Liberis CEO on Fintech and Small Business Banking

Rob Straathof is the CEO of Liberis, a leading embedded business finance platform serving small businesses with the funding they need to thrive. Liberis is backed by the UK Government owned British Business Bank, and has funded over £600m to ~20,000 businesses, safeguarding over 100,000 UK jobs to date. We caught up with him to find out more.

Q: Tell us about your role and Liberis's key role in the fintech marketplace

 Our platform enables payment processors, marketplaces, banks and software providers to embed business finance into their ecosystem through their dashboard or app. My responsibilities are setting the vision and strategy, hire the right talent, ensuring we’re all rowing in the same direction, know what our customers needs are and making sure we are top of mind to our strategic partners.

My background in financial services started off at JPMorgan in the FinTech investment banking team, followed by a range of SME-focused finance experiences including Director roles at Everline, the UK’s first digital SME lender, and Newable Business Finance. I am originally from the Netherlands, and hold a Master of Science in Financial Economics from Erasmus University and started my early career as a co-founder at one of Rotterdam’s first online B2B lunch caterers.

Q: Who are your customers? 

Small Businesses and Small Corporates, there are over 300m SMEs operating around the world, that’s four for every 1,000 people! They employ over 930 million people across the globe so it is a huge and very important market, 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.

We know that the current financial system and banks aren’t set up to meet the needs of these businesses with an estimated $5tn funding gap, resulting in SMEs struggling with cash flow and they investment they need to grow. It takes the average business around 10-24 hours of gathering data to apply for funding, and banks take between 3-8 weeks for a funding decision, that is too long and with too much uncertainty. We enable businesses to apply in as little as five minutes, often with money in their account same day! SMEs typically operate on short cash flow runways, and the long application processes and low accept rates with banks deter them from accessing the funding they need. From our data, businesses which receive funding grow up to 50% faster vs. the competition, and have a ~20% higher chance of survival over three years, that is a real and material difference and it matters.

Q: What is the competitive business advantage of your company?

The embedded finance space is very competitive right now but we have 15 years of proven experience with SME finance – we are the experts, we understand SMEs and their financing needs and our 14 strategic partnerships and 20k customers show a real customer need. Our partnership model provides us with rich targeting data which means we have an 80% approval rate and payments are flexible based on the daily revenue generated by the small business.

We are also one of the few providers with a global presence, we are currently live in eight countries with a further two on our roadmap for this year. Our technology is world class, we don’t just have a referral journey, we embed our API driven platform into our partners’ ecosystem to offer a frictionless application journey, enabling pre-approved, hyper personalised funding offers, which customers can take out in as little as a few clicks! 

Q: What initially drew you to found the company?

First of all, my interest in SME finance comes from my family, who all run small businesses. I have seen first hand the emotional and financial impact a lack of SME funding can have on a business and a family. My brother has built an exceptionally successful business but has been denied funding at many junctions all because the financial services sector hasn’t been built to profitability serve small businesses. 

As for the business model and idea of embedded finance, when I briefly ran Everline in 2015 we noticed that the partnerships channel was the only channel that worked well and consistently delivered great results. Direct customer acquisition for SMEs is very expensive and creates a hugely adverse selection. What the data pointed out to me was that through partnerships we were able to access the right customer, at the right time with the right product, with the added benefit of low acquisition cost. And for the SME, we offer a trusted brand with a fair price, in an ecosystem they already work with. 

Liberis combines my years of financial experience, passion for helping Small Businesses and ability to build an embedded finance proposition through partnerships.

Q: Describe some of your key market challenges right now

The embedded finance space, especially the SME finance space is really competitive at the moment, with lots of VC funding into the sector. On the one hand this is great because it is getting the focus it needs, but it means that it is very dynamic right now and you need to be able to pivot and innovate at an incredible speed.

The global COVID pandemic, and economic impact resulting from it, has driven a dramatic increase in government backed bank lending of c.£47bn through the various COVID schemes. The expiry of these government schemes is going to create some interesting market dynamics and huge opportunities for companies like Liberis to step in where banks will start to pull back on their lending appetite. 

The great resignation is definitely one which can’t be underplayed. Hiring incredible talent in a highly competitive market is fundamental to growing our business and also to the small businesses we support. Brexit coupled with COVID has definitely created unprecedented challenges in this area which will be felt for years to come. 

There is also a general anxiety across all sectors about inflation and pressure on consumer discretionary spend. The increasing cost of raw materials, supply chain issues associated with Brexit and the global pandemic, as well as the war in Ukraine impacting global growth and uncertainty, are creating high pressure on the financial outlook for small businesses, especially those who can only partially price in the increasing cost of goods sold. 

Q: What technologies are you looking to develop further?

We are always looking at further adoption of machine learning and proprietary data sources to aid us in delivering a hyper personalised customer experience.  By adopting the best of AI and data analytics, we will further improve our risk, targeting and pricing models. We have also invested heavily in Robotic Process Automation, helping optimise and reduce our previously manual back office processes by over 80%. 

Q: Who are your key partners in your technology ecosystem?

We are a fully cloud native platform and utilise Microsoft Azure as our key stack. We use industry leading tools for availability and observability such as DynaTrace.  A key component of our targeting and underwriting is the use of open banking solutions including TrueLayer in Europe and Plaid in the US. 

Q: What is your leadership style?

Moving from startup to becoming a scale up necessitates the adoption of a more delegative leadership style as you can rapidly become the bottle neck in key decisions. Over the last few years we have made some phenomenal hires across our team and I see my role as making sure we have the right people, with the right skillset who I trust to take ownership and have a bias to action and growth. My role it to spot these people, hire them, grow them and create a company vision which is inspiring and motivating.

The scale and complexity of Liberis has multiplied as we have hired over 100 people in the past year and our run-rate revenues have tripled over the same period. Making sure we manage 14 large strategic partners, across 8 countries whilst delivering new innovative products and scale up the platform to integrate with banks has been an incredible journey! And my leadership style, as well as the teams leadership has had to adopt with it to be able to execute on this enormous opportunity ahead. 

Q: In terms of growth, what’s next for your business?

We are in massive scale up mode so there is a huge amount of really exciting growth happening at Liberis at the moment centered around 3 strategic priorities. Our vision as a business is to close the $5tn annual global SME funding gap, and to do this we need to ensure we excel in meeting our SMEs financing needs. Revenue based financing works extremely well for small businesses and to continue to support even more SMEs, we are adding a suite of new products to address the range of financial needs for our customers. 

Secondly we are focused on global expansion. We have built a formidable array of global 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 100’s 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, passionate and bought in to our strategy of helping small businesses thrive by offering them much needed funding. To be able to grow the way we want we need to continue to hire great people and help them further master their skills and experience at Liberis.