The Fintech Playbook

[Music] well today it's a lovely uh day today in ABI isn't it Adan it's very nice yeah good to be here great great thank you so much for joining us today uh look my name is Elanor Slinger as I mentioned and as uh Flo mentioned and I'm really proud to be here in Abu Dhabi and have seen some of the growth especially from startups and finex around the region um but yeah we want to give you a warm welcome Dan all the way from America as CEO of North America you've had roles previously and I just wanted to get your journey and how have you how have you been the last few months starting at liquidity group yeah it's uh it's been fantastic so I'm about three months on the job uh joined liquidity group September 1st um as CEO of the North American Business um as you mentioned there um the prior 20 plus years I was at Silicon Valley Bank uh so working with tech companies um mostly in the United States and and the uh the last role that I had at svb was leading the national fintech team um so National being us uh so Silicon Valley New York Boston you know the major Tech hubs um in um in the US and covering all the sub sectors within fintech um including uh lending and capital markets which you know now I'm at a a lending Capital markets company and would you say that there are any lessons and insights that you can bring from SV to liquidity group and what what have you sort of seen as the opportunities yeah I mean there there's certainly things that you know I can bring there's you know 20 plus years of pattern recognition across literally thousands of companies uh that we were working with so you learn you learn a lot you've seen a lot of things go right you've seen things go wrong um and um you know I think especially around you know when to raise Capital how much to raise what's the optimal structure you know within the um the company's Capital stack like all of those things you know very um very well rehearsed and like I said lots of lots of pattern recognition um however there are other things I'm learning you know being at a you know more flexible and more Nimble company now like how quickly you can make things happen uh for instance um and that's a that's a breath of fresh air I mean svb was great you know by banking standards you know in terms of making things happen uh but it you know it's nothing compared to being a startup uh where you know Monday to Friday every week you learn a ton about your business and about your client base and your Capital partners and all of that um but Monday to Friday you can also just make a lot of things happen you can really move the business uh because it's so much more Nimble so much more flexible um and um and everyone on the team is so much more focused as well and how have you used used Ai and uh machine learning to sort of make your your startup a little bit more Nimble what are the sort of ways that you're taking advantage of that yeah I mean look at at um our core we are an AI company right so we are an aid driven um asset management firm we have a machine learning platform we're ingesting Financial due diligence data um into that platform and then um analyzing uh that data and using the analytics on that um including Predictive Analytics uh to deploy capital for our Capital Partners mostly in the form of growth Capital debt um although we did just close our first growth Capital Equity Fund um as well that fund is uh focused on the Asia pack Market um so you know we are an AI company and that's um that's the business analytics but it's also Predictive Analytics around Revenue um profitability um stress cases and testing against like what what a larger loan might look like versus a smaller loan for instance all those kind of things and then importantly also using those same analytics to manage um the uh the loans and the Investments once we've made them and how important is it to be part of that Financial mix for startups and being able to offer different types of capit it's critical um you know I think that um for we're mostly working with tech companies you know like the other companies that'll be on stage today and you know those companies typically need venture capital for product development um there are other forms of capital that um and and less deluded forms of capital that come into play uh as they're uh growing Revenue as they're expanding their operations um so they might still be dependent on Venture Capital to some degree but they're these um complimentary forms of Capital like what we provide in terms of non-dilutive financing uh that can be um incredibly helpful to companies especially in a market like this where Venture Capital Equity is you know becoming uh increasingly more expensive or just not available and turning a little bit to yourself as a unicorn I'm just wondering are the pressures different now and H how do you sort of achieve 500% growth per year as put in one of your uh your releases I've seen and and perhaps what are the sort of expansion opport unities and what do you see for you know the Middle East as an opportunity yeah I mean look there's opportunity everywhere right Middle East and Beyond um how do you keep it up um that kind of growth I mean you've you've got to keep telling the story right you've got to be in front of uh all the prospective uh you know customers out there um but also the influencers around those decisions those financing decisions so you know venture capital and private Equity firms are um not the only uh channel That Matters there but they're one of the really important ones um and you know importantly you got to keep scaling the company and you know in in our business that means continuing to bring on um New Capital partners and more Capital right so at our core we're an AI based asset manager we got to keep adding assets right got to keep attracting um um asset managers who want to back us um and and and and deploy Capital across our platform but we also have to keep scaling the business from a product perspective and um you know we at our core we've got a decision science engine um you know that we use for underwriting that is the core of what we're doing we also need to continue to develop other products you know around that that make the solution and the workflow around it um that much better and uh generative AI is presenting itself as um the way that we're doing that right if you think about everything that happens after an underwriting decision is made you know what it takes to get through to sign loan documents and advancing money there's a lot of work there and and we're using gen AI to automate some of that workflow as well yeah the kyc process is not always fun for startups to have to do and would you say that there's different criteria and different factors you can take into account because you have this different decision-making uh science yeah I would absolutely say that um you know the um it's you know I talked about pattern recognition earlier and I talked about it in a positive way can also be negative right where everyone's just sort of chasing the same thing um and I think that having the you know machine learning driven AI based approach um to analyzing these companies and underwriting um uh the investments in these companies actually cuts through a lot of the bias um so we might be looking at a company that's in a you know a um a sector that's actually out of favor but the metrics um that we're seeing in our system are very positive right the the same kind of unit economics that uh the panel before us was talking about and when we see that it cuts through that bias that we might have around the the sector especially you know if the Predictive Analytics from our AI engine um are taking into account the macro factors that would affect that sector and we still like the opportunity it helps you lean in that much more the opposite could also be true right a company that's in a really hot space uh but the metrics just aren't there um you know having having the AI driven metrics based datab based approach really helps us focus on companies that are actually performing yeah and you were saying earlier you've scaled into the region you've hired people in the region and uh you've recognized that there's a potential itially a funding Gap would you sort of say that there is an opportunity for you guys to fund more of the startups here and what kind of sectors would you pick for this region if you could yeah definitely um so well first let me start with what we're doing here in Abu Dhabi we have 50 people in this building um and we're um we're hiring people all the time um mostly product and data science here a few people um including my colleague Carmen who's uh somewhere here um who is more Market Bing uh but a lot of uh product and data science people here um this has been a great place for us to grow our business um and it's um now our second largest office and certainly our fastest growing office um so um back to the point about scaling the company um Abu Dhabi and the support we've gotten from the adgm and um audio has been fantastic um to help us do that um on the market um it's look it's a younger Market but it's a super exciting one and I think the fact that we're all here um for multiple days um in a conference in a setting like this is sort of Testament to that um what's happening with um adgm and audio and just the way that the entire ecosystem is organizing around leaning into Tech and leaning into um capital and capital allocators is you know certainly a good sign of what's to come but that said the Market's there already great things happening here you know so you know we did um we did a deal with uh trucker um uh a couple of years ago we recently uh just um doubled down on that and provided more Capital to them because again we like the performance we like the metrics we like what we're seeing there um and it's helping that company um do even further expansion um um across the region so that's a great example of the kinds of companies that are getting built and the way we're coming alongside of uh the management team and the equity investors to provide this non-dilutive financing to help them continue to grow and with that non-dilutive capital is that more suitable for early stage to growth stage is there a sort of sweet spot that you would sort of Imagine yeah I mean look I I think in terms of um you know the financing Spectrum um there's a place for it everywhere in terms of what we're doing at liquidity we're focused on growth stage um so you know think about the way that our um um AI platform Works we're analyzing you know basically invoice level data so we can do a Bottoms Up build on all of the unit economics that the prior panel was talking about um and by looking at invoice level data we're getting a granularity and a Precision around that underwriting uh that a human analyst wouldn't however um that basically necessitates that you have a lot of invoices right so the more customers the more transactions the more differentiated our analysis is going to be so because of that that that sort of skews us to really focusing on growth stage companies so um you know companies that you know probably 10 million plus in Revenue um still growing and you know still looking for a market share um that they can capture do you see an opportunity to collaborate or partner with more traditional Banks and how they bank is there any opportunities there I I definitely think there um opportunity for that I mean we've you know over the last couple of years there's been this boom in the private credit space you know um which it's it's easy to sort of think about that as like you know being completely outside the banking system um however I think that there are plenty of opportunities for banks and um and private lenders to work together we're already doing some of that right and syndicating deals with a or syndicating a few deals with um with banks um but I think that look if banks figure out how they want to play in this market then I think there's definitely an opportunity to do deals together um um up and down the capital stack I also think um you know back to my earlier comment around continuing to scale our product and use geni to develop some of those workflow Tools around the deal process I think that is the type of product that actually is going to be um attractive to many banks um as well so that might also that that might be a different way that we end up playing with banks is actually licensing our software uh to them and I mean that was one of my questions with how do you scale Capital deployment quickly I mean is it just with the due diligence are there other factors is it trying to get more uh finan is Into The Mix as well it's all that it's all that you know I think that um you know some of it is scaling the team right to make sure that you're in front of the right opportunities you've got people with you know sort of the capital markets expertise on the team to scale the uh Capital Partnerships piece of it um and and that you've got a great marketing engine actually our CMO is here as well youve got a great marketing engine that's telling the story and getting it out in front of the uh all sides of the market uh that matter um but importantly we also leveraging technology right it's not like to do more deals we have to hire more analysts um and at least that's not a onetoone kind of relationship we're in a much more scalable um situation just because we're leveraging the machine for so much of the underwriting and decision um uh making that we're doing and we're on the eve of cop 28 which is very exciting to be here in the uee uh this year and I just wanted to understand how do you build in the long-term goals of sustainability with the need for profit how how do you help startups achieve that yeah definitely um you know I think that that that that's a conversation that starts in the boardroom uh for each of those startups um but I think that you know understanding how you know the the the impact that a company intends to have Beyond just the return to shareholders uh the financial return that is is really important um you know I I guess I can't say yet that you know we've got um any analytics or in our model around like what the environmental or social um impact might be for a company but what we certainly can do is say hey that company that does have an environmental or a social Mission or some kind of impact uh Beyond uh just the business metrics how is it also performing right um is is it actually able to do the both and um and if so so you know that's a that's a way we can support those companies great well that's good to hear look as a as a final question uh for startups in the in the team or in the audience today it' be really good to get some of your tips and key lessons and just to summarize you know how can these startups take advantage of uh this new form of capital how can they sort of achieve what you've achieved as a fintech yourself uh and some words of wisdom if you don't mind yeah so you know there are a few things I would I would think about there you know one is um you know think about your Capital right and be Capital be as capital efficient as possible um we're in an environment right now where that's sort of being forced on you um as an operator we were an environment you know a couple of years ago where everyone would have thought you were crazy to not spend as much as possible right so the everything goes in cycles and you know just think about think about the capital resources you have um and think about how to allocate that um and be as capital efficient as possible um doesn't mean don't spend doesn't mean don't take losses um if those losses are producing um Enterprise Value in your company uh because you're gaining market share expanding markets developing product whatever it is um but uh but be Capital efficient and then the maybe closely related to that is just uh be open to how you're thinking about forms of capital um you know as I said most product development companies have some form of venture capital or other Equity Capital present um in their cap structure already um and that's great um and you might need more of that um as you grow but think about the complimentary forms of capital especially non-dilutive financing like we've been talking about um here today well thank you so much for joining me today Dan it's been a pleasure to chat and uh hope there's been some Pearls of Wisdom for you all today so thank you so much enjoy the rest of the adgf yeah thank you so