Leaving the Banks Behind: How Planet Ark Power made solar profitable with Marketlend

Upfront costs and unconventional financials have held back the expansion of businesses transforming our energy markets and introducing new ways of delivering electricity.

 

That’s what happened to Planet Ark Power, an engineering organisation which combines modern PV solar panels and batteries with AI powered software to ramp production up or down based on demand from the electricity grid. With a system that is cash flow positive from day one, Planet Ark Power installations help businesses turn energy from a liability into a revenue stream, as well as providing energy security.

 

But not too long ago, Planet Ark Power struggled to get the funding they needed to grow.

 

“5 Months of Hell” – The role of the right finance

 

Rapid growth brings rapid change, and Planet Ark Power needed a line of credit to cover the cost of those changes. But Executive Director Richard Romanowski says his experience with getting finance from the banks was less than ideal.

 

“The bank put us through five months of hell, then said ‘go make your sales targets for the year and come back to us’. The banks will only give you money AFTER you’re successful, with no regard for how much energy it takes.

 

“That’s when Marketlend came to the rescue. They asked us to explain what we were doing and our business prospects. When they understood our challenge, they said ‘this is a great opportunity’.”

 

By looking solely at past numbers, investors can easily miss high value opportunities like Planet Ark Power. The Marketlend platform makes up for what’s lacking in the traditional lending model by providing investors both a quantitative and qualitative assessment of each company.

 

In doing so, small to medium enterprises have more flexible access to fast finance, allowing them to take advantage of growth opportunities in their sector.

 

How Marketlend made growth simple

 

Through the Marketlend platform, Planet Ark Power borrowed $500,000 from 50 lenders, which Romanowski says has been a game changer for the business.

 

“The cost of client acquisition is huge. We’ve gone from $30,000 sales to $10 million sales, and each one is a massive learning curve – building new systems, new sales approaches and so on.

 

“I have a 5-star contract but I have to wait 60 days to get paid. With a customer base growing and changing so fast, I need cash flow to handle it.”

 

No more missed opportunities

 

Marketlend puts sophisticated investors in touch with high potential opportunities that fall through the cracks of traditional lenders. It avoids the many pitfalls of a peer-to-peer lender, because it is a vetted, thoroughly transparent lending platform.

 

“Marketlend actually cares about your business. They really want to know what you are doing,” Romanowski says.

 

“They take a bit of a punt with you – not in a lender-of-last-resort way, but in a way that actually understands the risk and reward.

 

“We now have a $500,000 line of credit and are looking to increase it. When we first went to Marketlend we had 25 staff, today we have 35. Not only that, the size of the projects are growing fast.

 

“Because they really understand your business, they can unlock the opportunity.”

 

Marketlend Academy: Marketlend performance for 2018

Each year it’s worth looking back to take stock, and we’ve been doing some of that at Marketlend – we’re happy to see that Marketlend performance in 2018 was as strong as it has ever been. Watch Marketlend CEO Leo Tyndall outline what it was that made 2018 a strong year for Marketlend’s investors and borrowers, and what’s making him excited about the future of peer to peer lending. You can also read the transcript below.

 

Video Transcription:

 

We had a great year. So from a volume point of view we’ve been very successfully growing our book. At the same time, from a risk point of view, we’ve been able to ensure that our book has grown, but not increased the negative effects of such a growth factor. So what we’ve seen is our default rates have actually reduced, it’s gone down from the 4.6% that we had for the year down to around 2-2.2%. But what we’ve also seen is we’ve been able to control the product that we produce and that means that investors have been able to get a great return. So the average return from a net point of view has been 10.2%. What we’ve seen is that we’ve been able to grow, and as I mentioned in other videos, that we’ve seen a growth of our book double compared to last year, so we’re up to $61 million funded.

 

We still look at December being a strong month as well, but what we’re seeing very much is also an increased focus of due diligence and implementation of some of the measures we brought in early in the year. We send out an external accountant if the exposure’s greater than $250,000, which has helped us significantly to really get to know our client, and then spending a lot of time interacting with our client post settlement. So we’ve put on settlement clerks, you could put it, so that they can interact with them post settlement so that we can increase the utilisation as well of the actual portfolio. So it’s been a great year for us.

 

As far as staff goes we’ve now got a total of about 35 people. In Australia we have around 15 to 16. I count that number because we only just put on two new people again today. So we’re continuously growing the actual support staff. We’ve also got the Philippines team which is a total of 14 people, and then we have developers all over the world. So it’s been a great year for us.

 

Marketlend Academy: what makes Marketlend unique?

Founder and CEO of Marketlend Leo Tyndall explains the significant differences that make the Marketlend platform so powerful and supportive for investors.  If you prefer, you can read the transcript below.

What makes Marketlend unique is that we’re able to give SMEs direct access to the capital markets, but in a secure and also price competitive environment. By using insurance, and also using loss reserves, we’re able to give the SME the benefit of those so therefore getting better pricing for them, and at the same time give the investor comfort that when they invest in an SME, that they have additional protection against the possibility of a loss. Now, matching … In, in, by doing this we use trade credit facilities, which is an unusual thing. In that, what we’re doing is, we’re becoming the owner of the goods. And then essentially what we’re finding is the SME’s able to then buy more goods and then within 90 days repay us, and therefore giving them an improved profitability so that they have a, a better, you know, cost of funds. And then also, giving them the ability to have money now versus waiting for 30, 60, 90 days depending on the type of facility. So it’s actually having the money to actually pay expenses or buy more goods and enable them to improve their profitability of their business.

Marketlend Academy: Why Marketlend is a “fierce advocate” for investors

In this video, Marketlend’s Founder and CEO, Leo Tyndall, explores why it is so important that Marketlend act as a “fierce advocate” on behalf of its investors, especially when it comes to protecting their investments.  Watch the video or read the full transcript below.

 

We see a very significant need for a number of things. One is, obviously, we always want our investor support, but we also see that we need to be very diligent in enforcing debt and very diligent in making claims on insurers and ensuring that they understand the true risk so that the investor gets his funds back to the extent that’s possible. Obviously, if we find that if we were negligent or we were lazy about that point in our business, well then essentially you could say the wheels will stop.

You know, we we essentially look after our investors in that we see them as an integral part of our business, and we do see that they are leaving it – not leaving it to us – but they are a lot of he ongoing servicing role and the like is left to us. And they don’t want a situation where they put the money in and then they think that we’re sitting there, you know, having coffees in the background and not doing much and really not diligently ensuring that people pay on time, when I’m diligently actually collecting on debt or we’re not going to the insurer and advocating the case as to why they should pay.

And one of the things I think is very important there, it you look at the Royal Commission and you look at with banks now or you look at say, for example, the AMP scenario, you know shareholders is a bit of a similar example. Shareholders would like to think that AMP was doing the right thing for them. Not just protecting them, but also protecting the business. And then to discover that they weren’t and they were actually doing things that were contrary to the business. That’s something that we don’t want to ever be seen doing and we’re very cognisant of the need to do so.

And that’s why we do things like have a due diligence done by Deloitte every year. And that’s why we also have people like Clifford Chance review our legal documents. And that’s why we always invite investors, you know the larger investors do their own due diligence, and other investors while we have regular catch-ups or webinars or other items like that to really show them that we’re doing. And that’s why we have a newsletter to keep them updated as to what we’re doing.

Marketlend Academy: What is a loss reserve and how does it work?

Watch Marketlend’s Founder and CEO, Leo Tyndall, talk about Marketlend’s loss reserve, a important feature that protects investors.  The text of his comments appears below if you prefer to read.

So a loss reserve for us in Marketlend is actually built on the basis of protecting against the possibility that we have someone who falls in default and therefore there is a differential or shortfall between say, in an insured position, the amount of insurance that’s paid and the amount that’s actually, essentially owed or in the case of an uninsured it’ll be that the assets themselves don’t sufficiently cover the shortfall to the amount that’s been advanced to the borrower himself, or the account holder. What we do with the loss reserve is, is that we essentially collect that loss reserve and if the actual borrower has paid on time at all times, they’ll get their loss reserve deducted off their balance when they owe the money.However, what we do do is, we actually hold that in a separate trust account and we enable that loss reserve to be assisting investors to actually protect against that additional risk they have that the insurance may have a shortfall. Not significant but, or that the actual underlying assets and the guarantor guarantee situation isn’t sufficient to cover that. As well as, possibly the fact that it takes a lot longer to actually collect the debt so therefore there is a need to cover that cost during that time.

Marketlend Academy: what we look for in investors

Watch Marketlend’s Chief Investment Officer, Jane Lehmann, talk about what Marketlend looks for in its investors.  The text of her comments appears below if you prefer to read.

 

Marketlend has a very specific requirement in regards to its investors.  Under the Corporations Act, we are required to only engage experienced, sophisticated, wholesale, official investors. So  for an experienced investor, that really is someone who can  demonstrate that they have, as the name suggests, experience in lending in these types of financial instruments, and truly understand the risks that they’re undertaking when they engage in the platform. Sophisticated is actually a means test related  defining feature that you need assets of a 2.5 million.  I think the inference there is they also are a more sophisticated and experienced investor.

 

The institutional investors  have a different profile that they tend to be funds. Many of them are offshore. And for them they often have a specific  risk profile that they’re interested in and we can customise that for them. We have a pool of loans that we have onboarded and we can work with them to understand what their risk tolerance is where there are risk sectors they’re not comfortable with, where they have an appetite and craft a portfolio for them.

 

The experienced and sophisticated investors have the opportunity to go on to the platform and make their own assessments. They can look at each loan that is presented and make their own assessment and take a view on whether that is something that appeals to them as an investment opportunity. And that is obviously why you need experienced investors, because they are making a financial decision.

Listen To The Investor Townhall

This past week, Marketlend ran an investor townhall.  Transparency is integral to how Marketlend operates.  Our investors expect it and we are committed to delivering on this promise.  The investor townhall offered a chance to roll up our sleeves and explore issues that matter to the investor community.

We dug down into the mechanics of how we return principal in the event of a problem loan and the integrity of the Marketlend platform generally.  There was ample room for Marketlend’s Founder and CEO to field questions and the result was a really engaging and hopefully enlightening look inside the how and why of this aspect of the Marketlend platform.  Click above to have a listen.

Marketlend Academy: How Can I Fund my Business?

Funding is often a constant concern for SMEs.  To fund a business doesn’t just mean finance and there are creative ways to bring money in the door that can support growth.

What are your best options for funding? Here are some “outside-of-the-box” options that can help.

 

Presell Services or Products

 

This is a creative way to fundraise when your business is in the early stages. Get your elevator pitch ready for anyone who wants to talk about your new project. If you plan to offer a consulting service, web security, a new line of grocery stores, offer a presale.

 

A presale means you receive money before your grand opening. Give your customers proof of purchase, such as a coupon, to be redeemed when the business opens. Customers love to help a business they believe in and are happy to exchange a proof of purchase for something new.

 

This works best if you can show proof that your business is more than a concept. Blueprints for your new building, a working model, or an online store all help push presales.

 

Approach Angel Investors

 

If you have a tech startup or product idea that will disrupt a market, try pitching to a group of angel investors. If you get an offer of money, it will come with the caveat of equity. Angels want to take part in any business they fund, so they choose businesses they know well or like. This can work to your advantage if you are open to hearing a new voice as you build or expand. However, if you don’t want a board or individual looking over your shoulder or combing through your books, this might be a detriment to your growth.

 

The key to approaching angel investors is use your connections and your reputation. Start by asking people you already know if they have any connections to the investment community and use those familial or social ties to build your network. When you meet a new investor because a mutual, and trusted colleague introduced you, the prospect of getting money is much greater.

 

If no one can give you an introduction, try a cold email or a message sent without the buffer of a personal introduction first. Research the investor you want to talk to and see what kinds of projects they prefer. Stick to those who are active in your industry and go for it.

 

Once you take meetings, be sure to be as transparent as possible with your numbers. Any exaggeration or dishonesties will paint you in a negative hue and keep potential partners at bay. Be yourself and let your business speak for itself to win people over.

 

Crowdfund Online

 

Crowdfunding sites like Kickstarter let you set a financial goal, break down your vision and timeline for visitors, then market yourself to potential donors. Each campaign has a set number of days to raise the necessary money. If you reach your goal, you get the money deposited into your account and the site asks for a small percentage of what you earned. If the donations fall short, you receive nothing.

 

Successful campaigns start long before they are up on the crowdfunding site. This requires marketing videos, a large following and tons of buzz over what you have in the works. The most successful campaigns have money promised to them before the timer ticks down.

 

Once the campaign is up, it can be a full-time job to manage the social media and email marketing to bring in additional money. You will also have to organise rewards for donors that don’t gobble up all your new money but still make it worthwhile to give. A campaign requires creative marketing in all outlets in order to succeed.

 

It’s a lot to handle, but people make real money on these sites. If you are a master of marketing, this is a good option.  

 

Government Grants

 

Australia’s government offers a variety of grants for small businesses, but expect a complex application process and very specific criteria for funding.

 

Grants are available at the state or federal level and are listed online. They tend to favor specific projects or a stage of business, such as funds to start or funds to hire as you expand. Research grants ahead of time so you know what to apply for throughout the year. Tailor each application to the specific grant, don’t rely on generic forms and answer each question with clear, honest responses.

 

Some of the categories for grants include expansion, green business or disaster recovery. They’ve been created to help solve problems as opposed to a basic round of funding. Check out the whole list and mark which ones line up with your business or future undertaking, then mark due dates on your calendar. If you can talk to someone who received a grant in the past, ask for advice on how to present your problem in the best way possible.

 

Before you Finance

Still think you may need finance?   Here are some things to avoid to help you make finding finance smoother and more likely to lead to success:

• Not working with an accountant – Many business owners turn to bookkeepers, but an accountant will keep your statements in order and all your numbers on point.
• The wrong partner – Investors want to see dynamic teams that balance each other out and have a clear vision with a solid plan to put it in place.  Don’t waste time with someone who is unprofessional or doubts your vision. Find a partner who shares your vision and knows exactly how to help you succeed.
• No plan for the money – Anyone who funds you wants to know your plan on how to spend it. Have all of that in place before you borrow or accept the grant.
• Waiting to ask – Plan out your search for finances early. The decision to put off the search for finances can put unnecessary stress on your business. You know what you need to stay functional, so don’t hesitate to ask for it

Martketlend Academy: 4 ways to improve your shot at getting business finance

Need some general tips on improving your small business’s health –especially when it comes to getting finance?  This week, we have the pleasure of welcoming Bessie Hassan, who shares our drive to educate the market and help small businesses.  As the Money Expert for finder.com.au – the site that compares virtually everything – Bessie is an experienced commentator who often appears on national radio, TV, and throughout online publications sharing her best money-saving tips and property advice. Bessie is passionate about empowering Australians to make better decisions, whatever it is they’re looking for. 

 

Whether you’re an entrepreneur looking to start a new business from scratch or a seasoned owner wanting to expand your business offshore, you’re going to need some capital at some point. To get your hands on this extra dosh, it’s likely you’ll need to take out a business loan. In business, time is money and money is time, so it’s worth knowing a thing or two about how to apply for finance the right way.

Here are four ways to improve your chance of getting the “green light” for your business loan.

 

1. Check your credit health

Although we’re told to keep our business and personal lives separate, this rarely happens for business owners, as lenders often look at both your company and personal credit scores before lending you money. There’s no point applying for a business loan if you know you don’t have a great credit history (either personally or via your business). Being patient and working to improve your credit score before applying will give you a better chance of securing finance.

 

Your company’s credit score will be impacted by how long you’ve been in operation, your credit enquiries, Personal Property Security Register (PPSR) registrations and director information. You can improve your score by paying your bills on time, keeping balances low on credit cards and communicating with your creditors. Your personal applications for credit and accounts held in your name may also be checked to help the lender determine your risk profile. Being happy with your credit score and taking steps to improve it will put you in a strong position to begin your finance search.

2. Have a solid business plan

Lenders are most concerned about your ability to repay the loan over time. They’re not going to fork out and invest in your business if they doubt you’ll be profitable and successful in the future, so they’ll want to see proof-points that your business can stand the test of time.

 

A thorough business plan will make it easier for you to communicate your business vision, strategies and goals to lenders. Including information about how the money will be used and some cash flow projections will show you’re serious about your business and confident in your ability to repay the loan.

 

3. Know what type of loan you need

There are many different financing options available for businesses. To be eligible for most, you’ll need to have an Australian Business Number (ABN) and for some you’ll need to have been operating for a certain period of time (eg one year for most unsecured loans). You also might need to generate a minimum amount of annual turnover, which can range between $50,000 and $200,000 depending on the type of loan you’re going for. To decide which option to take, you’ll need to understand why you need the capital in the first place.

 

For example, if you need some additional funds to meet daily business expenses, you might want to take out a business credit card. Remember you’ll need to compare providers to score the lowest interest rate you can. If your expenses can fluctuate (maybe on days when you purchase stock) then consider a business overdraft account, which allows you to overdraw on your business account to a certain limit.

 

There’s no point approaching a lender for equipment finance if you’re just going to spend the money on inventory – it’s important to do your research so you apply for a product that will complement your needs.

 

4. Don’t leave it until the eleventh hour

All businesses need money to operate so if you’re short on cash, your business’s lifespan may also be short. If you know you’re going to need extra cash in the near future, start researching your loan options now! Approval for a loan can take anywhere between a few days and a few months, depending on the type of finance you’re applying for. It’s important to have some time up your sleeve so you’re not rushing the application and can wait out the approval process (without going bankrupt in the meantime).

When embarking on your search for finance, it’s important to practise due diligence to ensure you take out a loan that will suit your business needs. Understanding your credit history, having a solid business plan in place, researching your finance options and being prepared are simple ways to improve your chance of being approved so you can make your business vision a reality.

Marketlend Academy: What do Investors Look for in a New Business?

The thought of approaching a professional investor with access to millions makes you sweat, but if you’re like many startups, you need money to get your new business off the ground. What is it that makes investors reach for their wallets?  

 

Businesses who bring in money do several things right. Here are key points you want to present to any potential partner.

 

   1.  Do Extensive Research

 

A lot of entrepreneurs skip this step as they develop their product or service. But market research is crucial and it needs to cover each angle.

 

Start with your industry. Look at how new developments in tech affect your field and be an advantage. Make note of trends and patterns, what aspects are in decline and where the market may expand. Approach customers and ask them how they use the product or service and take notes.

 

Next, tackle demand. What do customers in your area of expertise want? Real estate firms may see a need for more rental properties. If you have a chain of gyms, ask your members what products or services they wish you had.

 

The creators of Instacart are a great example. They studied the food industry and saw the move towards deliverables. They put together a plan to expand delivery service to groceries. Today their industry is worth 2 billion USD. The company saw a demand and responded, which makes them a big draw to investors.

 

   2.  Write a Stand-out Business Plan

 

A business plan is your future company on paper. It lets investors see the results of all your research, understand what problem you want to solve and shows how you differ from your competition.

A good plan includes:

• A one to two-page executive summary, (an overview of your plan’s key components)
• Your research presented as proof of demand and market
• Financial data and how much money you need
• A description of your perfect customer
• A write up of any staff or team members
• Past accomplishments and future goals

Walk the line between enthusiasm and hyperbole. Use plain, straightforward language and be sure to edit several times. Ask a professional writer to look at it, make sure it reads well and seek any minor mistakes.

Your complete and polished presentation will help you stand out and make the right people pay attention.

 

  3.  Develop a strong Marketing Strategy

 

Break down your marketing for anyone who wants to buy into your business. It’s essential to be specific and have a breakdown of your numbers.

 

Take the college magazine as an example. Here is what an interested investor is waiting for:

 

“We ran a quick poll on Facebook and got a big response from readers aged 17 to 19.

We tested keywords in tandem with Pay-Per-Click, (PPC), on Google. A new reader costs us $4.50 and generates $30 dollars in profit.”

 

You know the audience, you can build the audience and be in the black. You are the expert of your project – show it.

 

  4.  Have a Working Model

 

Ideas alone are rarely enough. It’s those who have a working model that get the money. Show that your idea has traction and you are much more likely to get that deposit in your account.

A working model is your service or product offered on a small scale. For example:

 

Product: An online subscription magazine for students on surviving college

 

Working Model: A blog with over 1,000 subscribers and a substantial social media following

When investors see the success in your model they will see you as an asset.

 

 

  5.  Answer the Question: Why You?

 

Never forget that you are the true product, so make investors understand why you, not the competition are the real investment.

Put your best traits, biggest accomplishments, past success in the foreground. If you have a mentor, classes to help you continue your education or any seminars scheduled, bring those up as well.

The best trait about you is that you have more than an idea, you have your drive and your vision to back you up. Show investors you bet on yourself and that will help bring them around to do the same.