Sunday 12 October 2014 10:18 pm

Fintech kings talk starting from scratch, old clients and handing businesses a lifeline

In Holborn last week, a three year-old London-based company held a party to celebrate reaching £250m of business since its inception. If that doesn’t sound impressive, by the time the event was held, MarketInvoice was already nearing £270m. “We seriously underestimated repeat usage,” says co-founder and chief executive Anil Stocker. “Companies see how the platform works the first time they use it, then use us more and more, making bigger trades.” 
MarketInvoice was set up by three friends in 2011, with two of them – Stocker and Ilya Kondrashov – now steering the ship. The online marketplace works like an Ebay for invoices. It enables institutional investors – asset managers, family offices and high net worth individuals – to advance working capital to small businesses by buying their outstanding invoices, shortening the lag created by long-term payment terms. Of course, invoice factoring has been done for centuries, and MarketInvoice is minute compared to its banking competitors. But Stocker tells me that comparing the company to the dusty and inflexible products offered by banks is “a bit like saying ‘people used to buy books from the high street, then a company called Amazon came along.’”
But despite their bullish optimism, Stocker and Kondrashov had to rely on determination and a good dose of luck in the early days. “People thought we were crazy. But it would have been even harder to start this business in 2005, during the boom. By 2011, banks had retrenched. People were fed up and had lost trust,” says Stocker. He had completed a graduate programme at Lehman Brothers; Kondrashov the same at Goldman. “I spent a lot of time at work looking at the kinds of debt products businesses could get,” says Stocker. But he never felt wedded to fintech. Before the threesome began developing the idea, he even did a tour of the UK, looking for a business to buy. “I just knew I wanted to build a business. But fintech’s the right place to be now. We’re part of a wave of change.” After following early-stage businesses in America, which were starting to gain traction, the friends began writing a business plan for a crowdfunding platform that would help businesses raise capital. 
Last year, MarketInvoice won City A.M.’s Innovation of the Year award, but support hasn’t always been forthcoming.  “We started at zero. No brand, and no customers. We got seed funding, and it was strange, because people thought we’d struggle to get investors, but it was actually harder getting the businesses to take us seriously,” says Stocker. “They’d been used to dealing with four or five banks, and we’d turn up at their door and say, ‘we can do that better’. Obviously they said, ‘who are you?’” With nobody wanting to take the bet, it was an anxious time. But after a desperate push, they managed to secure their first customer. “Once we’d got one, we could build trust. We had a testimonial and case study. And entrepreneurs like to talk to each other about what works, so that helped.”
Now, new business is coming thick and fast. They say that the early months of this year saw £12m of business. In July and August, however, they reached £25m. The platform services over 700 businesses now, with advances ranging anywhere between £10,000 and £1.5m. And despite “SME” defining their client base, Stocker and Kondrashov don’t like it as an expression. “There are big differences between ‘S’ and ‘M’,” says Stocker firmly (he’s talking about the businesses they work with). “Our ideal profile is a firm wanting to go from £1m-£2m turnover to £5m-£6m. But really, what all our businesses share is that they want to grow.” And improving credit conditions for firms is a rewarding business. “I’ve visited clients and been pulled into the office and told the 10 people outside wouldn’t have been hired – or sometimes kept – without MarketInvoice,” says Stocker. “It’s really what it’s all about, and what keeps us excited,” adds Kondrashov. 
Despite it being tough making their voices heard, MarketInvoice has had some loyal friends along the way. Shadow business secretary Chuka Ummuna has, for example, been on board from the word go. And the future is bright too. “Cheap money isn’t going to come from the banks now,” says Stocker. “It’s a secular loss of trust, not a cyclical one.” Kondrashov adds that, although most of their clients are younger, they’ve got plenty of older adopters who have been willing to try something new just because of disillusionment. 
Now at a stage where they’ve got a radio ad, and case studies galore, the pair are happy to share what they’ve learnt. Stocker says the best piece of advice he was given when starting out was that “the biggest risk in life is not taking a risk.” He thinks “social norms make people risk averse – what’s perceived to be the right thing at the right age – but there’s no formula. That mentality is changing now, though. People are realising that having a job in a big investment bank is not what it’s cracked up to be.” “At the end of the day, life is short,” says Kondrashov – “you only fail when you stop trying.” He’d like to see failure celebrated as much as success: “it brings a stock of knowledge to business that’s invaluable – we really need to look at it differently.” 
Company: MarketInvoice
Number of staff: 47
Founded: 2011
Title: Co-founder and CEO
Age: 30
Born: Switzerland
Lives: London
Studied: Economics, Cambridge University
Drinking: Carrot juice 
Eating: Bulgogi
Reading: The Remains of the Day, by Kazuo Ishiguro
Favourite business book: Thinking Fast and Slow, by Daniel Kahneman
Hero: Jack Ma
Motto: “It’s not what happens to you, it’s how you react to it.”
Most likely to say: “Where’s the innovation?”
Least likely to say: “I give up.”
Title: Co-founder and COO
Age: 29
Born: Russia
Lives: London
Studied: Economics, Cambridge University
Drinking: Green tea 
Eating: Sashimi
Reading: Without Hot Air, by David McKay
Favourite business book: Zero to One, by Peter Thiel
Hero: Sergey Brin
Motto: “Who dares, wins.”
Most likely to say: “We can do better.”
Least likely to say: “Let’s agree to disagree.”
Awards include: City A.M.’s Innovation of the Year, Credit Today’s Best Use of Technology and Alternative Lender of the Year, and ICM’s Commercial Lender of the Year