Cash flow problems can beset any business. When relying on clients for payments, even a profitable venture can run into trouble in terms of having ready cash on hand.
Given the explosion of fintech startups over the past few years, one of the niche markets still seemingly poised to grow is small business finance. We’ve looked into firms active in the industry in previous articles, but as a sector of the financial market so crucial to business expansion, and so core to finance, profiling new ventures is always important.
With this in mind we had the chance to interview Eyal Lifshitz, Founder of BlueVine.
His company provides funding solutions to a range of businesses, and even facilitates more straightforward invoice payments for clients. Eyal took the time to discuss what sets his firm apart from the competition, his personal motivation for starting the business, and also offered some valuable insight into how he sees the fintech field developing in the future.
How would you describe BlueVine to someone unfamiliar with the business?
BlueVine provides working capital financing to small businesses online. If you, as a business provide services or products to other businesses, you extend them credit terms which can range from 30 to 60 days. The waiting time is challenging as a small venture, so we work to give businesses the money upfront. You can use the advance to streamline your cash better. We only get paid when the company pays the invoice.
What led you to create the company?
For me it was a combination of two things. First, I’m familiar with small businesses and the cash flow challenges they face. My father, and his as well were small business owners. My dad had a physiotherapy practice where he would wait up to two months to get paid from private insurance company’s. On the other hand, before this role I worked at a finance firm. I was a principal there, and during my time I was exposed to a lot of companies and innovation in the financial space. I saw a lot of companies disrupting the field and doing a good job. Bringing those together I thought there was a good opportunity to leverage my knowledge and experience as a venture capitalist, and my experience in how you can apply data analytics in a disruptive fashion. When it comes to invoices, I believe we can provide a similar disruption in this space.
All companies have their competitive advantages, what really sets BlueVine apart from traditional short term lenders?
I’d argue that nobody’s doing what we’re doing. A mortgage is not the same as a student or auto loan. These are different financing structures based on different factors. Commercial financing is the same, with different verticals and niches. We’re disrupting a specific niche, invoice financing. Nobody, at least in the US is doing what we are. Other companies might be similar but the overlap isn’t that great. Our competition is the offline world, we’re the first doing it online on this scale.
From what I understand, businesses don’t even have to redirect their invoice address to the company, they can keep everything in their name and still pay you back?
The way it works is we give our clients a BlueVine account (P.O. Box and bank account), and with the invoices we fund they have to change the payment info with their customers, but their information is the same. Even though the money is going to BlueVine we’re really anonymous. We’re discreet in what we do. The customer might send the check to a different address but they still write the check to the same customer.
How prevalent would you say cash flow problems like these are? What kind of market are we looking at?
The traditional market at the low end could turn up to $15 billion in the US. It’s three times the size of merchant cash advances. Banks might finance large credit lines for large companies, but on the low end the market estimate is around there.
Moving forward, how do you see the fintech field developing? Where do the next big trends lie?
In the new age fintech market I think you’ll see brands being developed. Why do people go to Bank of America or Chase? A lot of it has to do with brands. I think you’re seeing some of it today with companies like Lending Club. Companies that are startups today, in five to ten years will be common household brands. In terms of opportunities, there are so many. It’s hard to say what will happen with something like Bitcoin. There’s lots of layers to that and it’s interesting to see how it’ll develop. In financing I think there are a few verticals like equipment financing which haven’t been developed. Those could be disrupted, along with niches like consumer credit. Especially using data to make better credit decisions. The way credit reports work is open for innovation and I think you’ll see that.
Anything else our users should be aware of? News about the company?
We recently increased our credit lines up to $100,000. Up until recently we were doing up to $50,000. A lot of it has come from our clients. We’ve grown with them, and they’ve become a catalyst for this. Our clients have been growing rapidly and that’s something we’re excited about. The business is growing fast for us at 100% quarter over quarter. We’re excited about reaching as many small businesses as we can and helping them thrive.