Prospa, this year’s fastest growing Australian technology company, was founded on the idea that a loan should match the cash flow of a business rather than its assets.
Greg Moshal, a career entrepreneur and small business owner, and sales executive Beau Bertoli, got together about four years ago, noting that banks wanted assets before issuing a loan.
“Small business owners are looking for an average of $25,000 and why should they put the family home on the line when they are only borrowing small amounts?” Bertoli told Business Insider. “And we thought there has to be a better way to do it.”
Prospa specialises in unsecured loans of $5000 to $250,000 to small businesses over three to 12 months with weekly or even daily repayments.
The online lender to small business had 6971% revenue growth over the three years to 2014, almost double that of last year’s Deloitte Australia TechFast 50 winner, communications company NEXTDC Ltd, which recorded 3626%.
Using a proprietary technology platform and a simple online application process, Prospa can approve and provide funding for loans within 24 hours.
Since 2011, Prospa has lent more than $70 million to thousands of small businesses.
They’ve developed their own credit information and interpret that in a way that banks and other lenders haven’t done.
“It really gave us an edge,” says Bertoli. “We’ve built up a huge depository of data around what the risks are.”
This has allowed them to accelerate lending.
“We work in our repayment and the way we structure our loan product with a business’s cash flow,” says Bertoli. “And that reduces our delinquency rate because we are able to work within cash flow.”
For a business which does well during summer, such as a restaurant at a holiday town, a loan can be tailored so that it repays more when cash flow is highest and less when trade is quiet.
“There’s a lot small business owners want to do but there’s such limited capital in this country to actually enable them to reach their full potential,” he says.
Here’s are Bertoli’s four key tips on building a startup:
1. The idea. You think it’s a good idea but you have to challenge it.
“Get out there and speak to real life potential customers and establish if this is a product or a solution that the market is actually looking for,” Bertoli says.
2. Finance. Any business that has a good runway will require capital. In the early stages, debt or equity is needed.
“Find some really good partners who are aligned with your vision and your style of management,” Bertoli says.
There can be a world of difference on how a VC (venture capital) wants to run a business and how the founders want to do it.
3. The Team.
“One of the hardest thing that we found in the early stages of our business was attracting the right talent to the business because in the very beginning we were just an idea,” Bertoli says.
Be disciplined. Don’t take just anyone. Get the right people.
“We have a truly amazing team,” he says.
“The core group of eight to ten who have been here since the very beginning of the business are still here.”
4. Failure. Always try new ways of doing things.
“We are constantly failing at things we try but what comes out of that is incredible learnings,” Bertoli says.
“That approach of never being afraid to failure really resonates with the whole team. And as a result of that we always have a team that is trying and innovating.”