After spending decades working in the ‘big end of town’, Sydney barrister Leo Tyndall turned his efforts to the ‘smaller end’, eager to help promising SMEs deprived of finance by traditional lenders.
In the four years since he founded MarketLend – an online lending platform inspired by international peer-to-peer (P2P) offerings – Tyndall (CEO) and his team of finance industry veterans have helped fund nearly $35 million in secured loans for Australian SMES with an annual turnover between $1 million and $20 million.
Tyndall spoke to Dynamic Business about giving SMEs a ‘fighting chance’ by connecting them directly with investors, why it would be inaccurate to call MarketLend a P2P lender, the importance of ‘putting skin in the game’ and how he plans to grow the formerly-bootstrapped fintech company.
DB: How is MarketLend helping SMEs access finance?
Tyndall: MarketLend provides SMEs with access to simple and flexible business finance to fuel growth and bridge liquidity gaps, ensuring they can continue to thrive. We do this by ‘breaking the ice’ between SMEs and institutional and sophisticated investors who are seeking quality investments with robust returns.
By enabling SMEs to form direct relationships with investors, we’re unlocking new opportunities for both parties. For investors, we make social lending a more secure investment choice with insurance and loss protection available on eligible loans. Meanwhile, we cut the time it takes for SMEs to access funding. With a Bank, an SME has to wait a minimum of two to three months to get funding approved. With our technology and funding structure, we cut that time down to just days – and in some cases less than a few hours. One particular area Marketlend services which has been closed to SMEs in the past is Supply Chain Finance, while Invoice and Debtor Financing has also proved popular on the platform.
DB: What was your motivation for launching MarketLend?
Tyndall: Working in the ‘big end of town’ – including as Head of Capital Markets (APAC) with UniCredit, as an executive with Rams and NAB, and as a barrister for Sir Anthony Mason Chambers – I came to realise the ‘small end’ was being badly neglected. Large-scale borrowers and investors had access to a number of sophisticated finance options, whereas the smaller ones didn’t.
With smaller investors unable to break into the market, this left SMEs with only the traditional lending institutions to turn to. Due to the constraints banks impose, I saw that SMEs didn’t have room to breathe. MarketLend was born of a desire to break down the barriers between eager investors and SMEs that require funding (but don’t want to sign their lives away to the Big 4) and so end the stranglehold traditional lenders have had on the ‘small end of town’.
DB: Can you distinguish MarketLend from other P2P lenders?
Tyndall: Learning from international P2P offerings, our platform is, by design, more mature and secure than your typical P2P lender. In fact, people might look at us and say “well, you’re a P2P lender” but that’s not entirely accurate. We’re the first to secure every loan in a securitised trust protected by an independent trustee, Australian Executors Trustee Limited, part of the IOOF group.
Further, our platform is underpinned by sophisticated safeguards typically seen in the big end of town – namely, robust legal structures, secure payment systems and proprietary risk assessment predictability software. Plus, MarketLend itself automatically invests the first dollars of every loan, putting our own skin in the game to give investors peace of mind. As a result, we give sophisticated investors the assurances they need to invest confidently while ensuring SMEs can keep their businesses running smoothly.
Another thing that distinguishes us from P2P lenders is the fact that we reject the sugar-high pay-day lender model. We’re not a lender of last resort – no, we only approve businesses we think can grow and succeed because we’re here for the longer term. Barring the big 4 banks, which have typically dominated the mindshare of SMEs, we don’t see any real competition.
DB: How would you quantify the success of your platform?
Tyndall: We’ve successfully moved beyond our initial focus, which was to expand our investor base. Now, through strong broker relationships, we’re increasing our number of SME borrowers. Consequently, we’re projecting we will be able to reduce the deliverable cost of funds to below 10% within the next two years, which would put us on an even field with bank pricing —an unprecedented achievement for a non-bank lender. Perhaps the most telling metric, though, is that to date Marketlend has funded more than $33m in loans – and that’s without a single investor experiencing a loss.
DB: What has been the defining moment for you, personally?
Tyndall: Closing a $1 million investment round in June 2016. It was led by John Barlow, the former CEO of Eaglewood Capital management (and now one of our directors alongside Brad Pattelli, the ex-President of LC Advisors). Up until that point, I had bootstrapped the venture myself. Receiving our first intake of external capital offered proof that my platform was resonating, which made all the long nights spent building it worth it.
DB: If you could name one secret weapon, what would it be?
Tyndall: Our technology. Not only has Clifford Chance vetted our proprietary platform, it has been shaped by the collective knowledge and wisdom of a team with decades of capital market experience.
DB: Looking ahead, how do you plan to scale MarketLend?
Tyndall: Our market potential is huge because few lenders have been servicing the SME sector and investors have had difficulty entering the market. Although we’ve focused on attracting Australian SMEs and investors to the platform, we have plans are in place to globalise the platform in the future.