Back in the early days of marketplace lending there was a company called Endurance Lending Network. They were one of the first companies to operate a marketplace for small business loans. Sam Hodges was one of the co-founders of this fledgling business, an entrepreneur who saw a broken system for small business lending and went about trying to fix it.
After Funding Circle bought Endurance Lending in 2013 it was Sam who became the leader of the US business. He has helped guide this business to become the leading marketplace for small business loans in the country, growing to more than $1 billion in total loans funded.
I received an email last week from Sam asking to connect about some news he wanted to share. We chatted earlier today and I learned that after almost 7 years running a small business lending platform he was stepping aside. Taking his place is Bernardo Martinez who, until yesterday, was the head of PayPal’s small business lending arm known as PayPal Working Capital.
This morning I chatted with both Sam and Bernardo to find out the back story and how Bernardo views the business. When I asked Sam the reason for his departure he basically said that the timing was right:
After almost seven years at the helm of this company I felt that the time was right to bring in a new leader. We have just come off our best year ever and business is as good as it has ever been. I have been thinking about this move for about a year and felt like this was the optimal time to effect the transition.
Sam will stay on until the middle of April where he will be working closely with Bernardo to ensure a smooth transition. After that time he will step back from day to day operations and assume the role of Chairman of the US company. He has no plans to jump into a new challenge, he said he is looking forward to taking some time off and spending some quality time with his family.
Bernardo has spent the last three years running the US business for PayPal Working Capital. He has helped build this business into a sizable operation topping $3 billion in total loans as of May of last year. Interestingly, PayPal Working Capital also has operations in the UK which is where Funding Circle is headquartered. Bernardo also led the acquisition of Swift Financial last year for PayPal.
When I asked Bernardo about what attracted him to this opportunity at Funding Circle he talked about how open the small business lending market is:
I have been impressed with what Funding Circle has achieved so far and I am excited to help the company build on these accomplishments. The US has a fragmented market with no clear leading brand when it comes to small business lending. The opportunity is there to become that leading brand and that is exciting to me.
I asked Bernardo what are some of the lessons he will bring from PayPal to Funding Circle and he focused on two key pieces:
- Customer experience – at PayPal small businesses can spend 10 minutes doing a loan application and then get their money instantly. While Funding Circle will not be duplicating that method there are many things that can be done to make the customer experience more seamless.
- Leveraging data – PayPal used their own internal data to make quicker and better decisions. There are opportunities at Funding Circle to use data in a more sophisticated way.
When I asked both Sam and Bernardo about the IPO news that came out over the weekend not surprisingly they had no comment. When the time is right we will learn more about their plans here.
My Take
Over the years I have got to know Sam quite well and I have always found him to be the consummate professional. He has represented not just Funding Circle but the marketplace lending industry extremely well over last several years. He was one of the driving forces behind the creation of the Marketplace Lending Association as he saw the importance of an industry group as the next stage of the industry’s maturity.
So now another chapter begins as yet another major marketplace lender finds themselves with a new leader. At least in this case it was a long planned transition that should be viewed in a positive light.
Funding Circle is at an important inflection point. Their long anticipated IPO is on the cards for later this year as they look to establish themselves as the leading brand in small business lending. They are no longer a startup and will be looking to become a more mainstream financial institution.
I look forward to working with and getting to know Bernardo and seeing where he will take Funding Circle USA.
