Pictured: Jacob Shoihet CEO & Co-Founder and Peter Spradling, co-founder & COO of Marco

Please tell us how Marco was launched and how each of you got into secured finance. 

JACOB:  Marco was born out of a global venture accelerator called Antler. They look for aspiring founders that are looking to build venture investable companies. Peter and I had never met before. We met in this program in the inaugural cohort in Brooklyn, New York in the Navy Yard. We both have had very different backgrounds and pathways into secured financing and in starting Marco. 
 

I had bit of an unorthodox path as I came from classical music, which is why I moved to New York from Toronto where I’m from in 2012 and really, to make a long story short, ended up getting into sales at initially Web 2.0 companies like Yelp and Groupon, and then my career ended up evolving more into growth-stage technology companies, a couple of which became unicorns, Taboola, OpenWeb, and GumGum. And so I just got a lot more experience from my early career where I was a fairly junior salesperson doing 80 to 100 cold calls a day to starting to get to interact with founders at these companies and helping to define go-to-market motions and lead partnerships and build sales teams, something that I’ve really been passionate about for my entire career.  
 

I just had this entrepreneurial bug that I wanted to pursue and then decided to leave my job back in 2019 and join this pretty unknown, especially in the United States, venture accelerator and to really take a shot at building a business. The origin story is initially I was working with somebody else on a banking software concept.  I’d say that was my first exposure to the finance ecosystem really talking to community and regional bankers, the thesis was leverage a relatively frontier technology at the time called Federated Learning and empowering community and regional banks to increase speed and confidence when looking at commercial finance opportunities for SMEs in the United States. 

It was really that first exposure in understanding all of the challenges SMEs have in getting access to financing and really how banks are sometimes challenged to pursue those opportunities, not necessarily even getting into the more esoteric aspects of specialty finance and secured finance, just really general commercial finance, that kind of obviously covers a bigger umbrella.
  

Peter has been a serial entrepreneur since he was 16 years old. So, he had experience exporting merino wool products at a young age. His family was in the meat processing industry, which is a big industry in Uruguay, and when I had met Peter, he had just sold the company where he was doing tens of millions of dollars of sales to Kraft, Heinz, General Mills, Newman’s Own, Schreiber, for example, and it was really getting to know Peter, understanding why he sold this business, what were the challenges and points of friction that he experienced for him to go from already being an entrepreneur to taking the enhanced risk of starting a venture investable company and joining Antler.  

It was really through conversations with Peter that I started to get exposed to the challenges of a business owner. I’ve never been a business owner; I’ve never been an entrepreneur. I went from talking to a lot of bankers about why it’s hard for them to be as active as they would like in commercial finance for SMEs, then Peter communicating to me that close to 50 percent of his time was spent looking for financing. He had actually talked to Barry Kastner and Fred Leder and other folks on our team when they were at a different lender, and he even explored getting an ABL line from them back in those days. 

Peter and I were able to both index the challenges on behalf of the lender, but then also on the business owner, and it really helped to catalyze this vision where we really believe we’re giving businesses oxygen. It’s very hard for a business owner, as Peter expressed to me, to focus on growing your sales and strategy, and taking care of your employees, when you don’t have access to working capital.  

Neither of us planned to start a FinTech company or to work in finance in any capacity. We wanted to start a company that we believed we could be effective operators in, that we believed we could understand over time and that’s why we hired experts like Barry and Fred and Luminita Pauna right out of the gate. We were not experts in the industry by any means, but we believed that this was a really powerful issue that is affecting millions of small businesses around the world, in the United States, and, of course, in Latin America where we saw a particular niche given the lack of activity there. 

PETER:  Jake touched a little bit on my background. I’ve been an entrepreneur pretty much my entire life, and as such I experienced the problem of financing, and more particularly, with my last business where I met Barry and Fred. I was able to get a term sheet from a company they were working for. Never closed by the way, but I did get a term sheet. As Jake mentioned, I was helping a lot of other business owners that had a good business, had a good product, had a lot of interest for their product, and the only blocker was the financing aspects. Especially when you deal with larger clients like I was doing, these are companies that are going to ask you for longer payment terms, and they can because they have that leverage. You’re a small business, they’re Kraft, they could ask you for 90 days. And their whole argument is we’re giving you big orders and we’re a good credit, so we’re going to pay you in 90 days.  

Peter, being a former borrower must really work in your favor when you’re speaking with prospects. Could you tell us more about that? 

PETER:  That’s exactly right, Barry always comments on how business friendly our credit people are. Usually, in a lot of financial institutions or finance companie it’s business development against credit, and they’re crashing. And Marco is different because we have from day one really built on the experience of that customer experience, and Jake and I don’t come from the lending space or the banking space. So we’re not coming at it as bankers first. We’re coming as clients first, as borrowers first and we think about how we build a customer experience around that.
 

We try to really think about the client first. We talk to not only our business development people, but also our credit people, to explain that how you ask questions of prospects is really important. We never want to appear accusatory. I’ve been there where I’ve gone through long, long processes and get the same question asked again and again, and I get questions from people who clearly don’t understand the business. 
 

JACOB:  Marco is customer centric. It’s really a part of the Marco ethos, which, in part, is derived from this venture mandate that we have, given where our equity capital is sourced. When we’re looking at underserved customers, especially in our Latin American markets, they don’t have a lot of the solutions and infrastructure that some of our U.S. clients do. And even some of our U.S. clients don’t necessarily have that.  

The vision for Marco is we believe that there are two core problems that every business owner faces: credit and sales. The Marco vision is to unify and build a holistic suite of solutions and tools that, of course it drives credit, but also helps them to solve financial suite needs, really innovating across that CFO suite of tools and then enabling them to hopefully focus their time and effort on their business and selling more. And on that roadmap is also building tools to help facilitate that so that they can have interactions with buyers and have easier entry to the market. 

We’re trying to get to know our customers so that we can be a more material partner. 

You touched a bit on the considerable growth that Marco has experienced since its launch in 2020. You’ve provided a lot of business in Latin America with capital and you’ve been growing your team. What factors do you attribute to Marco’s success during this time? 

PETER:  I think first and foremost, no matter what type of company you are, it’s all about the team. It’s people that make companies great.
 

We have 54 people on our team now. The culture is what attracts the talent and retains the talent; people like Barry, people like Fred, who were our first employees. Without Barry and Fred, we would not be where we are. 

The reality is we believe that if you have strong cultural values, if you treat your team right despite the challenges of growing an early-stage business, it’s going to help attract other like-minded, high-performing individuals.  

I think strategically speaking, we managed to grow quickly and effectively because we really do understand where we’re strong. We’re not trying to do everything.
  

We’re pretty broad coverage across industries, whether it’s staffing or even healthcare or agriculture, manufacturing, wholesale trade, etc.  We look at that vertical of businesses that are shipping something or exporting something in large part. It really is that focusing on the exporter cohort across industry verticals that I think has made us effective because it enables us to have diversity which we believe is important from a risk management standpoint. I think this is a big part of why we’ve had very low losses. It’s that risk-management perspective. When you think about diversity both from a regional perspective but also across industries, you end up having a very healthy diversified portfolio and the ability to grow at a consistent rate without doing deals that are going to change that risk adjuster return on equity and calculus. That is really important for our broader strategic vision of reinvesting our positive cash flows into enterprise value creation through the software products that we’re building, again, with that ethos of being more for our customers. 

So, we have three core reasons: the teams, the culture, the strategy, but I think any CEO will tell you team is 80 percent of it, if not 90 percent. 

We’ve gotten a lot of positive customer feedback on our team. First, they interact with our commercial team. Then, they interact with our credit team. Then, they interact with our legal team. And then, they get onboarded, and then, they have an account manager or an operations person that manages the account. We’ve been getting amazing feedback on all of those points.
 

What would you say are your short- and long-term goals for Marco? 

JACOB:  Our goals are always oriented around the customer and really talking to them and assessing their needs, both short- and long-term. And those really help to dictate the company goals. We are laser focused on the needs of our customers. We want to ensure that we’re oriented around problem-solving and not trying to build solutions because we think customers are going to like them or because we want to build cool things. It’s designed to alleviate the financial challenges of our customers. 

In the short term, we believe we’re in a strong position given we have a very scalable credit facility where we’re financed by MidCap Financial and Castlelake. We want to ensure that we’re able to leverage this piece of infrastructure that we have in order to offer credit and focus on growing sustainably. It’s not about trying to do every single deal that comes across our desk; it’s about trying to identify businesses that we can partner with for the long term.  

In the long term, it’s about this concept that if you do have a partner that ultimately knows your business intimately through your finances, and that comes at the underwriting, it puts that company in an extremely privileged position because all of this information is shared with the company, which we take with the utmost attention, care, and sincerely, but that also means that we are in a uniquely privileged position to see if we can offer more to those customers.  

And that long-term vision includes starting to address other pieces of support services infrastructure software they need. Some of these products we have live today. We offer LLC and total compliance services and bookkeeping for companies that don’t necessarily have a U.S. LLC, especially our Latin America customers. We are able to do those annual filings and provide that holistic suite of services so they don’t have to worry about that aspect of it, but they have that U.S. legal entity that then is going to enable them to catalyze having a U.S. bank account, which for businesses that are selling in a different currency than where they’re operating can be a huge pain point to have to constantly be embracing foreign exchange fees and transactions. 

This long-term vision is to continue to grow across our three distinct user journeys where customers are, of course, finding us for credit. The second component is building them this starter kit so that they can set up their business more efficiently to do business with the United States, get that LLC, your total compliance solution, and we’re launching our U.S. banking product that gives them access to multi-currency accounts.  

If we’re focused on that financial suite – credit, banking, compliance – we’re then going to be able to start to spread across solving that second massive pain point which is selling. We have data and information and partnerships with buyers and suppliers and we are understanding how we can start to connect that market together and how we can create a network that helps buyers in the United States and other markets with procurement and treasury management, and they can ultimately diversify supply chains, procure high-quality supplies or goods from other countries and create those commercial relationships.  

The North Star for Marco is we believe should be in a position to solve 80 percent of what our customers need on our platform.
 

What challenges and opportunities do you see for the industry in the next year or so? 

In the U.S., the specialty finance infrastructure is more built out. I think a challenge for us is reaching Latin American clients and educating them and informing them that just because a bank says no doesn’t mean that you can’t get financing. There are other options. 

Now that we’ve closed our new equity financing round and one of our partners is the Inter-American Development Bank, they’re going to be key partners for us and help us also on educating aspects. A lot of exporters don’t know that these solutions exist out there 

JACOB: Pete touched on a great point. The access point is difficult because sometimes these products are not easy to understand. They’re not straightforward. And even when we talk to venture capitalists that maybe even have a finance background, often it comes with a tutorial on the products that we offer. If you have not had exposure to this industry, it is not always super easy to explain or understand.  

There’s a key difference between the lenders offering these products and those offering unsecured products at usurious rates. Secured finance enables a company to grow and thrive.   

There’s no shortage of opportunities. Companies like Marco and other companies in this space are really critical to the economy. I think SMEs and SMBs are a very difficult segment to digest and understand. It encompasses such a broad range of types of businesses with a variety of needs. Educating lawmakers, as the Secured Finance Network does, and educating business owners, is exceptionally difficult, but I think things are trending in the right direction. The key point we need to drive home is that as lenders, we are supporting job creation in Latin America and the United States.