Techboard’s Peter van Bruchem speaks with Tim K Dean, Founder and CEO of Perth-based Fintech Startup Credi, which provides a fixed fee loan documentation and management system for individuals and businesses. Tim is also founder of a co-working space in Fremantle called Thinklab, which is where Credi is based. Credi were the inaugural winners of the Highest Trending Up and Coming Company at the Techboard 2017 National Awards. They also won at the Techboard WA Awards. Credi's Techboard wins were in part due to their achievements but also the extent to which Credi successfully raised the profile of their activities through effective and regular use of PR, media, social media including using the Techboard platform itself to amplify its successes.
Peter van Bruchem: So Tim can you tell me where did the idea for Credi came from?
Tim Dean: After an early career in accounting software, I've spent the last eight years focused on micro-lending, essentially large scale digital lending platforms that interact entirely digitally, no face to face meet with the client, for small dollar amounts. I sold my last business in that space in December 2014 to an Australian listed entity and unusually had some time on my hands to think “what next “! Along the way and I'd acquired Australia's first P2P lending platform with a view to developing it for a re-launch globally. I concluded that all the so called P2P lenders are really marketplace lenders. Society One, Ratesetter and others, they're very similar to the banks, it's just people’s money not bank money. But they still undertake the same credit checks and essentially people are lending to people they don't know, or will never know, will never meet. Whereas I had a hunch that there's a much larger and unserved lending community - people who are lending to people they do know, and they will meet. The relationship is the essence of it. The whole concept of lending people to people based on their relationship and not a credit score, taking out the intermediary, is way more interesting. The challenge was how to commercialise what essentially is akin to a social enterprise.
So I guess it was all going around in my head and yes, I was lending money to my kids and yes it was fraught and all those issues of lending money. My elder kids were going through university, so their need for financial help for setting up in a new city , for books, laptops that got lost, cars that got bought, all happened.
So I took a knowledge of lending, a knowledge of P2P lending and of course my own personal experience running my own branch of the “ bank of Mum and Dad “ and worked up to the concept that was to become Credi. Before I did anything formal, and committed material dollars to the project I went to RMIT and we invested , I think it was $18,000, delivering Australia's only report on relationship lending. It was a global survey, the title of which was 'Lending to Friends and Family an Invisible Phenomenon'. So really it was that report and leading about the quantum of lending between friends and family around the world that pushed the go button on the project. I probably wouldn't have done it without the report. The report just lit the fires under the idea.
Peter van Bruchem: So why is there nothing else out there like Credi?
Tim Dean: When Credi started it was positioned as a social enterprise, organizing loans between friends and family - solving my own problem - and one I reasoned a lot of parents would have too. With a social enterprise, and there's not an obvious monetization route - making it commercially viable. Certainly the fee structure isn't large - it can’t be, so what we have to do is to obviously get to the scale whereby hundreds of thousands of small dollar amounts obviously adds up, which is good but takes time. The data in itself becomes of value because we know a lot about the transactions. However the penny dropped early on that we could develop a version of the product that we can distribute through accountants and bookkeepers to their clients to help them administer these loans between their clients and their friends and family members - loans that are routinely undocumented. It's this channel and the distribution of Credi through those organizations to their clients that gave us our commercial model.
So we have the best of both worlds, a very affordable product for individuals, and a commercial version for professional loan management and administration.
Peter van Bruchem: So you are looking at an extension of the bank of mum and dad to something quite different?
Tim Dean: Yes - our Credi Partner channel is really focusing on the segment of users that are lending to their businesses, where people are putting money into their companies, into start ups. These are more commercially orientated transactions where there's a commercial outcome that requires the support of the loan. The administration support of an accountant or bookkeeper makes sense - and there is where we provide value and in return Credi can generate a sustainable revenue stream.
Peter van Bruchem: Plus also good for compliance with ATO and the like I imagine?
Tim Dean: Absolutely, I mean if you are documenting loans between yourself and your business under the Div 7A structure then there is a prescribed contractual format and a annual interest rate. We'll provide not only those pieces but also we'll provide a management system which helps overcome the nightmare scenario of getting to the end of the year and having a loan that you need to repay to your company. It's not only the provision of loan documentation that is delivering customers for us , it’s the package of loan documentation , repayments management , communications and administration that's creating the value.
Peter van Bruchem: How has Credi been received so far ?
Tim Dean: We’ve been blown away by its take up - and not just in numbers of users . We have received just so many real life testimonials - loans between people offering help to those they care about in a real and personal way. Often the motivation is quite surprising We had a lender the other day who wrote to us and he said that he was happy for us to talk about why he way helping his son out with a huge loan. He'd lent $350,000 to his child. He said “ I've done it 'cause it's his early inheritance, 'cause quite frankly I don't want my son to be in hock to ANZ for the next 20 years with the banks excessive interest demands paying for excessive executive salaries. ” He was really emotive and there is no question that his story grabs your attention.. I mean some bloke is ticked off enough about executive salaries in the banks to use our platform to offer a a very cheap loan to a family member. A definite win, win for the family.
We see credit cards being paid off. We see loans being consolidated Everyone's talked about the bank of mum of dad in the context of property,but II think for every dollar, we see through our platform that's property related I reckon there's three or four dollars that are not property related. So my take on this is that parents are just lending to their kids to help them avoid high cost credit, to get a car, to get a credit card paid off or whatever.
Peter van Bruchem: So Tim can you tell me about the reason why you set up Think Lab and how that fits in with the business of Credi?
Tim Dean: We were in an co-working space in Fremantle having moved to Fremantle out of the city because we wanted a different working environment and actually we found it easier to recruit the tech talent in the Fremantle environment.Freo is “ cool “ and techies like it here as everything just is a few notches lower. Parking is much cheaper, etc, etc. So once we'd outgrown a desk in the collaborative work space we obviously had to go and find somewhere else to live. A much larger space became available, which was about 120 square meters, which was obviously far more than you need for four people. So we thought why don't we occupy the whole place, turn it into a collaborative work space with a tech orientation as the other spaces in Fremantle are more arts and creatives orientated delivering both a space for ourselves to grow into and also one we can share with like minded people, sharing resources.
So our bookkeeper sits in our room and a couple of techies that are doing other projects do work for us as well. So we've got a great access to a pool of labor and we've been fortunate to make it already break even - encouraging enough for us to snap up additional space to double our footprint. Best of all, Credi is running on a net zero cost for it's rent and rates, which is good for a startup.
Peter van Bruchem: Can you talk about how you have managed to get such a profile for Credi in such a short time and the role PR has played for you.
Tim Dean: To deliver the quantum of users that validates the product and takes it from an MVP to a platform with measurable usage, you can either throw a lot of marketing dollars at it or if you're fortunate to have a really good story to tell and you can find out where that story can be told, and who'll be interested in it. Then by getting someone else to tell your story for you, you get a lot of credibility and a lot of reach. We found out pretty quick that we had a great story and invested in getting the right PR . We went through three PR companies, till we found exactly the right voice . So learned pretty quickly that you can send out many messages and shout at everyone , but using professionals who've got access to the journalists and authors who are trusted voices is way smarter.
The best piece of luck we had is we had a piece that was picked up by the Sydney Morning Herald. The journalist didn’t normally do pieces about a product but as the subject of the bank of mum and dad was such a hot topic he ran with the Credi story - with a full page font cover of the money section. When every week you were seeing a story about the bank of mum and dad is the tenth largest financial institution in Australia, then the seventh, then the fifth, you get the journalists attention especially if you are the only one offering a solution to managing these loans gripping their attention. That piece itself still gives us five percent of our leads, even nine months later we sort of see click through from Sydney Morning Herald article. People are still going onto that site, it's got such a massive, massive long tail. So that article essentially profiled us. That article cascaded to other journalists who think that's important, I should write about it too and we’ve been on dozens of radio programs, Sky Business news, Channel 9 and soon to be in the air with Qantas on their Business Leaders and Advocates podcast series.
The PR and stories that it generates creates positioning, creates momentum. So when we walk into opportunities ,when we talk to partners, you get access because either they've heard about you indirectly or they read Credi’s profile and media blog section . As we haven't been around a long time, we have had to create authority by having respected people talk about us.
So when we're walking into accountants, we're not having to kick the door down and say look at us. They go, "oh I've heard about you, tell me what you've got". So PR is a real winner , if you can pull it off and you've got an interesting story that's relevant, current, captures people’s imagination, can be talked about and especially if you add a human context to it, you can get a lot of access and a lot of reach.
See Credi's Website.
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