Funding Options is a fintech that started out with the aim of being like a MoneySuperMarket for business lending said Conrad Ford, CEO and founder, at the company. It later became more like a dating site, he added.
Ford had spent most of his career working in banking including at a large investment bank and most of his career at Barclays.
It was during his time at Barclays and more specifically when he was moved into an innovation unit at the bank, that his interest in developing tech led products was ignited.
“Fintech wasn’t a word at the time but like other banks Barclays created a standalone unit with high independence to build new propositions,” said Ford.
He said this was a bit different to some of the “fluffy incubators” initially set up by banks. “We were told to go and build real businesses with real revenues.”
He said within the unit he was in a team focused on creating new services for small businesses. “Barclays had a huge number of small business customers and there was an opportunity to go beyond traditional banking services.” This included creating a tool that small businesses could use to do credit checks on customers.
He said he did not go into the unit out of a desire to innovate or get fintech experience (before the term existed) but because he wanted management experience. He expected to move back into Barclays in a bigger operational role, he said: “But my taste for freedom was enough and I didn’t want to do that.”
This is when the genesis for Funding Options emerged, which he described as his mid-life crisis of sorts. He said he was in his late thirties and decided now was the time to turn his years of experience in the banking to something new.
He said startup founders in their late thirties and early forties are statistically the most successful because of experience. “Many have previously tried things out with other people money and failed.”
“I jokingly describe Funding Options as my mid-life crisis because at the time I had a good job in a large bank, but I wanted to go off and do my own thing.”
It was 2012 when Ford “got serious” about Funding Options.
He said because of his connections he was able to raise initial funding just on the business plan. This plan, was for a fintech that helps SMEs find funding, and it came in at a time when they were struggling to get access to loans.
“The peak of the impact of the financial global crisis in 2008 on small business lending was probably around 2010/2011.”
He said the challenges for small businesses getting loans was central to his thinking at the time. “It seemed to be the right business at the right time.”
This is when the idea of building a platform like MoneySuperMarket but for business lending. “There are lots of sources of funding, and even were during the crisis, but the problem is small businesses and lenders couldn’t find each other.”
“So there was a big problem that had to be solved,” added Ford.
He said too many startups are focused on either not big enough opportunities or not big enough problems.
Towards the end of 2012 Ford made his first entry into the market, which he said was an abject failure. “We are a perfect example of a company that takes a couple of year to get the right product/market fit.”
“Some startups get the right product in the right market straight away but this was not the case for us and it took a couple of years to get it right,” added Ford.
This was an important lesson for Ford. He said people think they can run a business but then realise very quickly that running a startup is very different from running a large company.
Keeping investors interested during the early years required some “very inspirational speech” Ford joked. “There were occasions in the early period when we came close to going under, with two or three occasions when the management wasn’t sure if it was going to be able to pay staff.”
Initially Ford and his team built what he described as a “tech heavy solution” to the problem using advanced technology, but he said it didn’t work for small business customers which can be relatively unsophisticated. The initial platform also used accountants as a channel to customers, which despite research showing this to be a good idea, didn’t work, said Ford. “There was a discrepancy in what the accountants do in practice and what they say in surveys.”
By 2014 Ford said the team had worked out how the business should look and managed to raise some venture capital funding. “We got a couple of million pounds which is the start of where we are today.”
The platform today is like a dating site for small businesses and lenders. A small business goes onto the platform and is asked for information about what they want to achieve, how much money they need, how quickly they need money as well as questions about the business. Funding Options’ proprietary algorithms quickly match these small businesses with the most appropriate lenders. External data sources is also being brought in to improve and speed up matching.
Ford said: “A dating site will say there are thousands of singles in London, but how do you find the three that are worth having dinner with?” He said Funding options applies the same type of technology as dating sites to small businesses and lender matching.
It currently instigates loans of about £100m a year.
In June Funding Options was awarded £5 million grant, from the Alternative Remedies Fund, to ensure finance choice for SMEs across the UK.
Funding Options has about 60 staff in London and is also growing its new operation in the Netherlands. This came about after Dutch bank ING invested in the company.
Expansion won’t end there. “We plan to be a pan-European business,” said Ford.
Read the previous fintech interviews
Part 25 FutureBricks, Part 24 Esme, Part 23 The ID Co, Part 22 Currencycloud, Part 21 Tandem, Part 20 Tink, Part 19 Goldex, Part 18 Azimo, Part 17 Yoyo, Part 16 Bud, Part 15 Previse, Part 14 Finastra, Part 13 InstaReM, Part 12 Eucaps, Part 11 AimBrain, Part 10 Meniga, Part 9 TrueLayer, Part 8 InvestCloud, Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology