The UK Altfi market could be faced with a genuinely new business model to contemplate when Jeffrey Rogers, the President and CEO of New York-based LiftForward, brings his show to town sometime in the early part of 2017.
Formed in 2013, the company has already made one or two small business loans this side of the Atlantic, but the main event revolves around providing finance to manufacturers, distributors and retailers to enable them to offer customers a new way to acquire technology. Rather than outright purchase, or traditional lease, customers are invited to become members through subscription, the argument being that this approach fosters a better, longer-lasting customer relationship.
In the US, the big name that has already bought into the concept from the manufacturers’ side is Microsoft, which is an impressive start by anyone’s standards. Discussions with some other ‘big names’ are apparently ongoing, but it is too early to reveal their identities.
Finding the debt capital does not appear to be a problem, either. Having raised $ 250m from institutions in July 2015 – one of which was GLI Finance when it was under the stewardship of the since-departed Geoff Miller – Liftforward came to the market for a further $ 100m this month (November). This time it was spearheaded by another institution, Monroe Capital. Mr Rogers reckons this should satisfy funding requirements until possibly October 2017, but, such is the appetite for growth, he is already negotiating the next funding round with various banks.
Clearly, retail investors are not part of the plan and only institutions are invited to join the party. GLI remains a significant minority shareholder, holding “less than 15% of the equity”. Since Geoff Miller’s departure, the shares are now held by a new GLI-owned entity, FinTech Ventures Limited. “It’s much easier to deal with a few institutional shareholders rather than a whole host of small investors. GLI has been very supportive”, said Mr Rogers.
Most of the marketing to date has been conducted through relationships. “We have two sales people and we don’t spend a lot of money on marketing – half of the senior management is made up of heavily tech-focused people”, said the ex-investment banker. “We are very strong on due diligence – we have 50 data sources, plus other web sources, which we feed into an algorithm to produce a credit score. We specialise in fully-integrated tech solutions.”
“We are not burning cash, either. We are already profitable”, revealed Mr Rogers – surely of interest to the UK P2P business lending sector where many platforms are still accruing losses.