FinTech start-up Neu.Capital, which acts as a match-maker for mid-sized companies and investors, has been able to significantly reduce the cost of acquiring new clients. The company’s director Joshua Khoddami spoke to Dynamic Business about the crucial role played by marketing automation.
The ex-manager of Sydney-based digital agency The Web Showroom, Khoddami co-founded Neu.Capital with Edward Jones and Cyrus Church, both formerly of the Royal Bank of Scotland, in early 2015.
The company’s core service is generating investment deals of between $5 and $100 million for mid-sized ANZ companies by connecting them with compatible investors drawn from a global marketplace of hundreds of institutional debt and equity investors.
‘Deal ready’ companies
Khoddami explained that it’s tough for mid-market companies to secure funding due to reluctance on behalf of banks and investors to provide support at “the smaller end”.
“The work involved in providing a $5 million loan or investment is often the same as one worth $50 million,” he said. “Therefore, at the smaller end, it’s often not cost effective for a bank or an investor to go to the trouble of deeply understanding a company’s cash flows and the risks they face. Instead, in the mid-market what you see is asset-backed lending whereby the bank will simply look at what collateral they can take (i.e., equipment, property, etc).”
“Neu.Capital is combining new technology with a new process for capital raising to make it easier for mid-market companies to raise the funds they need to grow, hire new staff, buy new equipment, buy-out existing shareholders, acquire other businesses, refinance debt and expand overseas. We have a diverse investor base that includes a range of alternative financiers (both debt and equity) who can be more flexible when it comes to security and terms and conditions.”
“For investors, we provide access to ‘deal ready’ companies with standardised information direct to their desktops, tablets or phones. Importantly, for both companies and investors our process and technology is built to protect their privacy until they wish to reveal their identity – and then only to that one counterparty.”
Asked whether Neu.Capital has attracted companies from a particular industry or set of industries, Khoddami said the start-up has strived to be industry agnostic, building its investor base to match this goal.
“Initially we were mostly dealing with agricultural, financial services and resources companies,” he explained. “However, we have successfully diversified our clients to be across a range of industries and our latest listings include retail and logistics, manufacturing, Agtech and fintech. The initial influx of agricultural clients was mainly due to timing as it was an area where, in some cases, the big banks were pulling out.”
Khoddami said Neu.Capital relies on inbound marketing techniques to engage and attract companies and investors. These include producing eBooks and content for the company’s mid-market educational blog. Khoddami explained: “We place a big emphasis on educating mid-market companies about alternative capital providers because the biggest barriers to non-bank debt or a new equity investor(s) are lack of awareness of the non-bank investor options that are available to them and understanding how to access these alternative investors”.
Other techniques used by the company include SEO and an emphasis on personal brands. Khoddami noted, “We’re promoting the directors of the company and their expertise through social, blogs, guest authorship and PR. It’s a traditional ‘thought leadership’ approach.”
Clean data in and out
To monitor lead generation and the success of their marketing campaigns, Khoddami said seamless integration of CRM and marketing software was a ‘must’ for Neu.Capital.
“Due to the speed at which our business has grown and the lean operation we run, I didn’t want anyone wasting time trying to manually integrate systems through CSV downloads or clunky API’s,” he explained.
“Given my marketing background, I have been across numerous marketing automation providers. For us, the HubSpot platform solved two key problems. It allowed us to cut costs by aggregating all the digital marketing tools needed by an SME, and save time by giving it access to it all in one user-friendly space.
“We also pride ourselves on keeping data clean. By integrating our marketing tools with our CRM through HubSpot it becomes ‘clean data in, clean data out’ instead of ‘garbage in, garbage out’. This has allowed our sales team to easily track the activity of their prospects straight back to the individual contact, this is very powerful information.”
A smarter spend
Since implementing HubSpot in January 2016, Neu.Capital has seen a 60% decrease in cost per acquisition (i.e. the mid-market company listing with Neu.Capital to raise capital) and a 50% increase in engagement with its emails.
“It took us about 3 months to start seeing results,” Khoddami said. “From my experience, this is about average when launching new marketing tools – it takes that much time to get up to speed with the tech and to be able to optimise it effectively.”
“Through the platform, we’ve been able to determine which personas and content marketing campaigns are attracting the right kind of audience and providing us with better quality leads. This has enabled us to put money behind campaigns that are attracting companies ready to raise capital and amplify our results. Consequently, we’ve reduced the amount of marketing material produced but increasing our conversion rate. Overall, we’ve seen a 60 to 70% increase in inbound leads being driven to the website.”