Venture Beyond
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Venture Beyond

Partnering with Percent and why we believe private debt markets deserve better

Debt is everywhere (and that’s not a bad thing)

Where does our notion of debt come from? Anthropologist David Graeber illustrates in his book numerous examples of implicit credit systems that greased social and commercial relationships around the world, long before fiat currency was introduced. At the core of our modern economies, IOUs in the form of debt still power the circulation of resources and value creation. Debt markets have been a long standing pillar of capitalism whether through the bond securitization craze of Salomon Brothers and Drexel Burnham in the late 80s, the rise of P2P lending by Lending Club and Prosper in the 2000s, or the recent spotlight on buy-now-pay-later giants like Affirm and Klarna. The way debt is delivered may have changed over time, but the fact that an ever-present debt market hums beneath the surface has not.

The debt market (i.e. demand and supply of debt capital) is a particularly interesting fixture for us at White Star Capital as embedded finance becomes a new norm. In a world where non-bank institutions are increasingly offering financial products and services, it’s no surprise that credit is quickly becoming a focal point of this ongoing evolution. Stripe now offers business loans through Stripe Capital. Our portfolio company Uncapped, alongside companies like Clearbanc and Pipe, deliver revenue-based financing. It’s important to note that the majority of today’s tech-enabled lenders are borrowers themselves. Equipped with stronger relationship-building and underwriting capabilities, these companies secure large debt facilities that they then allocate to end customers in smaller parcels.

So with debt capital demand taking new shape at such rapid pace, how has the supply adapted over time? Surprisingly, it hasn’t. And we believe that Percent (formerly known as Cadence) is solving for this generational problem, which is why we partnered with the team. Before we dive into how Percent improves debt markets, let’s first look at where the status quo is today.

$1tn of private debt without technology

The global private debt market alone is reaching $1tn in size. The low interest rate environment across most developed economies continues to fuel investor demand for higher yield, while large banks are limiting their own commercial lending activities. These factors combined have led to a new class of lenders where credit funds, hedge funds, and family offices have become the staple investors filling today’s private debt capital needs. But debt investors are still predominantly institutions, and the process of working with them remains largely untouched by technology.

Lack of technology innovation in private debt markets incurs a great amount of cost on the corporate borrowers. The process of raising debt capital and fulfilling obligations remains extremely tedious and time consuming, oftentimes accounting for more than 50% of a CEO’s resources throughout a calendar year. A borrower’s typical journey can be characterized through limited debt capital avenues heavily influenced by personal relationships, lack of transparency on market terms, and the crushing high cost of capital that locks in borrowers for 3–5 years. This pain point is especially pronounced for younger, technology driven borrowers such as fintech lenders who are leading the transformation in embedded finance today.

In many aspects of the fintech revolution during recent decades, we’ve seen infrastructure technology become a crucial underpinning of modern financial markets. PayPal first transformed payments and money movement in the digital world. Stripe, Plaid, and Square then made up the infrastructure layer powering businesses to move these capabilities online. This parallel can be observed outside the fintech realm as well where the rise of DTC e-commerce gave birth to infrastructure platforms such as Shopify and BigCommerce. As we observe the new wave of tech-native lending across the consumer and business spectrum, we can’t help but look towards the inevitable need for a ubiquitous infrastructure layer that will power the modern debt capital ecosystem and service these lenders behind the scenes. This is where Percent enters the picture.

Percent as debt capital infrastructure

Percent launched in 2018 with an ambitious vision to help corporate borrowers of any size secure and fulfill debt capital through technology. By innovating the way private debt is originated, structured, and syndicated, Percent aims to become the dominant infrastructure layer delivering debt capital with unprecedented levels of transparency and efficiency. It is evident that Percent is solving for today’s chronic pain point as illustrated by the hundreds of millions of dollars in debt issuance it processed within 18 months of launch and the strong organic adoption it has seen among tech-enabled lenders.

This vision to modernize the private debt stack is driven by a phenomenal team with deep industry expertise. Founder and CEO, Nelson Chu is a serial entrepreneur with a wealth of experience advising early stage startups. Exiting his own company beforehand and helping others raise debt capital efficiently, Nelson saw an opportunity to bring together the vibrant debt investor ecosystem which became the origin story of Percent. Nelson has built an incredible team around him that now includes Prath Reddy (President and Head of Capital Markets) who brings 10 years of institutional debt capital markets experience from UBS and Credit Agricole, Gary Reifman (Head of Product) with over 20 years of fintech experience at Lukka, Orchard, Dataminr, and IHS Markit, and Vadim Shteynberg (Head of Engineering) with 25 years of engineering at IBM, IHS Markit alongside senior engineering roles at other fintech startups.

Due to the team’s intimate understanding of debt markets, it was clear that their approach to innovation in the space was distinctly more comprehensive than those of other startups. Rather than disenfranchising the institutions that support the debt market ecosystem today, Percent aims to catapult all parties including borrowers, lenders, and underwriters into the modern world through purpose-built software that touches on all aspects of debt transactions.

Partnering with Percent

We were fortunate to have become friends with Nelson before the idea of Percent was first penned on his initial pitch deck. Since then, we’ve closely followed Nelson’s journey, rooting for Percent as it continued to make incredible progress through its formative years. In many ways, our partnership with Nelson and his team has been an inevitable one that was several years in the making, and we’re extremely proud to co-lead the company’s $12.5m Series A with B Capital Group at such an important stage of Percent’s story. We studied the history of debt markets and its current state especially in the context of technology and innovation which led to this investment. Looking forward, we believe the future of debt markets will be defined by Percent and we’re excited to help build this narrative at global scale.



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White Star Capital

White Star Capital is an international venture and early growth-stage investment platform in technology. We partner with founders who aspire to scale globally.