Nelson Chu is the founder and CEO of Percent, a global leader in lending innovation and the one-stop source for private capital seekers. Founded in 2018, the company leverages proprietary technologies, integrations and data to bring first-of-its-kind transparency and efficiency to lenders and credit transactions.
Prince: How does your private credit investment platform connect investors to originators, and vice versa?
Chu: Percent is more than an investing platform. We are a core infrastructure and services provider for all private credit transaction participants, including investors, originators, and beyond. Our bespoke institutional offerings help connect originators to hundreds of millions in capital.
For originators, we built Sync to help efficiently manage all their debt capital needs. Sync helps accelerate the growth of originators of any size, providing them the opportunity to raise debt capital on Percent at the lowest possible cost—thanks to our dynamic market pricing and standardized terms. As this side of a multi-trillion-dollar market is rife with inefficiencies, Sync helps originators streamline all aspects of their business.
On the investor side, we offer investors and institutions high-yield and often shorter-term investments into notes from our growing roster of originators. An originator can set up and manage a new investment opportunity with ease using Sync, opening it up to thousands of investors on our platform. These types of investments were once only available to a select few, however Percent makes them accessible to any accredited investor in the US. Institutional investors have the option to invest in bespoke offerings tailor made to their needs and mandates. Best of all, our investors absolutely adore it, as over 68% of them have invested in more than five deals on our platform.
Prince: What need in the lending industry has Percent been able to solve for with its tech platform?
Chu: The private credit market holds a wealth of untapped potential, especially within the exploding tech-enabled, VC-backed non-bank lending space. These disruptors and innovators are becoming a core part of the lending market, yet since they are not banks, they need access to debt capital to lend. Before Percent, they were beholden to legacy markets where there is no infrastructure to support the arduous process of raising and managing debt capital.
Percent was created to solve for this and more, bringing efficiencies to the lending market like never before. The pairing of Sync for lender originators and our Investor platform for capital allocators is a powerful combination. By seamlessly connecting capital seekers to capital providers and using technology to optimize for pricing and market demand, what once was a six-month process can now be done in weeks with better outcomes for everyone involved. Lenders benefit from the lowest cost of capital in the market through investors who are searching for yield in this low rate environment.
Prince: What do you believe has impacted the lending industry the most this past year, and what is next on the horizon for this space?
Chu: Covid-19 had a significant impact on the lending industry. Alternative lenders took initiative during the pandemic to continue supporting the livelihood of consumers and small businesses that were disrupted by systemic shutdowns of the economy, while banks pared back from all non-core lending. Fintech startups stepped up to the plate and facilitated PPP loans and extended other forms of capital to small businesses at a faster rate with more transparency, while the banks’ legacy infrastructure buckled under the demand hitting their websites.
This has fundamentally upended how many borrowers perceive lending, and the private debt market continues to expand as more small and mid-sized enterprises turn to fintech lenders for their capital needs. Percent is the partner-of-choice behind the scenes, powering many of these up-and-coming fintech lenders and their hundreds of thousands of borrowers, both small businesses and consumers alike.
In the coming years, the maturation of core infrastructure being developed by fintech companies will allow for a level of efficiency and transparency that would rival traditional public markets. As a fintech company taking full advantage of these advancements in the ecosystem, Percent is using transparency to help drive more liquidity into the market. With greater transparency and more efficiency comes more interest, more demand, and ultimately more capital to support the growth of lending markets.
Prince:How will Percent evolve to meet any changing demand in the private credit space?
Chu: The low rate environment that has persisted for the past several years has driven significant demand for private credit. We believe this will continue even if rates tick up slightly this year. As a fintech company with no legacy infrastructure to slow us down, we easily adapt to any situations that arise—interest rate hikes, bearish macroeconomic indicators, steep equity market selloffs, and more.
The Percent platform is well suited for growth in the rapidly evolving private credit space. The data we capture and synthesize for lender originators empowers them with knowledge of how the market is reacting to their assets in near real-time. Whether rates go up or stay flat, they will know precisely what investor sentiment is, and by extension, how much capital is available for them to tap into at any point in time. During the extreme volatility of March and April 2020, Percent’s platform let the market determine pricing and in turn, we were one of the only platforms still extending capital when these lender originators needed it most.
We are focused on continuing to drive innovation in the space. Efficiencies that rival public markets lead to opportunities to create new products that reflect the changing interests and needs of market participants. Our newly launched Blended Notes embody this as they were a direct response to investor feedback on increasing diversification of deals in their portfolio. In an industry that has only ever known direct investments into specific lender originators, we went outside the box to create something truly unique that reflects the changing needs and demands of a private credit market that is maturing each day.
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