June 18, 2024

Small business finance can be slow, inflexible and have a negative impact, learn how Rob Straathof has changed this.

Whether businesses are looking to expand, buy stock or invest in marketing, most will need access to fast and flexible funding to help them achieve their goals. For many years traditional high street banks have reduced their exposure to small business funding and that’s where Liberis steps in.

Rob shares his journey with Business Matters.

What products or services do you provide?

We provide revenue-based finance to small and medium-sized businesses through partnerships like Klarna, Tide and Barclaycard. Our embedded finance solution integrates directly into our partners’ ecosystem through an API to offer SMEs finance, all white-labelled in our partners’ branding. Using the data available through our partners allows us to target and pre-approve a large portion of small businesses for the funding they need before they even apply. Our fast and efficient 2-click application process takes the hassle out of the application process allowing the company to get back to what matters most, growing their business.

What type of businesses do you work with?

We work with small and medium-sized businesses, primarily direct to consumer-focused, from various sectors through partnerships with banks, marketplaces, software providers (ISVs) and acquirers. There are over 300m SMEs operating across the globe who employ over 930 million people, contributing more than 60% of global GDP. They are a critical driving force in the global economy, creating jobs, driving innovation, and generating income domestically and through trade.

With a funding gap of circa $5tn and too much uncertainty due to traditional high street banks’ lack of appetite to provide small businesses with funding, they seek alternative methods of getting the vital funding they need to help them grow and thrive. Our innovative revenue-based funding solutions allow businesses to apply for finance within minutes, often with money in their account on the same day! Our data shows that businesses that receive funding grow up to 50% faster than the competition and have a 20% higher chance of survival over three years. This is a material difference that matters.

What problem does your company solve?

Without the finance they need, small businesses can’t thrive –and neither can our economy. We want to fix that. By using data smartly and having insights upfront, we can pre-approve many small businesses for funding as they require it, enabling more opportunities for them. That means they need to have instant access to these facilities with the click of a few buttons as opposed to long application forms, uncertain underwriting timeframes and delayed access to funds.

What is your USP?

Unlike competitors in our space, we have over seven years of data and over 45,000 historical transactions that allow us to offer pre-approved revenue-based finance to small businesses through our partners globally. By using data, we can see that a business already qualifies for funding and can target them at the right time using a brand they already know and trust. This fast and efficient 2-click application process helps to eliminate the main fears that small business owners have when looking for finance:

Fear of rejection – they are pre-approved before they even apply and can access the finance at the right time for the right opportunity.
Fast finance – the application only takes 3 minutes to complete, eliminating the need for long wait times, having to provide document after document and having to chase for timeframes over the phone constantly.
Trusted finance – since we offer our funding through partners that our customers already know and trust, businesses feel more at ease when working with Liberis.

How do you ensure that you recruit a team that reflects your company values?

Attracting phenomenal talent to Liberis is a key pillar of our People strategy. We understand that recruitment is a two-way process, so we integrate our values into our selection process so that we can find candidates who will be happy and successful at Liberis, as well as ensure they put our customers and partners first. We want to ensure candidates are fully aware of the essential things they are interested in knowing when looking for a new role, including:

Our Culture – that we are collaborative, transparent, informal, flexible, and always place our customers at the heart of what we do
Career growth – the opportunities for our people to grow and develop
Leadership – who’s in charge and what they’re like
Company growth – our success story, our history and future growth potential

Are you happy to offer a hybrid working model of home/office post-covid?

Yes! Employee expectations have changed because of the pandemic, and we have adjusted our working practices in line with this. As an inclusive, global company, we need to be mindful of each employee’s circumstances. We have a combination of hybrid and home-based roles depending on the nature of the work. We encourage our people to come into their local office to build the right relationships and use the time to brainstorm and have productive collaboration. We believe in the power of teamwork and strive to have a learning culture, so it is essential to meet face to face at times to enable this.

Do you have any tips for managing partners and customers effectively?

With partners, you should always aim to maintain alignment with each other’s business, financial, and customer goals. The partnership should complement the skills that the other would find difficult to source or embed into their own business. Strong partnerships also need to align on how to treat their end customers, so alliances tend to be stronger where internal company cultures and processes are similar.

They say the customer is always right! Well, it’s true. Making sure that you treat customers fairly, never mislead them and ensure that they are happy with the service that you are providing is vital. That said, it is also important to be a responsible lender. Finance providers have a duty to turn down businesses for finance if they don’t have the affordability to pay it back. 

Lastly, if customer issues or complaints need to be managed, it’s important to do so quickly and efficiently to maintain that customer loyalty and lifetime value. Implementing things like reviews into your customer journey validates you as a business in the eyes of future customers and shows just how much they value you.

Any finance or cash-flow tips for new businesses starting out?

Every penny counts! Small businesses should always try and negotiate the best and most cost-effective funding options from their finance providers that align with their overall business plans. 

They should also try to find ways to extend payment terms with suppliers and get discounts if they pay them early. Even a 1% discount, if you pay two weeks early, leads to a 26% annualised rate saving! 

Businesses should also make use of government taxes and subsidies. They can provide small businesses with things like Start-Up loans, tax grants and R&D subsidies which can really help a fledgling business with their cash flow.

If you could ask one thing of the government to change for businesses what would it be? 

It would be helpful for small businesses if the government introduced mandatory 30-day payment terms for all invoices and payments, especially from larger, more cash-rich companies. Most large enterprises stretch the terms to their suppliers out to 90 or even 120 days, bringing real cash flow issues to small business owners who don’t have sufficient working capital. Making 30 days mandatory, i.e. 6% mandatory compounding interest after that, would be a step in the right direction.

What is your attitude towards your competitors?

Businesses working in the same area should always be respectful of each other. It’s important to remember that your competition is trying to make their company succeed by working hard and working smartly. 

Don’t speak negatively about them! At one point, you may be in a winning position over them, but as technological innovation can rapidly advance, you might find yourself working for the competition at some point! 

Focus on your priorities and product improvements, deliver the best product to the market, and you will win all the right battles.

Any thoughts on the future of your company and your dreams?

We are in rapid scale-up mode, so a huge amount of exciting growth is happening at Liberis centred around three strategic priorities. Our vision as a business is to close the $5tn annual global SME funding gap; we need to ensure we excel in meeting our small businesses’ financing needs. Revenue-based financing works exceptionally well for small businesses. To continue to support even more growth, we are adding a suite of new products to address our customers’ range of financial needs. 

Secondly, we are focused on global expansion. We have built a formidable array of international partners with access to merchants who need financing across the globe. We follow our partners to geographies that matter strategically to them.

We are on track to fund over 100,000 businesses in the next few years and safeguard 100s of thousands of small business jobs, powering the local economies. This is only achievable if we continue to hire exceptional talent aligned with our purpose and who believe in our vision. The talented team we have built is dedicated, driven, and passionate and has bought into our strategy of helping small businesses thrive by offering them much needed funding. To grow the way we want, we need to continue to hire and retain great people and help them further master their skills and experience at Liberis.

Read more:
Secrets of success: Rob Straathof, CEO of Liberis