I had the pleasure of recently speaking with Tim Dean, co-founder of Perth SaaS startup, Credi which recently launched.
//SN: What’s Credi about? What problem does it solve?
According to the RMIT report “Friends and Family Lending – an invisible phenomenon” commissioned by Credi , we found outside of credit card usage, the largest provider of credit is friends and family. 2,400,000 US startups each year get 42% of their working capital from F&F. In the UK and Australia almost 50% of deposits for first time buyers are provided by parents. Yet these are largely undocumented, informal, ad-hoc. These loans are based on relationship and trust, evidence tells us that they generally get repaid, albeit with some bumps along the way. The bumps are the issue. Lending money is never informal – ever. There is always the crunch when someone needs to be repaid, let off or loan forgiven. At that point, relationships get broken, friendships strained, families argue. That’s were Credi comes in.
//SN: Who’s the target market? How are you going to reach them?
Everyone at some time is touched by lending between friends and family. The challenge is going to be how to efficiently get the message out there, encourage take up, and get repeat usage and referrals.
Credi has strategies to get to targeted groups such as first time buyers, parents supporting students, friends helping fund startups. Indirect route to market will via accountants, bookkeepers and financial planners – introducing Cedi to their clients through affiliate and partner programs.
//SN: How did you get the idea for Credi?
Well I am a classic parent, moonlighting as the Bank of Mum and Dad, to my grown-up children, and others. After yet another loan request, and a fraught agreement nutted out with a headstrong 23-year-old who wanted some money to go travelling that he promised he would pay me back, I found my moment.
So, I went digging, then building, and finally launching.
//SN: Who’s the team behind it?
We now have 5 full time and 7-part time staff – IT, Legal Accountants, Brand Design, a Growth Hacker and even an ex Federal Minister for Financial Services on board.
//SN: What’s the biggest mistake (or learning experience) you’ve had so far?
Using offshore developers – the time difference, language and cultural barriers are a killer for a startup when everything is “now“ and details are nuanced and in constant flux.
//SN: What’s the biggest success you’ve had so far?
Recruiting and retaining a great team and through the process onboarding the key members as shareholders and committed stakeholders – creating a team with “skin in the game“ sharing problem solving and adding to the brains trust in the business.
And moving from West Perth to Fremantle. We are in the financial services sector, but that does not mean we are not creative. Our team saw as I did, that a creative environment lets you thrive. Suits, awful parking and attitude, or shorts n T and Little Creatures on Fridays – it was never a tough call.
//SN: What’s the big-picture vision for it?
We’d like to have everyone using Credi – and why not, it’s FREE for loans under $ 5,000 and a reasonable price for larger loans.
Launch done, growth is our next objective. That will need funding for sure, but with a great product, and big problem solved we are confident that when we need it, it will come.
//SN: What’s the thing you need to do next?
Scale, develop fantastic feedback loops for our community of users – and evolve the product. It will find its way.
//The Story So far
So, after 2 years, a bunch of cash and time, a dozen of us have produced Credi as our solution to the problem everyone will face at least once in their lives, and ignores at some cost, emotional and maybe financial.
So back to my 24-year-old who is now 25. He needs a new laptop and approached the Bank of Mum and Dad, hoping it was still in business. Armed with my new toy I sent him off to Credi. In a short time, we got from him asking for $ 3,000 for the latest MacBook, with me lending him $2500, to me lending him $1500 against a second hand nearly new model. We never spoke, fell out, disagreed – we negotiated, did what we were comfortable with, and in the end, he became a cautious buyer, accepting a trade-in model over new, without me having to directly tell him to do so, or say “I told you so“. He has the computer he needs, we have an agreement, and we both learned a lot along the way! Added bonus, is that we probably spent about 15 minutes in total in getting it done – no long phone calls, lengthy emails, sleepless nights.
//How did we get there. What was the process.
We set aside a dollar amount to get to MVP. For us it was $ 100K. The funders were the founders, as we wanted to formulate the project, get it off the drawing board, before asking anyone else to fund our dreams. We started by testing the idea, and went to RMIT to do a case study / report on informal lending. That gave us the big numbers – a big audience. We then contracted a IT consultancy with banking experience to turn our ideas into spec the developers could build. They then recruited a small team to build out the product, whilst we thought about brand, marketing and routes to market, and made sure that as a financial services business we had the regulatory perspective understood. As we built we realized that we had to decide, whether to “just do it“ or build skinny and test. We decided on the former – and the founders funded again. We recruited IT professionals, all contractors, and paid them their way. Some stayed, some went (as we were not paying top rates) and some came back. Finally, we launched.
Along the way, the approach built credibility in that we offered up expert opinion on market and technical structure, we backed ourselves which gets respect, and we were honest in what we could do, and what we could not – always setting the expectations of our team.
This article is one of a series of interviews where I speak with the founders of Australian SaaS (Software as a Service) companies. You can view the other interviews here.