Cash flow problems can affect any business. When relying on customers for payments, even a profitable business can have trouble keeping cash on hand.
Given the explosion of fintech startups over the past few years, one of the niche markets that still looks set to grow is small business finance. We have examined companies active in the industry in the previous articles, but as a sector of the financial market so crucial for business expansion, and therefore essential for finance, new business profiling is still important.
With that in mind, we had the chance to interview Eyal Lifshitz, founder of Blue Vine.
His company provides financing solutions to a wide range of businesses and even facilitates simpler bill payments for clients. Eyal took the time to discuss what sets his business apart from the competition, his personal motivation to start the business, and also offered valuable insight into how he sees the fintech field growing at the to come up.
How would you describe BlueVine to someone who is new to the company?
Blue Vine provides working capital financing to small businesses online. If you, as a business, provide services or products to other businesses, you give them credit terms ranging from 30 to 60 days. The wait time is tough for a small business, so we are working to give businesses the cash up front. You can use the advance to better streamline your cash flow. We are only paid when the company pays the bill.
What prompted you to start the business?
For me it was a combination of two things. First, I know small businesses and the cash flow challenges they face. My father, and his father too, were small business owners. My father had a physiotherapy practice where he waited up to two months before being paid by a private insurance company. On the other hand, before this role, I worked in a finance company. I was a director there and during my stay I was exposed to many companies and innovation in the financial field. I have seen a lot of companies disrupting the field and doing a good job. In bringing them 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 from disruptive way. As far as invoices go, I think we can provide a similar disruption in this space.
All businesses have their competitive advantages, what really sets BlueVine apart from traditional short term lenders?
I would say no one is doing what we are doing. A mortgage is not the same as a student loan or a car loan. These are different funding structures based on different factors. Commercial financing is the same, with different verticals and niches. We are disrupting a specific niche, invoice financing. No one, at least in the United States, is doing what we are. Other companies may be similar, but the overlap is not that great. Our competition is the offline world, we are the first to do it online at this scale.
From what I understand, companies don’t even need to redirect their billing address to the company, can they keep everything in their name and still refund you?
The way it works is that we give our customers a BlueVine account (PO box and bank account), and with the invoices that we fund, they have to change the payment information with their customers, but their information is the same. Even though the money goes to BlueVine, we are truly anonymous. We are discreet in what we do. The customer can send the check to a different address, but they always write the check to the same customer.
How prevalent would you say such cash flow problems are? What kind of market are we looking at?
The traditional low-end market could reach $ 15 billion in the United States. This is three times the size of merchant cash advances. Banks can fund large lines of credit for large companies, but at the bottom of the scale, the market estimate is there.
In the future, how do you see the field of fintech developing? Where are the next big trends?
In the new age fintech market, I think you will see brands grow. Why do people go to Bank of America or Chase? It has a lot to do with brands. I think you see some of it today with companies like Loan Club. Companies that are startups today, five to ten years from now, will be mainstream household brands. In terms of opportunities, there are so many. It’s hard to say what will happen with something like Bitcoin. There are a lot of layers to this and it’s interesting how this is going to develop. In financing, I think there are a few verticals like equipment financing that have not been developed. These could be disrupted, as well as niches like consumer credit. Mostly using the data to make better credit decisions. The way credit reports work is open to innovation and I think you will see it.
Is there anything else our users should know? News from the company?
We recently increased our lines of credit to $ 100,000. Until recently, we were making up to $ 50,000. Much of it comes from our customers. We grew up with them and they became a catalyst for it. Our customers have grown rapidly and that’s something we’re excited about. The business is growing rapidly for us 100% quarter to quarter. We’re excited to reach as many small businesses as possible and help them thrive.