AI, risk & reality: Inside modern lending decisions

Tony Clark: This is the London FinTech podcast bringing you practical insights and approaches, stories and inspiration from the innovators who are building the new world of financial services. Welcome to London FinTech podcast. Today's conversation is about the five and a half million small to medium businesses in the UK. Think of FinTech in the aftermath of the financial crisis and the journey in the 14 years since. We're talking about business lending, machine learning, fintech and incumbent collaboration mod. My guest today is Christoph Reacher, CEO and co founder of iWalka. Welcome Christoph, it's great to talk to you.

Christoph Reacher: Thank you very much for having me.

Tony Clark: Good to be here. This is a conversation I've been really looking forward to as it's a fast forward from the FinTech era of 15 years ago. With all the current AI excitement we sometimes forget that many innovative fintechs have been running for over a decade. The disruption era of neo bank and lending startups following the financial crisis has evolved to what some are now calling the great rebundling. And some of the earlier innovations have matured to new core petition models, um, where they quite like unusual collaboration models perhaps between incumbents and new entrants to the market. And we're seeing embedded lending, embedded payments, some of those models maturing and it's a lot that I think we might uncover in today's conversation. So before we get into talking about the iwalker business and the founder's journey in a bit more depth, Christophe, can you tell us a little bit about your early years and background and how you came to be building iwalker?

Christoph Reacher: Yeah, of course, very happy to. Um, I started my career at Goldman, uh, Sachs and um, spent seven years on the, on the market side which was a tremendous learning experience to really understand how markets are functioning across all of the different asset classes. Working with very talented and ambitious people. And um, over the years I felt that there was something missing in my day to day job. I wanted to have a stronger impact on, on individuals rather than working on the sort of grant sort of financial markets where you know, arguably obviously had very little, little impact on, on how they'd be moving. And I think that was sort of the, the start of um, my desire to start my, my own business and define my own fate and, and build something with my own hands.

Tony Clark: If you really wanted to get closer perhaps on a slightly more individual personal level, I understand that broad markets, you're looking at a screen and there's a lot of numbers moving around and uh, but you're not really connecting with people so perhaps m. More of the uh, the individual connection there.

Christoph Reacher: Yeah, it's, it's a, uh, it's sort of direct translation of the work that you're doing and how it impacts the world. And I just felt that, you know, I wanted to have um, a stronger connection to the people that I impact than, than I could have being on the broad financial market. And so, yeah, that was really kind of, I think, sort of like the, the inner desire in me to start my, my own company. And then I started uh, researching what, what I could be doing, started to look for problems that I could solve and um, came quite quickly on the big challenge that small businesses had in, in accessing financing. This was during. Towards the end of the Great Financial Recession. It was um, very publicly debated that small businesses didn't have the access to finance that they needed to make investments and grow their business. And in many cases actually even um, not to trade through short cash flow problems. And that uh, in, you know, many cases did lead to the company having to wind down. As you're, as a small business with relatively little reserves, you can enter quite quickly into a downward spiral. And I thought that was a fascinating and really important problem to solve. I liked first of all the fact that I could give an individual business owner the funds that they need to pursue, um, you know, in some parts their dreams to grow their business and others just to sleep better at night, to have the funds available to pay the supplier and their staff and to continue to run their business. So you know, the desire that I was earlier speaking about was really kind of, um, you know, very, very present in that challenge that by providing them the funds that I have this, this impact on an individual that I was lacking very much, uh, working on global financial markets. The second bit I found really exciting about this opportunity is that there are millions of small businesses, um, you were referring to five and a half million in the uk. If you go broader in Europe, there are um, more than 20 million small businesses. So it's a huge market. So if I can help fund, um, not just one customer, but do it a million times over, then I can actually have some impact, even on a macro level in a way that, you know, I didn't have before. And the third bit that really um, won me over is that there was a lot of evolution in the years running up, um, to us starting the business. And um, that was the emergence of APIs through which you could access data in a way that wasn't possible before. And um, and then also new techniques to process that data, um, and, and build Better credit models. So I felt like all three points were incredibly compelling and um, and then I, I decided um, to give it a go.

Tony Clark: Yeah. So personal individual impact, almost addressable market opportunity and uh, maturing technology and API capabilities sort of coming together there. You've certainly had an impact since. So if I'm right, Iwalker is on a mission to finance 1 million businesses. So maybe let's uh, touch on that. What size is the business now in terms of customers and loan books and uh, countries that you serve?

Christoph Reacher: Yeah, before I answer that question, you know the fourth one, um, they came together is that I found an absolutely amazing co founder that uh, complemented me 100%. Um, you know both of us are still very active into the business but as you're starting sort of on a journey like this, um, you know your early partners that you choose absolutely defining of the success. So I think that was the fourth one also you know from the start had had a team as more or less just the two of us and to really make it happen I think that's something that I um, would really highlight um, as um, the sort of core foundation of our worker.

Tony Clark: Yeah. As we often discuss on this show, you know starting something up is a team sport and it's crucial to have a complimentary team of founders um, and bring those uh, different skill sets together in order to drive something. It's almost impossible you can have. There's a lot of ideas out there but the hard work that goes into execution, you really need a team. Um, so I think it was, is it James, your co founder, uh, was with you right at the beginning.

Christoph Reacher: Yes. Um, so James has been there from day zero and um, still going strongly

Tony Clark: 15 years on and you're still there. Okay, so yes, I asked you about the size of the business and where you've, where you've come to. So love to hear that. Before we jump right into today's episode, a quick thank you to our sponsor, nextwave. Nextwave is an award winning consultancy that is helping many of the world's leading banks, investment managers and insurers deliver on their growth efficiency, risk and control goals and transform their businesses. With a senior team who have come from MD level positions in major firms like HSBC, Barclays and UBS. NextWave has both the deep industry expertise and the hands on capabilities in AI, data and automation to drive real results, more business outcomes and less PowerPoint. From the consulting experience as their clients like to say. Nextwave has moved two week manual processes to five minute agentic automations, rescued global banking Regulatory control programs and digitized deal platforms, sustainability and regulatory reporting systems. And they do much of this with hands on engineering capabilities on leading technologies which include ServiceNow, Alteryx, Quantexa, uh, and Camunda. So if a modern and specialist alternative to the big brand consulting model sounds appealing, one which covers the full life cycle of strategy specialists and solutions, but with small practitioner teams, rapid delivery and a better price point, then perhaps you should talk to next wave. Visit nxwave.com to find out more and get in touch. That's nx wave.com all right, let's get back to the episode.

Christoph Reacher: Yeah, it's been, it's been a roller coaster. Um, right sort of from the outset um, we saw this as a sort of global opportunity. And um, you know the starting point was we want to be operating in 75 countries, lending, lending across the world. And um, you know over the last 15 years we made it to two markets that are very successful for us. Uh, we've been in four at a maximum, um, but decided um, that more focus is required in getting it right in those two markets. That's the UK and Germany. In both of those we have grown to um, quite considerable um, scale. We're now funding probably about um, five, six thousand businesses um every month. Uh, we have originated um, uh more than a ah, billion and a half pounds um across those markets over the last 12 months. Um and as I said one of the things that you know I felt really exciting was that I can have an impact on a macro level as well. And we've now started to measure how much economic activity our financing is supporting. And uh, you know we, the estimate is um, about more than two times of our lending amount. So over the last 12 months we have added about three and a half billion pounds to the economy and created um, some 60,000 jobs. So I think you know that that's kind of really for me as a founder and for the entire team really motivating that we have delivered sort of on these three points. So massive impact on many small businesses to really add scale to create economic activity. And we'll be speaking a bit more about the tech and how we're using data but you know that's been a really exciting area where we innovated a lot.

Tony Clark: I love that measuring the market and the real world impact as a multiple of the uh, funding that you provide. Because that's really the end point with this. It's uh, creating jobs, growing the economy, creating uh, opportunities in the market. I walker uh, so I gather and I think your Your comms team put me straight on this in the, in the research. I had it, I thought it was of something else but it's instant working capital if I'm right. And, and that's pretty much your mission. I think. You're underwriting loans and providing funds inside 24 hours.

Christoph Reacher: Yeah and our uh, personal best is um, 2 minutes and 37 seconds. A business starting the application process to actually having money credited into their bank account. Um, that specific customer was um, a customer that um, is banking with Tight. And, and so through our API integration with Tight they were able to share the information that we need to make a um, a decision. And so that really does accelerate or we present this real time application to funding um capability that we have built. So yes, um, we um, in you know more than 80% of the cases our customers receive instant um, credit decisions um, um, that they can then use to draw funding from us.

Tony Clark: And when you were starting out this idea of real time underwriting, instant working capital, really out underwriting the high street banks who might take days or weeks to make a similar decision or perhaps not even interested in that loan size at all. But what reaction were you getting from market? Were there people saying to you there's no way this is going to work or was it a very quick um, quick adoption and product market fit?

Christoph Reacher: Well nothing, nothing is um, quick. You know, 15, 15 years on um and you know it's been quite the journey that we've gone through. But um, businesses of course you know, absolutely love the um, speed um and certainty that we can give. Um if you're a business owner you kind of juggle a lot of balls at the same time. Um, it's really draining to ask someone um, for funding and having to do this over many many weeks without a certainty whether you can actually get it or not, whether you kind of invest the time, you know, your sparse time into a process that doesn't go anywhere. It's very frustrating. So um, so yeah, you know the barriers that we have broken down through the technology and the experience that we provide today is um, yeah it's been an absolute fresh breath of fresh air for businesses and game changing for many. So businesses can now literally if they get offered um, um, a stock for example from the supplier as a good price but they don't necessarily have the funds. They can really react within the same day to buy that stock and pay for it. While in the past in many cases they would have had to pass because if they get funding in four to six weeks the deal would Obviously be long gone. So for many businesses really this sort of um, speed of access uncertainty is um, is, is, is game changing.

Tony Clark: Yeah. And you said that it's been a roller coaster and for many businesses, including my consulting business, one of the big rides on that particular roller coaster was Covid. The government. UK government launched a bounce back loan scheme that many firms relied on to survive at the time. There's been a lot of issues in the aftermath of that with, with lending decisions, but all of the big lenders were scrambling to provide the bounce back loans. Were you involved in all of that and what were you seeing from the inside?

Christoph Reacher: Yeah, it was a roller coaster for everybody. You know, starting with our customers. Of course they were heavily impacted like everyone else. And then us as a result, government over those uh, you know, two years or so, provided I think um, more than £50 billion in liquidity to SMEs. It was one of the um, largest funding years I think to SMEs on record. And we were directly participating in the schemes that the government offered and we were credited for the Seabille scheme, the Coronavirus Business Interruption Loan Scheme. Um, um, we're one of the largest funders under that scheme and therefore really supporting businesses in that um, difficult period of time also saw a sharp reduction from some of our customers in requesting funding from us as the bounce back loan scheme essentially replaced us in many ways. So before lockdown sit, our average loan size was probably around £25,000. The bounce back loan scheme was up to £50,000. So for businesses it was um, a lot more attractive to um, take those government funds which came um, at um, a near zero interest rate and um, no other covenants attached to them. Um, and that of course was very attractive. So there was much more demand to access these pools of funding than coming, coming to us. That was difficult for us. But at the same time as we were accredited for the, for this other scheme where our uh, loan sizes were on average closer to 250, 300,000 pounds, we were able to support a different segment of SMEs that we weren't as present in before the lockdowns. And that meant that we could build a new capability during this period which is not very valuable to us. So for us, sort of this period, as painful as it was for our customers as well as us, it was also a period where we could grow new capabilities and we benefit from those very much now.

Tony Clark: Yeah, well I remember it very well. We were launching our uh, consulting business exactly at that time. In fact we had first fees in January of 20. I'm afraid I didn't know about Iwalka at the time but we got a uh, Covid loan um, courtesy of Starling bank in the same day. I was quite impressed at the time thinking that that happened quickly. I don't think that was everyone else's experience. I know there's been a lot of scrutiny since on lending decisions by all sorts of lenders um, during that period. So some of the processes were a bit rushed. But I like that point about um, how it sort of matured your offerings and allows you to add capability. I'm curious what, what are the highs and lows? You said roller coaster journey and I'll ask you um, in a few minutes about some of the lessons you've learned. But, but the ride that you've been on with Iwalker. Um, perhaps it'd be great to hear um, a couple of things that been a peak experience and a couple of things that may have um, given you a really, really difficult obstacle.

Christoph Reacher: Yeah, I mean you know the last 15 years just has been a bit of a roller coaster for everyone. It's um, you know it's a very fast paced world with um, a lot of geopolitical um, events that happened over those um, 15 years. And you know, before I go into some of those, you know, you know I started by saying that in that we were excited by helping individual small businesses to access financing, to do this a million times over and to use tech and data to solve that problem throughout sort of this roller coaster period. These were the three constants all the way to today that always um, kept us focused, kept us going. Um, and um, that stability in knowing which problem we are trying to solve and what it takes to solve it I think was really um, critical for us um, to stay kind of you know, in the right lane and move in the right direction. So things that we you know worked through in the early days, uh, we've had the um, European government crisis with um, you know, Greece being bailed out. That led to a lot of turmoil. Um, as you remember it, um, you know was during a time where we had to raise funding. We were loss making at the time. We were highly reliant to raise more funding to be able to build out the business and continue to fund our growth. You know, if you are kind of in a period where at that point the world went, went into a difficult spot that sort of immediately puts you in a very precarious position and that you know was, was quite troublesome. Then Brexit was of course another one, a lot of uncertainty for an extended period of time. If you remember 2019 period where I wasn't sure whether it would be a hard Brexit. No Brexit, soft Brexit. Um, and um, it was just like the whole population and certainly businesses were very worried as we were. And usually kind of, you know these things kind of lead to um, worse access to funding. And again as a fast growing businesses like ours where you're relying on quite heavily on external funding, these are uh, um, these are very nerve wracking periods. And then you know, Covid, we already discussed and then post Covid, you know our businesses um, obviously had to trade through a period with very high inflation. You know inflation, the double digits was the highest you know, I ever experienced in my lifetime. You might remember the uh, October where Liz Truss was Prime Minister. That was again a period where we were um, raising capital which made, was very, very difficult by um, politicians.

Tony Clark: Yeah.

Christoph Reacher: And now sort of we have another geopolitical crisis. So I think kind of like the roller coaster period were generally kind of because of some geopolitical events that were generally caused by politics really rather than by businesses. So I think if you would take sort of those sort of um, events out it would have been um, you know, a very concentrated um, path on solving the problem. But you know we kind of had to work around sort of those and make sure that we do raise the funding that we need to be able to do our jobs.

Tony Clark: And to many extents chaos is the new normal. So unfortunately I have to believe that there are more shocks around the corner and that uh, the roller coaster is likely to continue.

Christoph Reacher: Yeah. What is to me really amazing um, is to see how resilient small business owners are. It's just um, regardless how rough the conditions are, they'll figure out a way how to trade through them slightly, um, pivot at times or just cut down on cost um, where needed, um, and if needed. The last 10 years they've been thrown from one crisis seemingly to another and they're still going strongly.

Tony Clark: And so let's talk about your clients a little bit, your customers a little bit. I guess that's. There may not be a typical client because there are so many um, mid market businesses types out there. But if I was to ask you that question. Typical Iwalka client. I mean I'm interested. Maybe it's a restaurant or is it uh, a beauty salon or something? I mean can you tell us a bit about the customer base?

Christoph Reacher: Yeah, you're absolutely right. There is uh, nearly not like atypical client because we are providing funding all the way from a few hundred pounds through our Walker Pay which is our uh, B2B buy now pay later solution now used by more than 10,000 UH businesses to purchase from their suppliers all the way to um a million pounds our maximum loan amount that we're lending which is attractive to um, um small and medium sized businesses. If you take our sort of you know, if you were to say a typical customer like the majority of our customers are taking funding below £25,000. So just by count that is representative of how many of them there are. But then you know we're funding um a large volume also at the other spectrum of the larger ones. So I think you know it's, it's more uh, I think what is special about what we've built is that we're able to cater to all of these different segments and that we have built technology that is um, that is enabling us to provide all of these businesses a fantastic service and one that they wouldn't get anywhere else. So on the, on the smaller ends, fully automated. You know I alluded to that more than 80% of our customers get an immediate um credit decision which is up to £50,000. Um and then you know when we go up to a million pounds we have built systems that enable us um to ingest um some human intelligence into our system which is then used um by our systems to um generate the credits credit decision. These are very, very different um platforms that we made um and built to work very harmoniously um together so that even for a million pounds we might be able to give um our customers a decision within a few hours from them, from them applying and to cover kind of you know who our customers are. We have a decent um, you know decent allocation of our funding goes to construction. That's about 20% of the funding that we originate. Um and um we're very active in that part of the economy but equally kind of um larger um for us the um, um whole services sector, hospitality, you know restaurants, um and hotels are uh a big sector for us as is retail and warehousing. So you know we do cater pretty much to every industry in the, in the economy.

Tony Clark: Yeah, multi sector. So you touched on technology and this is a fintech conversation. So let's go there. Were you always a technology company with an automation, a data uh strategy from the, from the start or was that m more evolved with the technology capabilities that have clearly evolved in the wider market rapidly over the period that you've been running the business?

Christoph Reacher: No, day one um, we, we saw us as um, using technology and data to solve the problem. So from day our ambition was to make um, automated decisions for everyone, um, that we are funding. And it was only over the course of time that uh, we realized that there's quite a bit of value by funding larger businesses where um, you know, where full automation is, um, not leading to the best credit decisions as we do get some signal by looking at elements that are just very difficult to automate and we automate more and more of them as we get more data. But you know you have to start sort of some manual underwriting to be able to deliver this. To give you an example, imagine kind of a customer comes to us that um, turns over a million pound and that million pound is from exactly one customer. You would say that's a fairly kind of high concentration. But if that customer is the NHS then it's a fantastic counterpart. But if the contract with the NHS is expiring six months then obviously that's a huge kind of cliff and it's unclear whether the business will ever be able to refill that revenue. So you know this is just one example. But it's, it's not obvious how you automate all of these steps without having necessarily the information available to make that assessment. And that's kind of where a lot of our IP lies is how we, how we manage that process of um, getting some information in that you can't necessarily automatically ingest but still use the same sort of machine learning models to optimize how we ultimately then take credit decisions based on the information that has been included into our system.

Tony Clark: So it's sort of hybrid AI and uh, data driven and human process depending on the size and nature of the, of the borrower. Can you just walk us? Let's talk about that a little bit about what actually happens. That 24 hours or an example you gave a few minutes ago, two minutes if it's really quick. So a client comes onto your website and uh, they're looking for a business loan. What are the steps and which data and uh, what data are you taking into the system either from them or from other market sources in order to make a lending decision.

Christoph Reacher: So for any customer that comes to us, um, the first bit that we would use this data from credit reference agencies, from various ones from um, public registers like Companies House and other public registers. We would um, um also in the majority of cases receive their bank statement history which has a huge amount of relevant data on their business and complement that um, with some proprietary information that we have through the very large data warehouse that we have now after 15 years. We've done more than 380,000 loans over these 15 years. Most of them of course, sort of over the last five years or so. And so that wealth of data that we have on literally hundreds of thousands of customers and sort of the loan experiences, we're able sort of to combine all of that information, outcome information, as well as sort of the, the, the information we receive, so loan outcome information as well as the information that we receive from new customers to um, um, you know, in most cases provide an instant credit decision where um, you know, when customers um, are larger then um, we might ask them for additional information that might also include their management accounts, that might include their data list that we then use to um, digest that information and add it to the system. But again, as I explained earlier, we never have a person make a credit decision. A person is only adding information to our system and then it's the um, algorithms that we built based on the data that we have that ultimately makes a credit decision. Um, but yeah, that's basically um, um, the process, you know, where a company is larger and we might ask for an additional um, data point from them that then you know, might take a few hours more on that data to be sent to us and then you know, for someone to review that data which is, you know, largely done in an automated way, but then um, you know, make some judgment on that data which goes into then our data warehouse.

Tony Clark: Yeah. So you've been using machine learning algorithms for uh, over a decade. The last three years have all been around generative AI and last year much excitement about agentic AI and this year firms starting to deploy agents into production. How does that sit with your roadmap? And are you now finding there's, you could do a lot more and you're building agents or you've perhaps felt that you're sort of already there because you've built your bespoke narrow AI models and it's working. Just curious, sort of how much the agentic era, uh, is going to provide an opportunity for you now.

Christoph Reacher: So I think the um, fully agentic way of building credit models, uh, we're not quite there yet. The main benefit we have observed over the last year and sort of accelerated over the last few months is just how much faster we can do data analysis with the new tools that are given to us. And that uh, sort of just enables us to test and work on many more things. In the same period of time that we would have done otherwise. So the learning process is accelerated quite significantly. You know, a next step, um, would be to have agents talk to each other rather than humans sort of talk to an agent, sort of to do parts of our work. But we're not quite there yet.

Tony Clark: And this all needs to be done clearly on auditable guide rails and treating customers fairly. And there's a, there's a, a huge element of AI safety and ethics that overlays on the agentic world. So not um, to be taken lightly. And I think it's going to be an incremental progress. So let's talk about business models a bit because at the top of the conversation I sort of threw in the phrase coopetition which is this sort of cooperation, competition model. And when you were starting out, I remember um, that sort of first wave of disruptive fintechs and there were several lending startups and I remember going to a panel discussion at the, the, at the LSC with one of them. I think they were called Lend Invest and they were doing um, real estate, um, backed investments. And it was the first time I'd heard this model of a disruptive lender, um, acting as a distribution arm for one of the big incumbents. And you'd think they'd be in competition but she said no, I guess I get my money from, you know, I get 200 million from Goldman's or from whoever. And we're acting as a uh, as an innovative and rapid, um, additional distribution channel for those established businesses. Um, and I think listening to what you were saying about the way I Walker works, um, that's very much part of your model. But what's your take on this competition model and the fact that I think the stats are right, the specialist lenders like yourselves are now doing the majority of the SME lending in the market. It's not the established firms.

Christoph Reacher: Yeah, it's a fantastic corporation that we were able to forge um, with um, some of them and you know generally all of them um, are doing this in some shape or form. We um, you know we are incredibly good at um, serving customers through the experience that we're able to give them. And that's a function of the technology that we've built the way, how we're using data and so forth as we have discussed. But they, they have all the capital. Many, you know, banks have the cheapest cost of capital and they are now able to, to um, provide us with that capital and therefore use their strengths and we use ours and that means, um, you know, a team, we're delivering the best experience to, to businesses. So I think it's really kind of a fantastic partnership where you know, each site is adding a lot of value, um, you know, create the best outcomes.

Tony Clark: And is that, is that the whole of model? So your funding sources essentially are blocks of capital from the big lenders. I mean is that really sort of the whole thing or is there another source of capital or some of your own funds or something that you're doing that's in the mix as well?

Christoph Reacher: So banks are providing the bulk of capital, they provide the liquidity. We're also working with credit funds that um, take a more subordinated position in our funding vehicles. And then of course we are providing our own capital as well. So in all lending that we do today, we are the principal lender, uh, we're the risk taker. And then we have our um, bank supplemental funding sources that provide us with the liquidity. And then, you know, our credit mezzanine credit funds, they have a higher yield by taking somewhat more risk than the banks that generally sort of take a senior, senior position.

Tony Clark: And is there an element of embedded lending with your API? Maybe this was fundamentally part of the model as has always been as the handshake between you and the capital providers. But uh, I'm curious, are you sort of lending your underwriting algorithms and your technology to other firms as an embedded service?

Christoph Reacher: Yeah, great, great question. So you know, if I, if I look at our 15 year um, history, the way I kind of quite like to describe it is we have built a Formula one great SME lending platform and you know, very tech, uh, oriented, um, with teams that are really combining skills between technology, data science and commercial skills, um, working on every part of that car. And that's sort of a continuous monitoring and optimization process, just as you would expect from a sort of fantastic uh, racing stable. And that's the core of what we've built over 15 years in sort of 20, 15, 16 we realized that it's quite expensive to build a brand. So you asked me kind of, you know, how excited were customers about this? Yeah, the people that were using us, they were very excited. But to really get your name out you need to invest vast amounts of marketing. And being more tech led, that wasn't necessarily our strength to sort of embark on a speculative marketing brand campaign through TV out of home campaigns. So we, we started using technology to embed us into other platforms so that businesses didn't have to come to us or respond to our own marketing uh but we'd rather sort of brought the financing to the places where they actually are at every day. So that included accountancy platforms like Xero, include strategic partners like ebay that you know fund customers directly through their account, where we fund directors directly through their account pages again in real time. Also take repayments through ebay. In this example we are in marketplaces which became ever more prominent both for consumers as well as then also businesses. So that someone searching for a loan on the, on the Internet when aggregator got a live quote from us within a few minutes. So all of this was uh, part of an embedded financing strategy which aimed to bring our financing to our customers rather than having them come to us. And now you know, if we speak a little bit and you know that has um, scaled enormously over the last um, you know eight years since we launched it with our first partner which was tight. But um, we're looking at the future now. We're taking this one step further and we're now building our own services in which we are embedding uh, financing. And so our next sort of phase of development is a more vertical integration into the SME economy. As an example we have launched an a platform for SMEs big problem businesses find it really hard in this segment to sell their business. You have a huge cliff of um, people who are in their 60s who are looking to sell their business but there's no real advisor available at that scale. And so the process often is um, you know, people don't know how to sell their business in the end equally lots of buyers, you know, lots of SMEs would like to buy another company but it's really hard to actually find one um, and make it, make it work. So we launched an M and A platform and have embedded acquisition finance into this platform. We um, have launched a um credit health score where businesses can understand, monitor and we give them pointers how to improve their credit score so that access to financing is uh, more easy for them in the future. We are launching an um, SME insurance brokerage because I feel that this is a market that is ripe for innovation. Um, and I think that will have a transfer wise moment over the next 24 months and we'll embed premium financing in our offering from the start. And we're also launching a credit card for businesses which will have a lot of ancillary service attached to them. So our next chapter of, of evolution is really one where we go much broader into the SME economy. SME economy build um, solve problems that are largely unsolved, um, today and provide financing from within. And that's sort of like a really exciting prospect. You know, every year has been different sort of over the last 15 years, but the next few years, you know, being able to scale all of those, um, and you know, some, some might win, some might, might fail, but that's sort of like the next challenge that I'm looking forward to.

Tony Clark: Well, I love that. I mean you've built such a foundation and I was going to ask you where it's all going next, but I wasn't expecting that answer necessarily. Um, so I would love to have been a fly on the wall for that whiteboard session because you go, I've got 380,000 um, loans, I've got this um, ecosystem and client base, many of whom are similar types of businesses. You know, a big media agency, a middling media agency might want to buy a small one for example, and there'll be turnover, as you say, of people, um, you know, life events, retiring, wanting to sell up and that Conveyancing, well, finding and then conveyancing of a big business is a, is a complex end to end workflow. And there's financing, there's valuation, there's asset handovers, um, there's all sorts of things that sit in that. And that was, I think, just one, one of your ideas there. So um, I can imagine sort of putting the client base at the center and kind um, of spidering out all sorts of ideas about where you could go into these vertical market segments and particular offerings. So I can sort of tell you maybe you're having some fun with that.

Christoph Reacher: Yeah, I mean in a way we're kind of quite fortunate timing wise. We're quite, we're quite profitable. So we're able to fund those new ventures from our own funds. We don't need to raise funds. We have, as you mentioned, um, a very vast network of SMEs that we can tap into. Last year we had in total 750,000 businesses applying for funding from us. Um, you know, we have quite a bit of data on these businesses and we're able to implement those new ventures much faster due to the emergence of um, AI and cloud code. It takes us a lot fewer resources that can go much faster than we would have done even a year or two years ago. And that sort of makes it really interesting to uh, to supercharge that vertical integration at this point where we really start from a pretty clean sheet and um, and, and kind of see kind of how far we get over the next five years. But I think, you know, it's a real kind of potential for us to build a. You know, we've already been transformative in some ways, but I think kind of there's a whole new level of transformation that we can drive over the next, um, few years to grow the SME economy in a way that we could have never imagined when we started.

Tony Clark: Yeah. And it sounds like that opportunity is accelerating as well. You know, investors look for a J curve in the returns. And you said most of the loans you made were in the last five years and they are opening up a whole load of new strategic growth initiatives. And, uh, it's not the first time crawl coders come up in conversations. I mean, the things that people are building out pace certainly with this year's models, which have become a lot stronger, has just sort of lit a fire under all of these opportunities.

Christoph Reacher: Yeah, fully agree.

Tony Clark: Excellent. Well, we're on the same wavelength then, so let's switch this, um, just as we wrap up perhaps, uh, on things that you've learned along the way. So you've been on a roller coaster, you know, built a substantial business and now opening up a whole new, uh, suite of business opportunities into, into your market. What have you learned along the way? You know, what would be perhaps your, your one thing that you wish you'd learned, you knew at the start.

Christoph Reacher: It's really hard. Most days are really hot. So, um, you know, I didn't, I didn't expect it when I started to be so hot. And it's been 15 years now. And you're just, um, every, you know, every day kind of, um, you'll have sort of to push yourself a little bit further up the, the mountain. And then there's viewers obviously getting ever better the higher you go. But it's a very hard pass up there.

Tony Clark: I can echo that. I'm founder myself. Um, we run a consulting business. And you just don't know at the beginning how hard it's going to be. And um, we have lots of examples of stories of things that went sideways or we weren't expecting, and I'm sure you do as well. But, uh, I always say it's 1% inspiration and 99% perspiration building something. And if you are a would be entrepreneur entrepreneur out there, you really need to think about the effort and the, and the resilience that needs to be involved.

Christoph Reacher: Right.

Tony Clark: Even with AI, you can't just throw a few clawbots at something and expect that it's going to succeed. Um, there's Some really heavy lifting.

Christoph Reacher: Yeah. So I think that's definitely. Yeah, it does feel a bit like, uh. A very kind of long and um, and challenging hike. Also very exciting. Obviously. Kind of like with all achievements that we have made, I do think kind of life became a little bit easier when we. When we became profitable. Because you don't have necessarily every day that existential threat, um, threat anymore that, you know, I need money in six months. If I don't have that money. Kind of know these are the consequences of running out of money. And you know, they're just incredibly stressful. So I'm. I'm very, very glad that we are currently beyond sort of that threshold and hopefully will continue to be. And then, you know, the second thing is like, I think any kind of, um, you know, CEO is always quite. Is um. Is incredibly worried about everything. You know, it's. You know, I like sort of this, um, analogy to a racing car. You might be in pole position, but you actually only have one. When you're over the finish line. You could, you know, your tire could blow up, um, as it did in many cases in the last lap, or your engine could sort of crash. So you're constantly kind of thinking what can go wrong? You know, what are the things that I could possibly preempt over the next year or two or next few months? And um. I think that's, um. That's a skill that, you know, served me quite, quite well to just always be somewhat paranoid about, um. About the future. So I generally give him the roller coaster we have been through. I never take anything for granted. And um, that also sort of keeps us as a business somewhat more grounded. We have, um, humble as one of the, um, values or behaviors we're looking in people when they're joining. I think that humility that, you know, next quarter could be our last one is still one then I think is, um, a really good one to have that I kind of learned to, um, you know, never kind of stop worrying about the future, you know, also the future. But I'm sort of. It's a balance. Like, you know, there's always like half doubt, half excitement.

Tony Clark: Yeah. And I think, um, being sort of professionally cautious I think is important and that humility is so important. When the sort of, um. The confidence and the assumptions run away with you, that's probably the. The warning sign that something's about to go.

Christoph Reacher: Go wrong.

Tony Clark: And I think usually it does so. And the people that you meet and work with while you're on your journey, you're always going to run into them again. And sometimes it's uh, you know, uh, very quickly and sometimes it's years later. So, um, just sort of um, having that humility and um, dealing with a bit of integrity on the way. It goes an awful long way. I think, um, it's probably a good segue. I normally open these conversations asking people how they decompress. So we're talking about balance and humility and so how hard it can be. Uh, curious, Christoph, uh, what do you do to sort of reset and decompress when you're not? Because you clearly do think about the business all the time. But uh, what do you do to give yourself a bit of clear space?

Christoph Reacher: I like running quite a bit. Um, running, hiking, just moving, moving around generally kind of think is sort of quite good and I'm doing quite a bit of that. And also just like sometimes to let my hair down. Like a good party, loud music, um, just a really good vibe. I think that sometimes helps to decompress. Not every week, but, um, yeah, still

Tony Clark: attending the old rave. Fantastic. Look, um, we're going to run out of time so just sort of we wrap this up. Ah, Any advice for would be fintech entrepreneurs out there. I mean you are so far on your journey and clearly have had a few twists and turns on the way. But is there any advice that you'd give to folks who are thinking of starting up their own thing?

Christoph Reacher: Well, a lot of advice that, you know, I can give from my own experience might be valuable or not for someone else. Every situation is also different. But I think the number one advice I would give, it's initially I thought like probably many founders, you start something and you might be doing this for a few years and then sort of you, you don't sell it and then you move on. And my advice would be don't do that. Just sort of um, keep on building and um, see this as a very, very, very long, long, long journey because it just compounds like, you know, everything that you're building at kind of in the sort of business becomes bigger and bigger, that it's um, really worthwhile to hang in there for, you know, for me now, 15 years and yes, kind of in these 15 years, you know, periods where you absolutely hate it. But so uh, my advice would be try to build a business for a lifetime rather than just um, you know, for, for a quick sale. I think that in general is a bit of a problem that most people just try sort of to build, make money and move on. But I think it's having an Eye

Tony Clark: on the exit before you start. Um, so I always say build for value and it gives you choices on the journey. So you have those choices, you know, once you're into profit and you've got scale. And I love that point about it, compounding, because we see that, that sort of resilience. And if you survive through a downturn and all of the time and investment that you and the team are putting in, it does compound. And it builds platform, it builds brand, it builds customer base and it sometimes comes back to you in surprising ways.

Christoph Reacher: Yeah, and they're all, you know, if you look at the most successful companies that you know, started in the late, early, you know, 2000s, the value that kind of they have today versus the value that they had after five, six, even 10 years is just on a astronomically different level. That is, I think from a value creation, the compounding that you can get. But as a founder, it's also just the pleasure of the growing impact that you have on customers, on being able to serve them in more, in different ways and many more of them. So that would be my advice. Just um, you know, keep, keep building

Tony Clark: on anything that's on your reading list or your listening list currently that you'd, uh, recommend.

Christoph Reacher: Yeah, reading is something I'd love to do more. Um, there's just so much information I have to digest, um, every day from various sources that the actual kind of reading for pleasure is falling a bit short. The last book I read was the 19, uh, 29 recap of the history of the market crash that then caused the Great Depression. It's been an okay book really overall, I'd say. But there's sort of just one sort of really good lesson from it. It's generally caused when people get too greedy and when there's too much leverage in the system. So, you know, this, I guess, kind of, um, has been sort of one of the key causes back then, has been a key cause for other crisis thereafter and will continue to be that way. So we're trying to manage our worker with a, with a leverage that is very sustainable. It's a, it's just a good book as a reminder that um, if you're getting too greedy, then um, the risk of failing increase.

Tony Clark: Yeah, cautionary note. So don't be too greedy. Some great advice and wisdom from, you know, 15 plus years in business there from Christophe and uh, I think we'll wrap it up there if folks want to find out more about you on the business, presumably website LinkedIn.

Christoph Reacher: Yeah, please, um, um, please reach out LinkedIn.

Tony Clark: Very good. Thank you. Look, Christoph, thanks for coming on the show and, uh, great conversation about the business and your journey and, uh, wishing you all the success in the future.

Christoph Reacher: Thank you very much. Tony,

Tony Clark: Sam, um.