Our Newest Investment — Valiant Finance
At Full Circle we focus on executing well against a very simple thesis — Find businesses developing technologies that make other businesses better, 10x better, led by 10x founders. We seek these types of opportunities across a variety of domains and what better area to have found our newest investment than in the backbone of the Australian economy — the small to medium sized business (SMB) ecosystem.
A summary of the opportunity — co-authored with Black Sheep Capital
According to the most recent data set provided by the Australian Bureau of Statistics (ABS), small businesses now account for approximately 97.5% of all Australian businesses, an increase of approx. 2–3% over the FY16-FY17 period. By definition, this subset of data includes any business employing ≤ 19 people, however, if extended to include medium sized business (i.e. business employing ≥20 & ≤ 199 people) this number rises to approximately 99.80% of the entire Australian business ecosystem.
This category of the ecosystem keeps over two thirds of Australian workers employed and creates a substantial proportion of new jobs entering the market each year Link.
Why is this important? Well, for the 97.50% (i.e. small business), obtaining access to debt finance is critical to their success and, more so, critical to the Australian economy and its continued prosperity. We believe not only do these businesses need access to financing opportunities, more importantly they need access to, and an understanding of, the right financing opportunities.
This is where our newest investment — Valiant Finance comes in. Valiant is a fully digital, tech driven lending brokerage platform designed to help place SMB lending requests with the most suitable financial products on first application; yes, you heard correctly, no more time wasted completing multiple lending applications, for various lenders, only to be rejected by all of them.
The solution combines a unique and well-polished user interface with a tech driven customer fact finding (i.e. information gathering) process, to quickly analyse the suitability of lending products available within its marketplace, against the needs of the SMB customers — at policy level and not on a needs basis. By matching opportunities this way, Valiant is uniquely placed to tell customers, quickly, if there are any suitable products within the network of over +70 accredited lenders, or quite simply, tell them there aren’t. This is great for SMBs as it means far less time wasted completing multiple lending applications independently, only to be rejected or redirected by lenders.
Why lead lending with costly human interaction when you can automate this process with Technology?
It’s no secret, the customers experience in typical broker/lender customer interactions, relating to obtaining finance, are far less than ideal. It usually looks something like, 30 minutes searching google, a few phone calls to various lenders, several meetings with the selected lender/broker/advisor and often hours spent compiling information. Typically by this point the customer still doesn’t know if they are likely to be approved by the selected provider for the target product. On the other hand, Brokers/Advisors/Lenders also spend countless hours each week collecting information from their prospective customers to assist with the development of a suitable lending applications only to find out that their networks are unable to place this customer with a suitable product. Incredibly inefficient if you ask us.
This is how the platform works:
The team at Valiant has designed a fully autonomous customer fact-finding process to collect all required data points from customers, digitally, while in parallel running any captured lending requirements through their policy matching algorithm to narrow down suitable lender products — saving all parties an abundant amount of wasted time if the aforementioned search, apply, reject and repeat scenario.
As a customer, in a matter of <5 minutes, you can be matched with countless suitable lending policies and be provided with an algorithmic matching score for each of the available products (i.e. providing the likeliness of approval as a % probability).
Running the process this way does three things that really excite us.
- It saves time for the customer by matching them with suitable lender policies with a higher chance of approval from the get go.
- It means SMB customer have greater access to policies and therefore opportunity — this is great news for SMBs and the Australia economy.
- It completely disrupts the traditional human interaction first approach to SMB lending by qualifying opportunities before a single minute of expensive resourcing time is spent on the transaction.
Matching based on policy fit, not economics.
For anyone not familiar with the lending ecosystem, it runs very deep and very wide. There are hundreds of financial products, a countless number of lenders and often complex and unique economic factors contributing to the makeup of a ‘policy’ such as interest rate, repayment terms and guarantees etc. As a consumer it is extremely difficult to know what you are getting, let alone compare that with the several hundred alternatives in the market.
The Valiant technology focuses on matching the customers’ needs by looking into all of the above mentioned factors at an aggregated policy suitability level (they call it ‘Match fit’) to ensure the highest probability of successful application. This significantly improves the customer experience and the efficiency of the lead generation/qualification process for the matched lender/s accepting the referred business.
A game changer for brokers, advisors, aggregators and bankers.
In addition to the slick and effective platform Valiant provides for SMB customers, they have also developed a fully digital referrer dashboard built specifically for brokers, advisors, bankers and the likes, to refer any of their unmet customers’ needs directly into the marketplace in such a way to ensure they, as referrer, retain full ownership of the customer.
This introduces a really interesting method of referring business for these actors as it provides them with the ability to service any previously unfulfilled customer lending requirements, outside of their own lending capacity, without losing the opportunity to monetise any placement successes.
If you are a broker, banker or advisor you are likely to know exactly why this is of value — no more pointing your customers elsewhere, losing visibility of them as a client, or worse, losing their business entirely.
For those less across the lending process, traditionally any unmet customer demand for a broker, advisor or banker meant handing over the customers details to a partner, competitor or competitive service. Now, these referrers can essentially extend their services offering, retaining full ownership of the customer relationship themselves, while also keeping in touch with them along the journey of finding a suitable lending product.
10X Founding Team
To add to everything mentioned above, Full Circle couldn’t be happier to be backing such a talented founding team Alex Molloy and Richard Cotton. In combination, the co-founders have a working history within very relevant and impressive roles with the likes of Mckinsey & Company, Goldman Sachs, Credit Suisse and Deloitte across financial services, banking and computer programming making them extremely knowledgeable and well placed to continue solving complex challenges in this space.
We cannot wait to see how much this team can help improve the overall customer experience in the lending industry.
We are very excited to be on this journey with Valiant and look forward to seeing this company scale!
If you are looking for a SMB lending product, feel free to reach out to us direct and we can put you in touch with the team. Otherwise, head over to Valiantand give the product a try
Publishers Note: I am an Investment Associate at Black Sheep Capital/ Full Circle VC, a former management consultant, strategist and tech enthusiast. For the record, all opinions represent me and not the funds I work with.
