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Revenued CEO Sol Lax on flexible lending for small businesses

Sol Lax, Revenued

On today’s episode, we sit down with Sol Lax, the CEO of Revenued, to dive into the intricacies of small business lending. Lax shares his journey from managing Merchant Cash Advances (MCA) to leading Revenued, a company focused on providing financial solutions for small businesses, particularly those with subprime FICO scores. With a background rich in financial innovation and a keen understanding of small business needs, Lax offers insights into the challenges and opportunities in the subprime lending space.

“Merchant Cash Advances (MCA) were a necessary but imperfect tool for small businesses,” Lax explains. “We saw an opportunity to create a more flexible and tailored financial product.” 

Through the tumultuous times of the Paycheck Protection Program (PPP), Revenued pivoted and leveraged its platform to process over a million PPP loans. This experience honed their skills in anti-fraud measures and scaling operations, setting the stage for their current offerings. It’s a candid conversation that you won’t want to miss!

Sol Lax is my guest today on the Tearsheet Podcast.

Understanding the Limitations of MCA

Lax begins by detailing the limitations of traditional Merchant Cash Advances (MCA). While MCA addresses the needs of high-risk customers, it falls short in flexibility and cost-effectiveness. “Early repayment on an MCA term is not really discounted,” he notes. This rigidity often leads small businesses to overextend themselves financially, taking larger sums than needed due to the inflexible structure of MCAs.

The Innovation of Revenued’s Flex Line

Revenued’s Flex Line is designed to address these shortcomings. “We created a product that offers more controllable, predictable, and available capital,” says Lax. This innovation allows small businesses to access funds as needed without the pressure of taking on excessive debt. It’s a solution tailored to the real-world needs of small business owners, providing a safety net and a more manageable financial tool.

From PPP to Anti-Fraud Expertise

The PPP era was a turning point for Revenued. Partnering with Cross River Bank, they processed approximately a million PPP loans, which was a crash course in scaling and anti-fraud measures. “It was utterly crazy but a fantastic learning experience,” recalls Lax. This period refined their technological infrastructure and credit models, setting a robust foundation for their current operations.

The Future: Data-Driven Insights and Expanded Services

Looking ahead, Lax envisions a future where Revenued not only provides financial products but also offers valuable insights to small businesses through data analysis. “We have the ability to look at things like who’s using which bank and how much they’re spending in fees,” he explains. This data can empower small businesses to make informed decisions, optimize their operations, and potentially save on costs.

The Big Ideas

  1. Lax emphasizes the need for flexible financial products. “MCAs are too rigid,” he says. “Our Flex Line offers more controllable, predictable, and available capital.”
  2. The PPP era was instrumental in refining Revenued’s operations. “Processing a million PPP loans taught us anti-fraud and scaling,” Lax recounts.
  3. Revenued is harnessing the power of data to provide actionable insights that help in decision making. “We can show small businesses how much they’re spending on bank fees and help them find better options,” Lax explains.
  4. Lax acknowledges the difficulties in subprime lending but sees opportunities. “Subprime small businesses find it challenging to access credit,” he notes. “With a different credit perspective, we can make it happen for them.”
  5. Revenued is looking to expand its offerings through strategic partnerships. “We’re partnering with companies to provide business insurance quotes and other services based on our data,” says Lax.

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Building the Google of finance – with Uri Kartoun

P2P Lending's Developing Debt Market

There aren’t a lot of really innovative search technologies for investors.

That’s changing — researchers and entrepreneur are looking at unique ways to classify financial product data on mutual funds and ETFs. That means it gets easier for us to identify new investments that make sense for our portfolios.

Uri Kartoun, co-founder of Stockato, has some great academic experience in robotics and classification of large data sets and he’s turned his attention to investing.

Uri joins us to talk about how his set of cloud tools can help this generation of investors find the investments they’re looking for…and maybe what they didn’t know they were looking for.

Listen to the FULL episode

About Uri Kartoun

Uri received his PhD from the Ben-Gurion University of the Negev in Robotics and Intelligent Systems and worked as a research Software Developer Engineer at Microsoft Business Solutions Group.

Learn more

Even More Resources

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Blowing up the fine print in financial product marketing

As a user of various financial products over the years, I sometimes wonder what it is I actually own (most of the time this occurs sometime after hitting some single malt before bed and sometime before day break).  I dunno — I read the labels on food that I ingest.  Just thought it might be interesting to know what’s in the mutual fund into which I invested all my life’s savings.  Just for kicks, you know?

So, I decided to do a little sleuth work and *pull back the covers* on the disclaimer language on some of the most widely held financial products.  What I found written in Arial font size 6 might be a little surprising to owners of mutual funds and ETFs:

Of course, past results are not at all, in any way, form, or fashion indicative of future performance.  No way and it doesn’t even matter that we have to say that.  We probably would anyway just to cover our own asses.  Anyway, in terms of performance, it’s really just a crapshoot.  Who wrote that Random Walk thingie again?  We’re not big fans of him (he’s probably an academic).  We don’t love Bogle either — he’s the one who tried to force us into buy and hold strategies.  Cramer’s more our speed, if you care.  We sell/market financial products that trade in a secondary market so we don’t really care all that much anyway how they perform.  As long as we grow our assets under management and provide liquidity to the products.  In fact, we’re not quite sure what to make of all the blogger research that shows that our ETFs don’t come close to tracking the indices they’re supposed to follow.  And those leveraged ones — the 2x, 3x, 4x, XXXs — who really understands how all those things work?  I mean, can you really use daily future rebalancing as part of a core strategy anyway??  Thankfully for us, it’s products like these that enable us to raise our management fees in an environment that continuously pushes fees down.  We had it good with mutual funds — whose stupid idea was to transition to lower-fee ETFs? By the way, if you really want performance, why not try just giving your money to one of those fancy hedge fund vehicles?  They seem to know what they’re doing, right?  Man, I’d like to be in their shoes.  Me?  I’d be David Tepper or maybe  Bill Ackman.  Yeah, Ackman.  With his build and that gray heirhair, he’s totally a baller investor. Also, you should know, that we don’t really believe all that new-fangled behavioral research that shows that for investors, our products are sort of like drugs in the hands of addicts.  In essence, there’s no way these people are going to make money in the market anyway.  So, why not provide a vehicle that purports to do as much.  Is that so bad?  Is it?

Wow, who knew what was written in all that small print?

photo courtesy of somegeekintn