Under the hood: simplifying small business lending

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" There’s a big difference between someone operating an alpine ski resort compared to a tradie or a florist or a GP. They’re operating totally different business models.” – Alex Molloy

For Alex Molloy, co-founder of ANZi alumnus Valiant, supporting small businesses in accessing the right lending products in a simple way was a no-brainer. When Molloy, who has a background in consulting, and his co-found Ritchie Cotton, who has an investment banking background, started researching the small business lending market they were baffled by the sheer complexity of the different products and offerings available.

“That was really the basis for Valiant,” Molloy explained to me from Valiant’s bustling offices in Sydney over video conference. “It’s a platform that helps demystify business lending for small businesses and helps them understand who they get approved with, at what rate and why they would make a decision between different products.” 

One might ask: why would ANZ invest in a company like Valiant which could potentially recommend a competitor’s product to a small business? Doesn’t that make Valiant a competitor of the bank?

Molloy says they are instead pursuing a collaborative relationship with lenders of all shapes and sizes. “Business lending and credit supply for small businesses is fundamentally fragmented,” he explains. “There’s a big difference between someone operating an alpine ski resort compared to a tradie or a florist or a GP. They’re operating totally different business models.”

Molloy explains it's a natural state of the business lending market that there are hundreds of products that need to be in place helping customers. So large sections of lending supply don't naturally compete with each other at all.

“What those lenders need is scalable, low-cost access to high-intent customers who are ready to transact with them. Valiant's role is to be the glue between all of those customers seeking access to finance and the exact right combination of factors.”

However, I pointed out to Molloy it would be easy to get carried away and try to fix all of the problems surrounding small business lending all at once. Something that Valiant is acutely aware of.

“Very early on we thought we could help customers with insurance or we could have a software offering that provides insights and engagement for customers. We were getting peppered with ideas,” he conceded. “But our mission for the business is to be the only place for business finance. So we stayed focused on that.

“Each time we really nail a point in that lending process, we move one step deeper to where now we can get a customer from any digital starting point all the way through to a settlement. But we refuse to move on to the next thing until we have really nailed a full use case for a customer stepping through that process.”

With the COVID-19 pandemic, which was obviously extremely disruptive to small businesses and funding-based ventures like Valiant, Molloy says the company used the opportunity to steer their customers towards the various government and lending support options available.

“As news about JobKeeper, state-based tax initiatives, all these things were evolving, we were trying to communicate that through to our customer base and help them pivot. That was also the best possible thing we could do to serve our customers in the segments that were still lending.”

“Thankfully, that is rapidly getting better now with the light at the end of the tunnel and we're seeing pent up enthusiasm now being released to start operating again.”

You can listen to our full conversation by clicking on the podcast above.

Shayne Elliott is CEO of ANZ