intake Process What market are we competing in? What customer are we serving? What product are we building? CustomerProductPainPoint Week 2
  • 7. We tested our cash management MVP, and customers hated it “To be honest, we’re not really interested in any reworking of our financial processes for what amounts to small dollars of incremental interest.” - COO & Co-Owner @ $50M revenue New England distributor Cash Management MVP Week 2 Feedback
  • 8. So we asked ourselves, what are small businesses actually complaining about?
  • 9. Pain Point Pivot (Week 2): Moved from a “vitamin” to a “painkiller” “Getting our first loan was a nightmare. The paperwork was endless and the bank took forever to approve it.” - Co-Owner @ NYC e-Commerce Co. Loan Applications MVP Customer Insights
  • 10. Three Key Pivots Cash Mgmt Loans SMBs Banks Intake Process What market are we competing in? What customer are we serving? What product are we building? CustomerProductPainPoint Week 5
  • 11. We tried building our “common app for loans” for SMBs, but ran into a wall... Customer Acquisition Get Data / Complete App Processing Underwriting Tools SMB Customer Bank Customer No Digital Integration of Supply & Demand for Loans Pivot to building digital intake for banks
  • 12. We learned banks know they have broken tech and are eager for sol’ns “We’re not in the business of building every solution ourselves, nowadays. Startups succeed with UX and data, banks struggle there. Fintech needs to work with large banks.” - EVP of Innovation @ .
  • 13. Customer Pivot (Week 5): New MVP white- labeled digital intake for banks
  • 14. Three Key Pivots Cash Mgmt Loans SMBs Banks Intake Process What market are we competing in? What customer are we serving? What product are we building? CustomerProductPainPoint Week 7
  • 15. Loan intake MVP Week 7 Feedback Banks liked our loan intake MVP, but no “rip it out of your hands” moment 1. A “nice to have” but not biggest pain point 2. Some direct competition (Mirador) 3. Major software implementation for bank
  • 16. “I have four analysts sitting in our Palo Alto office who just do spreading. That’s the bottleneck—I’m waiting for them to finish the spreads so we can underwrite these loan applications.” - Senior Managing Director @ . (Literally leapt out of his chair to show us this step) What was the big pain point for lenders? → Processing
  • 17. We set out to better understand the spreading process
  • 18. We mapped out competitors to see if anyone was offering this service Customer Acquisition Get Data / Complete App Processing Underwriting Tools SMB Customer Mid-Size Bank Customer Market Gap No software products automating processing for mid-size banks
  • 19. We built our new MVP to automate the spreading process
  • 20. We got a 10x better response when we when mentioned spreading “Can I send this to my credit analyst friends?” “We have analysts making $80k a year who sit in an office in downtown LA just doing this.” “Of course spreading should be automated.” “Let me send you the template we use right now.”
  • 22. Business model canvas VALUE PROPOSITION Remove major process bottleneck Make credit analysts more efficient / cost effective PARTNERS 3rd party Software integrations SMB promoters REVENUES Per application fee (fixed $ amount) [e.g. Mirador] CUSTOMER RELATIONSHIP Initial customization and integration (white label) Continuous feature improvement Long-term support CHANNELS Direct salesforce targeting bank System integrators (e.g., Accenture) CUSTOMER SEGMENTS VP of Small Business Lending - Employed at bank with $1- 50B in AUM -Trying to expand their loan book - Non-score based lender - Banks outside the “top 50” (outsource SW to many vendors) Must oversee underwriting dept. → not loan officer Bank Head of IT (Same bank characteristics as above) Remove major bottleneck in loan processing COST STRUCTURE 1) SW Dev: engineers, web dev tools, hosting, hardware 2) Fintech API partners 3) Cust. Svs: some req’d ongoing CS / manual oversight KEY ACTIVITIES Build integrations, be data intermediary KEY RESOURCES OCR expertise UX design expertise Banking process domain knowledge Direct Salesforce Banks $1-50B in assets Fixed $ / loan application
  • 23. Pilot Customer Pipeline: High-impact demos with mgmt over next 1-2 weeks
  • 24. Spreading is just the beginning Tax data processing All financial data Adv. under- writing Year 1 Year 2 SMB loan applications currently take 2 months to process, underwrite, and close. We believe it should take hours, or even minutes.
  • 25. Target market is $1.8B; SAM $8B Target: $1.8B SAM: $8B TAM: $30B TARGET ASSUMPTIONS 3k banks in segment x 500 commercial loans per bank x 4 apps/approved loan x $300 price/app (spread + UW) $1.8B PER YEAR
  • 26. Going forward YES, we ARE continuing, gathering more product feedback and piloting with an initial bank/credit union partner • Ben & David will work on this full time through the summer • Dan & Soumya are continuing part time
  • 29. Loan Applications MVP Week 5 Feedback We couldn’t build our MVP because banks can’t accept electronic apps 1. Borrowers would love a “common application” for SMB loans… 2. ...But banks aren’t integrated to handle electronic applications
  • 30. We learned more about the nuances of serving SMBs versus banks Customer Acquisition Get Data / Complete App Intake / Processing Underwriting Tools SMB Customer Bank Customer 1. Antiquated tech makes lending slow 2. Expensive to acquire, but high LTV 1. No bank integration → hard to scale SMB-facing biz 2. Expensive to acquire, low LTV
  • 31. We then asked, which of these pain points is most interesting? Are SMBs Complaining About Same Issues? Are Other Startups Trying to Solve? Lending / Credit Similar Complaints Some Competition Bookkeeping Varied Complaints Some Competition A/R Collection Similar Complaints Direct Competition
  • 32. Competitor leaf diagram Internal loan processing teams * Currently only do consumer mortgages Lending front-end (digital loan app) * Lending CRM Underwriting tools Data-driven direct lenders
  • 33. Customer Type Description Interviews Gov’t / Other SBA, IRS, Industry Assc’ns 4 Competitors Direct Lenders, SW Providers 20 SMBs $250K - $50M in Revenue 27 Small Banks < $10B of Deposits 25 Mid-Size Banks $10 - 250B of Deposits 11 Large Banks > $250B of Deposits 16 Our Interviews This Quarter 103
  • 34. Cost breakdown ($K) ($K) Year 1 Year 2 Year 3 Year 4 Physical Company offices $10 $34 $67 $163 Software OCR (DocParser) $7 $35 $175 $350 S3 $0 $1 $4 $7 Web hosting $1 $5 $25 $50 Misc. SW $5 $10 $15 $20 Human Capital Engineering $300 $600 $1,400 $3,500 Design $- $130 $280 $560 Sales $- $360 $600 $1,500 Total $323 $1,174 $2,566 $6,150
  • 35. Key resources Physical ● Company offices Software ● Document processing service (DocParser) ● Cloud document storage (S3) ● Web hosting (Heroku) Human ● Engineers (2 at first—one frontend UX, one backend) ● Designers (founders only at first) ● Salespeople (founders only at first) ● Mentors / technical advisors (one banking, one general technology/web) IP ● Brand/trademark/logo ● Integration expertise (e.g., with LaserPro) ● Spreading software
  • 36. Activities: Product, sales, fundraising ● Work with bank IT team/loan officers to understand inputs and outputs of bank’s spreading process ● Design and build user experience for loan officer and SMB data input ● Identify API partners (DocParser, QuickBooks) and set up their services Product Development Customer Development / Selling Fundraising ● Identify sources of funding and programs ● Complete applications and manage interview processes ● Create marketing and sales collateral customized to individual banks ● Source leads for sales through LinkedIn and founder networks ● Present (demo) product to bank credit officers and processing managers ● Draft contracts and close
  • 37. Insights: Charge $50 per Loan Application Benchmark vs. Current Approach Test WTP DirectlyMain Value Props 20 minutes per tax return Assuming no screw ups x 6 returns per loan app 3 business, 3 personal ______________________________ = 2 hours per tax return x $50 per hour labor $70K salary, $30K benefits, 40 h/w ______________________________ = $100 per loan app Note: Umpqua Bank Example 60 loans per center per month x 20 centers x 12 months x 2 hours per loan ___________________________________________________ _ = 28.8K hours or ~$2.9M labor (1) Remove Process Bottleneck “I have a stack of applications on my desk I can’t review yet because our analysts haven’t spread the numbers.” -Senior Loan Officer @ First Republic “Doesn't matter what bank you go to, they never hire enough credit analysts. They are always cranky, they are always backlogged. They are the only thing standing between you and the loan approval.” Loan Officer @ CDC Finance (2) Time / Cost Efficiency “My credit analysts could spend more time analyzing the financials instead of transcribing them.” -Senior Loan Officer @ Heritage Bank Q: Would your bank pay $500 per loan for this product? - Goal to start high, test down - 3 potential buyer banks (mid- sized) - (Senior) Loan Officers, no mid- sized bank CIOs (yet) Responses: ● (2x) “I don’t know” ● (1x) Mental math of credit analyst cost of time + bottleneck pain → $40-50
  • 38. Partnerships Integration partners SMB promoters SF Small Business Commission ● The bank’s core system (ex FIS) holds all of their client and transaction data ● Their spreading program is used to make underwriting decisions ● Use organizations that help small businesses ● They connect with existing SMB lenders and complain about the completion time (30-60 days) and complexity
  • 39. Products / Services -Intuitive platform - Upload applicant tax return data -Single view of all tax returns and spread financials -Validate tax return data Pain relievers -Less paperwork/emails -Less manual data transformation -Lower risk of incorrect/fraudulent data Gains Creators -Increase number of loan applications that bank can process Value Proposition: Streamlined Loan Application Customer Segment: Commercial Banks Pains -Lengthy intake process -Risk of incorrect data → invalidates SBA guarantee Gains -Low application abandonment -High data accuracy at intake -Quicker decision cycle - Auto “spread the financials” Customer Jobs -Intake loan app data -Process loan app data (validate all correctly formatted/valid), request updated information if needed -Underwrite loan (provide a quote) -Close loan (final approval process) -Send loan data to SBA Updated Value Proposition
  • 40. Pilot Customer Pipeline: High-impact demos with management over next 1-2 weeks Bank Progress Last Week Steps Next Week(s) Heritage Bank Discussed solution with head of lending Demo next week w/ CIO, COO, & CFO Sterling Bank Solution validated with SVP SBA Lending Demo with EVP, CIO, & network manager Torrey Pines Bank Demo’ed with from former SVP Implementing changes, then demo w/ head of SBA First Republic Re-engaged with lending SVP Scheduling demo next week Union Savings Auto spreading inbound Demo with commercial lending AVP
  • 41. 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2 19 Q3 19 Q4 20 Q1 20 Q2 20 Q3 20 Q4 2021 Operations & fundraising plan Customer acquisition Series A $ 800KSeed $ 7M Product v2.0 launch Product development Official product launch Prototype Next 3 cust. Dev. activities S&M activities Pilot with 1 bank Sales and Marketing to other mid-sized banks Scale infra. Costs Integration/support Develop relationships with risk analytics providers Loan intakeAdv. underwriting First 100 customers! Fund- raising

Editor's Notes

  1. Slides are too wordy use animation
  2. Slides are too wordy use animation
  3. -explain optimization idea
  4. Would make this slide animate… else too much data
  5. What idea did you pivot to - maybe show your mvp
  6. Again animate
  7. Why not
  8. Map this out in a better way, maybe a pedal diagram
  9. The journey’s just starting! It’s a big idea :)
  10. Don’t show this slide as you don’t really understand it.