Reflections on Leadership, Growth, and Building for the Future

December 13, 2024

It’s an exciting time at Forward! As we prepare to welcome our new CEO, Jason Mullins, in the new year and our current CEO, Justin Bakes, transitions to the role of Executive Chairman, I can’t help but reflect on our incredible journey. Over the past 7 years at Forward, I’ve had the privilege of witnessing firsthand the leadership and dedication behind building not just a successful company, but a thriving team driven by a shared purpose. Providing hard-working small businesses, which are the backbone of our economy, with access to the working capital they need to succeed. We wanted to create a solution and build a mission-driven organization where talented people would be excited to run to work every day. That desire became the foundation of Forward.

The Foundation of Leadership

Looking back, I believe a few key principles have been essential to our success:

• Vision and Purpose – From day one, we’ve had a clear vision: to make working capital more accessible and empower small businesses. This purpose has fueled our passion and provided a guiding star for every decision we made.
• Transparent Communication – Open and honest communication is the foundation of our relationships with our team and our customers. We’ve worked hard to foster a culture where everyone feels comfortable sharing ideas and concerns, which is vital for collaboration and dynamic problem-solving.
• Adaptability – The business world is constantly evolving, especially in the fintech industry. Our ability to adapt to new challenges, embrace change, and maintain a solutions-oriented mindset has allowed us to navigate uncertainty and emerge stronger.

Lessons Learned in Leadership

The years I’ve spent at Forward have been a masterclass in leadership. I’ve gained invaluable insights that have shaped my own leadership journey and the way I approach challenges.

• Invest in People – Our people are truly our greatest asset. We have prioritized investing in their development, providing opportunities for growth, and cultivating an environment of continuous learning. This has expanded our collective expertise and created an engaged and loyal workforce.
• Culture and Values – Defining and nurturing our company culture has been crucial. Our values based on authenticity, transparency, innovative thinking, and customer focus – have shaped our identity and guided our interactions at every touchpoint.
• Strategic Planning – Sustainable growth requires careful planning. As we evolved, we developed clear strategies, set measurable goals, and put action plans in place to achieve them – with solid communication and progress tracking all along the way. This disciplined, proactive approach has helped us stay focused and make more informed decisions with greater collaboration and alignment across the organization.

Why a Deep Leadership Bench Matters

Building a strong, diverse leadership team is essential for achieving both immediate wins and building a sustainable future.

• Driving Innovation – Leaders at all levels have expanded our collective expertise, bringing diverse perspectives and ideas to the table. This fuels innovation and allows us to explore new possibilities.
• Ensuring Continuity – A deep leadership bench helps ensure that the company can seamlessly navigate transitions, whether planned or unexpected. This creates stability and confidence, both internally and externally.
• Supporting Growth – Strong leadership is essential for scalability and building effective, resilient teams. These leaders inspire and support their people, creating a culture where individuals are empowered to grow and develop professionally, which also contributes to the organization’s overall success.

Final Thoughts

As we embrace this next chapter, I’m confident in our ability to thrive through strong leadership, collaboration, and empowering our people to succeed. By fostering a culture that values resilience and teamwork, we’re well-positioned for continued success. With deep gratitude for our exceptional team, loyal customers, and trusted partners, I’m excited to see what we can continue to achieve together.

Enterprise Partnerships, Expansion Opportunities, and the Future of Fintech

November 18, 2024

As a venture capital investor for startups, company founder, and a former VP & GM at Upstart (NASDAQ: UPST), an online lending platform, I’ve seen how vital enterprise partnerships can be in shaping the future of a business. Fintech is evolving rapidly, and enterprise partnerships offer a key advantage—not just in driving innovation, but in unlocking new expansion opportunities. By effectively collaborating with the right partners, we can access new markets, integrate cutting-edge technologies, and enhance regulatory compliance in a way that wouldn’t be possible alone.

Importance of Enterprise Partnerships in Fintech

As the fintech landscape grows more interconnected and the financing gap for many US small businesses widens, strategic partnerships are becoming essential for driving accelerated innovation. These collaborations are key to expanding access to capital, supporting sustainable growth, and unlocking the limitless opportunities ahead. For us, it’s not just about competing today, but laying the groundwork for tomorrow.

What Makes for a Successful Enterprise Partnership?

• Aligned Vision & Goals: A successful partnership begins with a shared vision and mutually beneficial goals. Both parties must be honest and transparent, as misaligned objectives lead to wasted time and missed opportunities.
• Complementary Strengths: Each partner should bring a unique strength to the table, such as technology, market reach, data insights, or regulatory expertise.
• Customer-Centric Focus: Partnerships should prioritize creating value for customers, addressing pain points, and enhancing the user experience.
• Open & Transparent Communication: Establishing clear lines of communication is essential to promptly addressing challenges and leveraging opportunities.
• Scalability & Flexibility: The ability to scale the partnership and adapt to changing market dynamics is a crucial consideration for success.
• Long-Term Commitment: Building trust through a long-term approach, where both parties are committed to sustained growth and evolution.

What Are Some Best Practices for Working with Enterprise Partners?

• Establish Clear Roles & Responsibilities: Define the roles, responsibilities, and expectations for each partner upfront to ensure seamless collaboration.
• Set Joint KPIs: Develop a framework for measuring success, including shared Key Performance Indicators (KPIs) and metrics to track progress.
• Invest in Regular Check-Ins: Consistent communication, feedback loops, and regular check-ins to ensure alignment and address any issues.
• Leverage Technology for Integration: Use technology to facilitate smooth data sharing, streamline processes, and enable efficient integration of systems.
• Risk Management & Compliance: Work together to identify and mitigate risks, ensure compliance, and keep pace with regulatory changes.
• Celebrate Wins & Learn from Failures: Recognize achievements and review any setbacks to continuously improve the partnership.

Where Fintech Is Going?

It’s truly incredible how fast the fintech industry is evolving. What was once a niche market has grown into a dynamic and innovative space that’s reshaping how we think about finance. Whether it’s through digital payments, AI-driven funding, or personalized financing experiences, the possibilities seem endless.

• Focus on Financial Inclusion: Fintech companies are driving financial inclusion, providing access to financing for underserved segments of the market.
• Personalization via AI & Data Analytics: AI and data analytics are playing a pivotal role in underwriting, risk assessment, and personalizing financing offers to better match the specific funding needs of businesses.
• Increasing Demand for Alternative Financing: The growing demand from small- and medium-sized businesses for flexible financing options has increased, especially as traditional lending criteria have tightened.
• Expanding Potential for Embedding Finance: There is a growing opportunity to embed finance, where alternative financial products are integrated into non-financial platforms to reach users in a convenient manner for them.
• API-Driven Models: API frameworks are fostering interoperability, enhancing product offerings, and making partnerships more seamless.

Final Thoughts

As we look toward the future, it’s clear that fintech will continue to break boundaries and redefine how small businesses access working capital. Working with strategically aligned partners allows us to create powerful ecosystems that deliver more value to customers and drive growth for all involved. Ultimately, it’s about finding partners who share your vision and complement your strengths.

A CPO’s Perspective on a Global Workforce

October 22, 2024

Let’s talk about the future of work, because, frankly, it’s already here. Throughout my career in Human Resources, I’ve had a front-row seat to the evolution of the workforce. Organizations have shifted from a traditional approach, where everyone worked in the same office, to a dynamic, global operation with talented individuals spread across multiple countries. This shift has been a game-changer for both organizations and employees, bringing a wealth of benefits, but also a unique set of challenges. It has highlighted the critical need for clear communication, adaptability, and ongoing evolution. To fully reap the benefits of a global workforce, organizations must continue to adapt to its demands.

The Benefits of a Global Workforce

Let’s face it – talent doesn’t adhere to geographical boundaries. Here’s why a global workforce is becoming increasingly more important:

• Access to a Wider Talent Pool: When we look beyond our own backyard, we discover a whole world of talented people. By casting a wider net, we can connect with skilled professionals from diverse backgrounds and experiences, increasing our ability to find the ideal candidates for specialized roles. I have found this particularly helpful when hiring for highly technical roles, like those in Tech and Data Analytics. We strive to open our roles locally and then expand as needed.
• Cost Optimization: Hiring globally, particularly outside of the US, is a delicate balance between maximizing talent while optimizing resources. We can tap into skilled professionals in places where the cost of living is lower. Also, with more employees working remotely, office-related expenses decrease, allowing organizations to reinvest in their teams and operations. A true win-win situation in my eyes. That said, there’s no substitute for in-person time (more on this later!).
• Hello, Innovation! Bringing together individuals from across the US and other countries introduces diverse perspectives and approaches to problem-solving. This melting pot of ideas creates an environment where innovation thrives.
• Enhanced Company Culture: A global workforce makes our company culture richer and more inclusive. Team members gain opportunities to connect with people from different backgrounds, fostering empathy and collaboration while creating a more inclusive work environment.

The Challenges of a Global Workforce

While the benefits of global hiring outweigh the challenges, it’s not without its hurdles. There are a few key areas organizations need to focus on to try to make it work as smoothly as possible.

• Communication and Collaboration: When working with any team, communication must be a top priority, especially with a global team. I’ve had my fair share of learnings here. Different languages, locations, processes, and cultures can make it hard to keep everyone on the same page. With the right focus, tools, regular check-ins, and a commitment to clear communication, we can ensure that all team members are working toward the same goals, no matter their location. This certainly takes work – it means really digging in to understand the unique operations of each office location and finding balance and alignment.
• Legal and Regulatory Compliance: Navigating different labor laws across countries, and even states, can be complex. That’s why partnering with local experts who understand the nuances and intricacies of these laws is critical. Plus, having in-house attorneys who are knowledgeable about multijurisdictional regulations ensures we protect both our employees and the organization.
• Building Trust and Team Cohesion: This is a big one. Building trust with a predominantly remote team spread across multiple countries takes effort. As teams continue to grow, scale, and hire in different locations, I’ve found at times it can bring uncertainty to existing team members who have been with the company long-term. Makes sense. Companies need to get creative to bring people together like virtual team-building and learning and development opportunities, regular, intentional in-person time, and cross-functional team projects. For example, we host a bi-annual Palooza in both our US and DR location to bring team members together. We’ve found that making space for employees to share their experiences, especially face-to-face, helps build trust and creates a sense of belonging.

Final Thoughts

In today’s world, the future of work is no longer geography bound. Expanding our workforce beyond traditional borders opens up exciting possibilities for innovation, growth, and opportunity. However, it also brings its share of challenges. We are learning as we go, evolving our approach to meet the unique needs of our people. By focusing on communication, compliance, and connection, we are working to build one unified team, regardless of geographical location. While we may not have all the answers yet, one thing is certain: the only constant is evolution.

Revenue-Based Financing Underwriting: Balancing Growth and Risk

September 16, 2024

Revenue-based financing (RBF) has emerged as a compelling alternative for businesses seeking growth capital without the impediments of equity dilution or strict debt terms. As the RBF landscape expands, so does the need for robust underwriting practices. In this post, we’ll explore the strategies and insights that drive successful RBF underwriting teams.

RBF offers undeniable benefits: flexible remittance tied to revenue, quick access to capital, and no equity surrender or personal guarantee. Yet, this rapid growth and flexible benefits underscores the importance of prudent underwriting. As risk professionals, we’re tasked with assessing customer viability, mitigating potential losses, and aligning RBF terms with risk profiles of each client. Underwriting teams should have deep interest in client success and provide capital that benefits their business and supports growth.

A Holistic Approach to RBF Underwriting

While RBF’s focus on revenue is central, underwriting goes beyond simple revenue calculations. A holistic risk review includes:

Revenue Quality

• Stability: How predictable and consistent is the revenue stream? Are there seasonal fluctuations or over-reliance on a few large customers?
• Growth: Is the company’s revenue growing, and what is the trajectory? Growth indicates potential, but rapid, unsustainable growth might be a red flag.
• Margins: Margins offer insight into a company’s pricing power and cost management. Higher margins often reflect greater resilience to downturns.

Business Model

• Industry: Some industries are inherently more volatile or risk-prone. Evaluating the company’s position within its industry is crucial.
• Customer Base: A diversified customer base is generally safer than relying on a few key clients.
• Competitive Landscape: How strong is the company’s position relative to its competitors? Are there barriers to entry that protect their market share?

Financial Health

• Cash Flow: Positive cash flow is crucial, particularly for early-stage companies. It demonstrates the ability to meet ongoing expenses and remit.
• Burn Rate: How quickly is the company spending its cash? A high burn rate may signal the need for additional funding, potentially affecting future remittances. Average daily and ending balances offer insight into cash flow stability.

Key Underwriting Strategies

A thorough risk assessment is the cornerstone of RBF underwriting. Key strategies include:

• Scenario Analysis: Don’t just rely on current performance. Model different revenue scenarios and sensitivities (e.g., optimistic, pessimistic, most likely) to understand the full range of outcomes and the impact on remittance ability.
• Cohort Analysis: Study the performance of similar customers in your portfolio. Are there patterns or trends that can inform your risk assessment of a new applicant?
• Industry Benchmarks: Compare the company’s performance metrics (e.g., revenue growth, margins, customer churn) to industry averages. This helps contextualize their performance and identify strengths or risks.

Qualitative Factors

In addition to quantitative analysis, qualitative factors play a critical role:

• Management Team: The experience and track record of the management team can significantly influence a company’s success.
• Market Opportunity: How large and attractive is the market the company is targeting? A bigger market often means greater potential for growth.
• Regulatory Environment: Are there regulatory changes on the horizon that could impact the company’s business?
• Reputation: Consider community support and online reviews. Are online reviews negative? Do negative news searches to find areas of concern that could put remittance at risk.

Aligning Pricing with Risk

RBF pricing should align to the customer’s risk profile.

• Revenue Share Percentage: Higher-risk customers may require a higher revenue share percentage to compensate for the increased risk of default.
• Term Length: Longer terms can reduce the monthly payment burden for customers but they may also increase the total cost of financing over time.

Final Thoughts

Robust underwriting is essential for both funders and customers. By carefully evaluating risks, tailoring terms to the customer’s risk profile, and staying informed about industry trends, RBF can continue to be a viable and attractive financing solution. For funders, disciplined underwriting practices ensure a balanced risk-return profile, making RBF a sustainable option for growth-focused businesses.