Huddle Capital: Shaping the future of business-to-business lending

8 mins. to read
Huddle Capital: Shaping the future of business-to-business lending

Join Huddle and Master Investor in a live Q&A Twitter chat on Tuesday 21st March from 1pm. Send your questions to @masterinvestor and @HuddleCapital using the hashtag #AskHuddle

Huddle Capital is a new business-to-business lending platform that aims to match small to medium-sized (SME) businesses that have excess cash reserves with other SMEs looking for financing. Huddle has chosen the Master Investor Show to exclusively launch the platform. We managed to get hold of Huddle Capital’s founder, Jay Tikam, a successful serial entrepreneur based in the City of London…

Master Investor: Jay, the upcoming launch of your new venture, Huddle Capital, will come with quite a splash. The first 100 investors to invest more than £5,000 through your platform will get a £1,000 cash bonus from you. That’s quite an incentive! What enables you to offer such a cash bonus?

Jay Tikram: Huddle is a subsidiary of Access Commercial Finance, a balance sheet lender founded in 2014. In the  space of just two years, they’ve built up a sizeable business loan portfolio exceeding £8 million. Huddle is therefore starting out on a strong footing with the backing of its parent company.

Not only does Huddle get capital backing, it’s also built on the same success with which Access Commercial Finance has been built. Any startup beginning life with a healthy capital base and with experienced founders has more of a chance for success compared to a firm that is cash-strapped or has inexperienced founders.

The Huddle 100 club has been made possible by the parent company, and it shows our commitment to the founding investors who back the platform at launch, and will help us to scale rapidly.

The Huddle 100 club has been made possible by the parent company, and it shows our commitment to the founding investors who back the platform at launch, and will help us to scale rapidly. Any marketplace lender generally has a challenge in attracting borrowers and investors, especially in the early days. Borrower acquisition is a core competence within the group; however, investor acquisition is slightly more challenging. We believe that the significant cash incentive will help us attract experienced investors, who will be re-assured by our commitment to ensuring they benefit by lending through our platform.

MI: Your entrepreneurial ambitions come on the back of a long career in banking, insurance, compliance and risk management, and now fintech. Can you give us a brief overview of your career and what brought you into the alternative lending space?

JT: In 2013, when fintech and Alternative Finance just started to emerge, I envisaged a massive transformation about to take place in financial services. Today I stand by that belief – in five to ten years from now, the financial services landscape will look very different from what it looks like right now. We are at a turning point, and the pioneering Alternative Finance and Fintech entrepreneurs of today are building the JP Morgans and Goldman Sachs of the future.

The disruption in financial services is not accidental. It’s being driven by an awakening of consumers. Some were awakened by the financial crisis, coming to a realisation that their bank or insurer or asset manager wasn’t really acting in their best interest. Millennials, on the other hand, grew up in an environment where they probably found it very challenging to access financial services. Think of the millennial going to apply for their first student loan and being turned down. Then they tried to buy their first car on credit and had to rely on their parents rather than a bank. Now they are struggling to enter the housing market because they don’t qualify for a mortgage. This new age consumer wants something different and their traditional financial services providers can’t address their specific needs.

UK businesses have equally struggled to access finance in traditional markets. They are fed up of begging banks for a loan. Even if they get a loan, it usually takes months to get it approved and the terms of the loan are often not in their best interest.

Alternative finance providers have recognised the gap and are building businesses that put customers first. Any business that anticipates and delivers on customer needs is going to have a high chance of success. It’s no surprise that Fintech firms can become $1 billion unicorns within an average of six years.

MI: Your company has the backing of another successful entrepreneur. Can you tell us more about him? 

JT: Terry Fisher is a driving force and investor behind both Access Commercial Finance (the parent company) and Huddle Capital. Terry is a successful serial entrepreneur, with an impressive track record of achievement.

He founded Travelworld aged 19 and grew it to become the UK’s fifth largest travel agent with 123 outlets and £130m turnover. He sold it to Airtours in 1998 and joined their Board to become Managing Director of UKGL Retail, with £1 billion turnover and 1,000 outlets.

After a spell building finance and investment businesses in Spain via Fisher Europa and investing in different businesses in the USA, he was invited to become CEO of Gold Medal Travel Group in 2006, tasked with restoring profitability and preparing it for sale. The firm was sold to Thomas Cook for £86.5 million in 2008, and Terry joined their Board and became CEO of the newly formed Thomas Cook Scheduled Business with P&L responsibility of £1bn.

In 2010, Terry returned to Fisher Europa to continue his entrepreneurial journey.

Jay Tikam

MI: During the initial phase, Huddle Capital will be focused on having businesses lend to other businesses – mostly SMEs. Who’d be your ideal investor, and what sort of returns can they feasibly look for?

JT: Huddle Capital will focus on UK based SMEs with surplus cash to invest. As a well run business, a company ends up with a healthy reserve that is not needed immediately within the business. This is true for a lot of service based businesses that have low overheads. It’s worthwhile seeking to make sure that the company makes use of those cash assets, in the form of higher returns than what could be expected at a bank. Although most SMEs have probably never thought of it before, lending to another SME could make a healthy return. Well run SMEs struggle to get a loan from banks and other traditional finance providers, leaving a gap for private and business lenders. Sure, lending to SMEs comes with its own risks, but the rewards are equally as good, as investors can expect to earn between 6% and 14% returns on their loans.

You may also believe that SME lending is an illiquid investment, tying up your cash over the life of the loan. But in fact, we will have a healthy secondary market on our platform that will allow creditors to sell their investment to other investors, so they can get out at any time, should they need their cash in a rush.

Although most SMEs have probably never thought of it before, lending to another SME could make a healthy return.

The alternative SME lending market has grown considerably over the last few years and this trend seems to be continuing because of the pent up demand for access to finance. We are working to get a regulatory licence to be able to offer the same opportunity to individual retail investors.

MI: The opportunity to join the “Huddle 100 Club” will be launched at our event. What will the club membership bring in terms of benefits?

JT: Huddle 100 Club members are the first 100 exclusive founding members of Huddle.  They will automatically become lifetime members of our elite Club Red, and when they invest £5,000 or more, they will get a generous credit of £1,000. Club Red members will get a credit of £1,000 each year that they invest more than £25,000. Club members will also get access to exclusive events.

MI: What else will set Huddle Capital apart from other P2P lending platforms?

JT: Huddle is focused on a very specific niche. Because of our focus, we understand the needs of our investors and borrowers, who by the way are also only UK businesses. We focus on building a community of SMEs who can network and benefit from one another through our networking events. Most importantly, we believe strongly in educating and not advertising to our market. Alternative lending is a new space and should be approached with great caution. What also makes us different is the fact that the firm was founded by experienced financiers and with a strong capital backing.

We’d like to be a fully-regulated firm that operates in the regulated and unregulated spaces.

MI: It must be exciting to launch this new venture at a time when the investing public is truly waking up to the possibilities offered by P2P platforms. Where would you like to see Huddle in one year’s time?

JT: We’d like to be a fully-regulated firm that operates in the regulated and unregulated spaces. Unlike our competitors, we don’t just want this business to generate revenue; we want it to be profitable in the first 12 months of its existence, and we are confident that we can achieve this. We’re aspiring to a loan book of between £8 million and £10 million within our first year, funded by retail, professional, corporate and institutional investors.

MI: Can interested investors join on the day of the show? What do they need to bring to stand 50 to go through the sign-up process?

JT: Absolutely! Investors can sign up on the day. But just remember that Huddle Capital is at this stage only open to investors who invest through a limited company. Investors can fill out relevant details on an online form, available on laptops and ipads on the stand at the event. They and their companies will be automatically verified. If in the unlikely event that we need further information to verify their details, then we will get in touch with them after the show.

Once verified, they are ready to start investing in exciting SME lending opportunities. In fact, at the show, we will be hosting a live loan-based fundraising round that investors can participate in. They’ll get to see the process in action and get an insight into how we select borrowers and underwrite their loan applications.

MI: Thank you, Jay!

JT: You’re welcome.

You can find Huddle Capital on stand 50 at the Master Investor Show in Islington on Saturday 25th March. Also, join Huddle and Master Investor in a live Q&A Twitter chat on Tuesday 21st March from 1pm. Send your questions to @masterinvestor and @HuddleCapital using the hashtag #AskHuddle

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