This startup from Israel is helping Australian small businesses get finance
Why Lending Express chose Australia as its first port-of-call.
After operating in the Australian market for a year and a half, Lending Express' co-founder Eden Amirav visited Australia for the first time last week. Sitting on Jones Bay Wharf at the AltFi Australasia Summit in Sydney last week, Amirav discussed his decision to operate the small business financing platform from Tel Aviv in Israel but establish it in the Australian market.
"I have been an entrepreneur for the last 12 years. This is something pretty common in Israel, we built a lot of companies, and I had four companies before. The common thing about all the companies was that they were always about Internet marketing, user acquisition, technology and stuff like that," he said.
"We thought business lending would be a good fit for our experience because you have to be very good [...] One of the biggest challenges is actually the user acquisition. Where are you getting your customers from? Because it's super expensive to advertise to small businesses online, and we thought that we would be able to do that very well."
Lending Express operates like an automated online broker. Businesses apply and are matched with multiple loan offers based on a lead qualification scoring system. The system also has a feedback loop that utilises machine learning.
This intelligent approval system has allowed Lending Express to get a 15% approval rate.
"The industry standard is probably 3%, 4%, so we manage to more than triple that," Amirav said.
However, operating a platform that services Australian small businesses from Israel doesn't come without difficulties.
"It is challenging, of course. In Israel, we always try to take challenges and convert them into an opportunity. So I guess the fact that we have different working hours, it means we have to be very efficient and automated and we have to improve communication. So we built a lot of infrastructures and frameworks and technology to support it."
Amirav explains how the team uses the instant messaging application Slack to communicate with its lending panel.
"We have shared Slack channels with all of the lenders and our system automatically pushes messages into the Slack channels notifying them about important updates. So for example, if we assign them an application, they get notified in the shared Slack channel; A new application has been assigned, these are the details, go try and help them."
Amirav says the decision to launch in Australia was born out of the plans for an eventual US expansion.
"The US market is like 20 times bigger, and we knew that eventually, we would be operating there. But we wanted to start with a smaller market that is similar to the US in that it shares the same challenges, it's the same language and the economy is very based on small businesses here in Australia."
Lending Express entered the US market six months ago, but still bases its operations out of Tel Aviv.
"When we entered the U.S. market it was very fun for us because we came out strong and with a lot of knowledge about marketing and how the market works."
However, Amirav said they did notice a few differences between small businesses in Australia and small businesses in the US.
"I think the [small business in the] US are much more educated when it comes to taking a business loan, and they're also coming in a much more comparison mode. So they would get one offer from a lender and then they would go and shop around with the other lenders. While here in Australia a business is much more straightforward. If it gets one loan offer and is happy with it, it will probably go with it," Amirav said.
"I would say that Australia is looking more for a simple process. They're not trying to maximise their offering. They're just trying to get funded."