Billy Libby, CEO of Upper90, an alternative credit manager based in New York City that has deployed over $700m within 18 months of inception shares a few tips for startups looking for new investments in this chat, while diving into the deeper growth of fintech investments as well:

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Billy, we’d love to hear about Upper90 and some of your top thoughts surrounding the latest fintech and other investment trends, around the world?

It’s definitely an interesting time to be in the world of fintech – as an entrepreneur and investor. Upper90 is actually a hybrid fund that provides financing to businesses in a manner that helps founders and early investors keep meaningfully more ownership in the companies they are building by providing both equity and credit. We are the initial capital partner behind Thrasio, Clearbanc, Octane Lending, Crusoe Energy and many others with more than $450 million in assets under management and $1 Billion in total originations.   We are able to start small and scale with companies as needed.

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Technology infrastructure from Amazon, Facebook and Google have enabled a new world for entrepreneurs to create their own business but the ability to get financing hasn’t kept up.  Because of the efficiency that fintech brings, individuals and businesses of all shapes and sizes will have greater access to capital.  In turn, the data-driven model of financing gives entrepreneurs the opportunities to own more of their business and be their own boss. Not every brand needs to be a unicorn – although we are seeing more and more of those high valuations these days.  Consistent and seamless access to capital, validated through data, will help today’s businesses continue to thrive on their own terms.

What are some of your top predictions for 2021, for the global fintech market?

I think we will continue to see massive valuations in the fintech space and more consolidation between new and old worlds, And everywhere you look, it seems like there is a new SPAC in the space. I believe SPACs will become more of a trend, rather than a fad allowing more companies to go public with less overhead. 

In terms of actual products, Fintech is eating the world.   Every company across industries large and small with underlying data and customers will offer some form of financing product.  This is a big reason for Stripe and Affirm’s valuations.  

I also believe that Fintech as a Service (FAAS) will come into its own as companies better understand how to use the data they have access to monetize new products. Embedded fintech allows virtually any company with data to offer financing. As the industry has evolved from using tech to make the financial industry more efficient and online, this next iteration will bring a new slew of companies focused on lending – all driven by data.

Seeing the growing investments in fintech especially today, we’d love some thoughts on what it is that investors look for before investing in one?

We look for businesses that are providing a valuable service to customers, not just lending capital.  It’s techfin vs fintech in my opinion.  Everyone has capital but the question is if you can build technology services.  For example, we liked Clearbanc because as they obtained more users, they could do bull buying of marketing ads and identify new channels for higher ROI.  If it’s lending alone, the arbitrage gets compressed quickly like we saw with LendingClub and Sofi.  We also like niche markets where you can own an entire vertical. 

A few takeaways for tech startups who are looking to raise new investments / funding?

One of the key things that sets Upper90 apart from others is the use of debt along with equity for early stage companies.   This allows startups to grow faster and own more of their business with an aligned partner. We are working to help educate fintech founders that it’s not how much equity you raise but how much equity you own in the end without sacrificing growth.  In fact, we often say that startups should “delay their A’ which can provide larger payoff in the end with more control. 

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Fintech entrepreneurs especially with capital-intensive businesses should be thinking about dilution-sensitive ways to finance growth especially for the predictable but experimental parts of their business.

Historically, fintech was used mainly as a way to bring technological efficiencies to old banking and lending models. We saw during COVID that there was an enormous movement towards ecommerce and new business models emerged. For example, Thrasio is rolling up the thousands of third party sellers on Amazon where there’s low friction to start a business online but larger capital is required to scale the business.  This is a huge market globally where small business owners need capital and supply chain expertise and a rollup can make a lot of sense. Upper90, in partnership with Thrasio has been a leader here. Octane Lending is another company that started as a POS for powersport (ATV, UTV, Jetski) dealerships and has evolved to also offer a lending service by having no CAC and complete underwriting data. 

Fintech founders need to stay focused on making the industry more efficient and using the data at hand to find new ways to monetize their offerings. 

Before we wrap up, a few biggest learnings and tips you’d like to share with fintech innovators and leaders?

The main takeaway for fintech innovators is to understand the different capital offerings that are available to them at the early stages. And to also recognize how fintech can be part of every industry which is more exciting and expansive vs its own vertical today. 

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