- The need for transparency in Consumer Lending
- How borrowing money can be a lonely experience and how Lendela makes it better
- The benefits, challenges, and expectations that accompany VC money
- Making the Consumer Lending experience more enjoyable and efficient
- The importance of cultural adaptability and how it helps building a startup in Southeast Asia
Some other titles we considered for this episode, but ultimately rejected:
- Transforming the Borrowing Experience
- The Rise of Fintech in Southeast Asia
- Challenges and Opportunities for Startups in Southeast Asia
- I Feel Like I Started Over Again
- I Was Terrified of Doing It On My Own
Read the best-effort transcript
Read the best-effort transcript below (This technology is still not as good as they say it is…):
Michael Waitze 0:05
Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast, Nima Karimi, the founder and CEO of Lendela is with us today. I’m honored Nima, thank you so much for coming to the show.
Nima Karimi 0:15
Thank you for having me.
Michael Waitze 0:16
It’s my pleasure. Let’s start by giving our listeners a little bit of your background for some context.
Nima Karimi 0:21
Yeah, I’m originally born in Iran. I grew up in Sweden moved to Sweden, because of the war and spent 30 years there. Went to school there, obviously. Yeah, I mean, basically, I’m Swedish. I would say that the Swedish passport and Swedish citizen after school, I went to insurance that nine years and one of the biggest insurance company in the Nordics actually so like, classic corporate career to some degree, and then I went from there to a different kind of company working with the product that I’m actually now eventually launched here in Singapore. So I’ve worked for two companies doing that, over the last five years in Sweden, and this this industry in in the Nordics, the model that I brought to Singapore is quite a mature industry in the Nordics. There’s a lot of players doing this, this company is they’re no longer startups, they’re they’re acquired a long time ago, and I really loved the business model. I loved what we were doing. And once I left the second one, I decided I want to do this on my own. And it was looking, I was looking with a couple of friends back then, where could we launch this kind of business and very opportunistically ended up in Singapore, I can do a longer version of that story. But let’s say I ended up in Singapore eventually.
Michael Waitze 1:34
I want to get to a couple of things, if you don’t mind, because this kind of really resonates with me. I’m just curious how old you were when you left Iran. For Sweden, you must have been really small, right? by five. Okay, so I was 24 when I moved to Japan, and I left when I was 46. So I have not lived in my home country for 30 something years. I know the age range is different. But I do think there’s something really unique about being born somewhere, wherever it is. And then moving to another place, like you actually said, kind of in passing. You know what, I’m actually Swedish. And I think to myself, sometimes I’m not Japanese. But I’m not really not Japanese in a way. Do you know what I mean?
Nima Karimi 2:11
Yeah, I think I do. And I think one thing is different. As I said that I’m actually Swedish, but I feel very runny. And as well, my parents, obviously Iranian, and I speak Farsi with them. So it is mixed. And I always still don’t look Swedish. No, you don’t. Not as far as I can see from here. And it’s tricky. I mean, you know, you kind of you’re, you’re a little bit stateless. I was saying because you’re if I go to Iran, I would not fit in whatsoever. Like I will be such a sore. Yeah, I mean, I would they would see from a mile away that I’m not actually Iranian. But in Sweden, I also don’t fit in look, looks wise, at least. It’s a weird thing. And coming to Singapore, it was weird, because I kind of felt like I started over again, like coming here and being an outsider, not understanding the culture, not understanding the unwritten rules. Again, not fitting in, from from looks why. Yeah, I feel like I still started over again.
Michael Waitze 3:10
I think there’s something really interesting though, about this confluence of me, I consider myself a third culture adult, right? Because again, I was raised in one place, which I feel like is still there somewhere, but I grew up in another place, and that still has had impact on me. But you’re right. I don’t look like what I am, at all. But I do feel like it’s given me this idea of adaptability, but also the understanding that maybe everybody else in the world isn’t exactly what they look like, and maybe every situation isn’t exactly what it looks like. And I think it allows someone like you to see the world through a lens that most people don’t understand.
Nima Karimi 3:42
Yeah, I definitely think it helped me coming to Singapore like having having another reset and kind of understanding exactly like you said, like there’s a I don’t want to call myself humble, but there’s some humbleness in that to know that okay, things are things are different. Yeah, in places you have to kind of read the rules and, and be very perceptive because that’s kind of how you’re how I survived in Sweden the first years I’m very perceptive, like, look, look, how are other people doing it, my classmates are kids and, and you’re constantly trying to like not stick out too much you understand your culture is very different. So it does give you a certain skill set in terms of that, but it also gives you some negative skills. I don’t know if it’s a skill set, but like you become very adaptable you try to always accommodate you know, you read the room, all those are great skill sets, but sometimes you also maybe should just ignore all of that and just go right there’s a there’s two sides to that.
Michael Waitze 4:32
I mean, just like with everything else, you have to find that balance of I can adapt to any situation and like you said, I can read the room but sometimes you just have to ignore it and do the thing that you know is right.
Nima Karimi 4:41
Yeah. Now there will be stood up to me kind of having to remember sometimes.
Michael Waitze 4:45
Exactly. And I think this is one of the real powerful things about being an entrepreneur before we get to Lendela itself. One of the things you said as well was I really felt like I wanted to do this on my own was this always something not Lendela itself but was going out on your own always something you’d considered or was it Something you just felt like, you know what, I’m ready for this. I need to do this now kind of thing.
Nima Karimi 5:04
Actually, I was I actually misspoke, I would say, I was terrified of doing it on my own. It was a Yeah, if it wasn’t friends. Yeah, I mean, I, they really pulled me out of my safe zone. I was working in this company. And I of course, I saw them benefiting from the products that I built. So I could see that, oh, this is something I could have done on my own, I started seeing that opportunity. But it was thanks to my my friends that I actually took the leap. I was very, very, very unsure about myself being an entrepreneur, I was not exposed to entrepreneurship growing up entrepreneur was didn’t exist as a term. That’s something I mean, until it was like self employed. And that means you couldn’t get a job. You know, that’s like that’s the I’m I’m old enough to kind of come from that. And then the last maybe 10 years in Sweden, really, it’s the startup culture grew. And then you know, now we have some amazing startups, of course, from Sweden.
Michael Waitze 5:57
Yeah, I mean, some of the global some of the most globally well known companies were started in Sweden, I think Spotify is one of them, right? It’s not even started actually just a massive company. But still, it started from scratch there. Before we get into, again, the details here, I want to get a sense from you, and maybe from the peers with whom you were worrying about what the consumer lending landscape looked like to you, as you started to have this idea of we’re gonna start lend della like, what did it look like? Why did we need this thing?
Nima Karimi 6:24
Of course, I came from a very developed market, a very digitally developed market, or just developed in every sense, regulatory, and all that, even in a market like in the Nordics, what we see and what we saw was, when it comes to lending, and especially consumer lending, on the surface, there seems to be plenty of choice. There’s usually a lot of options lenders out there, hundreds of them. Have you ever by the way, I’m gonna ask you a personal question. Have you ever taken a loan? I have? Okay, so how did you go about to do that? Like, how did you go and find the option for you?
Michael Waitze 6:59
So it’s a really good question. I was living in Japan, but I’m not Japanese. Right? So it was actually and I was making a decent amount of money, let’s say a real decent amount of money. Yeah. So for me, the the financial side of it was really straightforward. I could cover whatever I wanted to do. So I bought a piece of land. And I was building a house in Tokyo. And I just went to a couple of the banks that I knew, and back then interest rates were close to zero, right. So I just thought that should be the best way to leverage money that I have to build a property and live in a nice house. But I couldn’t get a loan on my own. I actually had to have my wife’s father, guarantee the loan for me, because I was not Japanese. I didn’t hold a permanent residence thing. And I was not a citizen of the country. So it was actually kind of tricky. The loan was mine was in my name, but it was for somebody else. And frankly, it wasn’t, it wasn’t easy to
Nima Karimi 7:46
get. Yeah. And that’s, I think those are common themes. Of course, you had the one level topper for you being a foreigner, but not being easy, and not a pleasant experience is a common theme. Right? We don’t describe that the process the journey of getting your loan as a nice experience or pleasant explained, most people don’t don’t connect that to a good experience. Like it’s not like going to an Apple store. And it’s a product you’re paying for it right? You’re paying the bank in interest. You’re buying a product, but the experience is not described as pleasant, like something you want to do.
Michael Waitze 8:19
Can I make a point here, because I think you bring up something really interesting. I hadn’t thought about it in these terms before when I go into an Apple shop, and I’m an apple aficionado. So I’m so glad you said this. I used to ride my bicycle, from my home to the store in Ginza. On the weekends, just for fun, even if I wasn’t buying a product just because it was cool. And it was energetic. And I loved looking at all the products and sure for sure. When they came up with new products, I was always down to going there. But imagine walking into that Apple Store and having them just kind of look at you like, huh, looks like he’s going to shoplift something. You know what I mean? Like in just a way of like, Why is he here? I always feel that way. When I was in the bank. They’re like, okay, from the beginning, we don’t trust you. And I’m like, I just want to buy something from you. Yeah, I have a job at Goldman Sachs. I just want to buy something from you. Why is this so hard? Sorry. Go ahead.
Nima Karimi 9:06
Yeah, no, let’s play with that comparison. And imagine then going through that. Imagine looking at the website and it says the MacBook costs $1,000 Right, great. I can I can afford that you go into the store? No, no, no, no, no, fill out this application first. And then, and then you go through that. Okay, I’ll fill out three pages and then submit some documents I need your ID card. And then at the end of it, they say either sorry, you can’t get it and not really explain why which is a rejection that most people that you experienced as an end alone, or no, you know what, it’s not 1000 For you it’s 2000 because that’s how lending works right you have to go through a process of applying and filling out forms you have to submit a few documents usually have to wait a while it’s not instant in most cases. And then at the end of it you might even get rejected and it’s there’s no explanation. If you don’t get rejected, it’s never going to be that price that you saw on the storefront it’s that’s the weird thing about loans right like you go to a bank’s website, it says 3.5% or 2.8%, or 5.6%. And that’s the advertised rate. Your rate is only after you apply will you know your rate, if you get approved,
Michael Waitze 10:11
your mileage may vary as they used to say, can I just continue this for one more moment? Yeah, when I go into the Apple shop, I have a credit card. And I can get 0% financing for 10 months. So if I don’t want to pay 90,000 baht, right, or 3700 bucks or 3500 bucks, whatever it is, from my laptop up front, they will actually let me pay $350 a month with no questions asked. It’s still super pleasant, like across the board. And you’re right, the price that they say it is, is the price that they do unless I add something on to it. Right. I know the base price, but unless I add something onto it, they can’t go. For Michael it’s $2,000. But for nema 25 Can’t do it.
Nima Karimi 10:52
Exactly. Exactly. We will never accept that. But that’s that’s how lending works. And you know, going back to your story about you getting a loan I heard also I picked up something that in the end, you my this is my guess is that you do once you got an approval, you were just okay, I got I got approved. And this is what actually is the problem. Like there’s hundreds of lenders out there, they will all give you different offers. Some of them will reject you, some of them will approve you. But once they approve you, they will give you different rates. But the problem is it’s so tedious to go through this process of applying and comparing that most customers once they get that first offer, they’re done. They’re like thank God, thank you. They give me the money. I’m out. And so we don’t compare. And what happens is we overpay we pay more than we should.
Michael Waitze 11:34
Yeah, can we make another point to not only not only that, but if I want to pay off my loan early. In most cases, at least back then this was when I was borrowing there was a fee associated with it. Like I don’t want your money. That’s the thing. Wait, first of all, you didn’t trust me when I got here. Now I’m trying to give you the money. You don’t want it. And if you do take it I have to pay to give you my money early like I understand the way the way loans work. I traded bonds, right. So I understand like how duration works, and all this stuff in relation to loans. But still, I just felt like it was so weird. I felt like the way banks treat treat borrowers and lenders is just really insane in a way.
Nima Karimi 12:15
Yeah. And that that’s still a curse, I still see those terms. And I I think on the you know, business b2b side, it’s fair play, you know, you can you sign a contract as a business fair play. But consumer lending, I also think that’s not fair like for consumer lending should have tighter regulations, you should you should be able to pay back, it’s in the benefit of the economy. If the customer has the money to means to pay back, they should be able to do so without any penalties. And it’s more and more lenders adopt that more and more lenders offer early repayment, which is just a given for me that that should be the case.
Michael Waitze 12:50
So one of the big changes that has happened and I’m just gonna pick a number like in the last 10 years is that all of us have way more access to way more information about everything right? And you’re right if I was because the bankers in Japan actually would come to your house. Right? And I couldn’t just sit there and just like bang up other opportunities on the internet and say, like, I could do what I go and buy a TV, which I did last month or two months ago in Fukuoka, the guy was like, Okay, this Sony TVs, 105,000 yen, or whatever. I’m like, I can get it for 98 Like right over there. So I’m here now can you just give it me for that price? And he’s like, Okay, fine. But you couldn’t you couldn’t do that before. So with all these changes, and all these information, all this information dissemination, what has changed at scale? And then how does Lendl a disintermediate doesn’t make it better for everybody?
Nima Karimi 13:35
Once you realize that, the industry will stay the same in it, you know, we joke about oh, you have to fill out application before you get your offer and all that we can joke about it. But that’s basically how it has to be because every person has a different risk. And the lender or the bank has to assess that risk before they can give you an offer. So that’s not going to change that needs to be a process of filling, submitting a certain amount of details about yourself before you can get your so called loan offer. So what we do is say, Okay, let’s let’s How do you work with that? So the lender law model works on a reverse auction model. So what we do is customers apply on our website, below, fill out our application form very, it’s very similar to loan application, but much better UX, hopefully, at least, I think so. But once they’ve done that, we have now enough information to run them through our matchmaking engine. So the purpose of that engine is to look at this profile that just came in and figure out who’s the best lender or bank for this customer. And that profile will go through this matchmaking engine and then be sent to multiple lenders and banks that we believe that our engine believes is the best fit for this customer. And those lenders and banks now have to submit return an offer back to Linda, right. So now multiple lenders or banks, or both are reviewing this application, your application for example, actually anonymized so they don’t get to see your name or social security number, but they get to see your entire profile everything they need to give and offer back you got it. And they now have to return it over to lambda law. And of course, knowing full well, but that they’re now being in there in a reverse auction, so they need to put up their best offer for this for you for you to take that. And once the offers are returned, they’re presented on Lynda loss websites. And now you as a potential applicant, you are a borrower, you review all these offers that have been pre approved based on your profile. Once you make your choice, we take care of all that. If there’s a document collection, if we need to book an appointment for you, if you need to do KYC, whatever we need to do we help you all the way until the point that you get the loan disbursed.
Michael Waitze 15:34
So is there an opportunity for the bank? What cuz at some point, I’m gonna walk into the bank and sign some papers. I’m presuming, right? They’re gonna see who I am and know who I am. At what point is that deal? We would say on the trading desk, right? Like if I give a price for a security, it’s just I say done, it’s done. Like, there’s no later like, oh, well, I thought you meant this out of the other thing, you just are done by your word. So what is the context for that being done? And does anything change after that? Like what right to the banks that have to change or the liquidity providers have to then change the terms of that agreement?
Nima Karimi 16:07
Yeah, good question. The answer is, it depends. So we are, as you know, we’re in three markets. I mentioned that earlier, by the way, but we’re in Singapore, Hong Kong, and we just launched Australia. Each market has its own peculiarities, and each lender has their own solutions. So we are very agnostic. And we adopt to how the lenders work. So for example, we have lenders in all three markets where the offer that is given is a final offer. So if the customer accepts it, it’s just a matter of going through the signing process. And that signing process to answer your question could be online, it could be offline, depending on the lender. But then we have lenders that give in principle approval, so they give an offer, but it’s based on the submitted details that we that we send to them. So if it turns out later that those if that information was incorrect, or was like it was missing information, they can revise the offer. Generally, we work towards what we call the final offers we want. We want customers when they get an offer on Mandela to be very confident that this is the offer they’re getting.
Michael Waitze 17:02
There’s so much data analytics that’s going on here, right on on the lintel aside on the banking side, at what level? Are you sort of gathering all that data and then saying, You know what, we have 15 banks on the platform, these three banks almost never lend to the person with this type of profile. Do you know what I mean? So that we’re going to now we’re just gonna send it to these other 12 institutions, because why even bother these other people with it? Are you going to have that level of granularity when you’re doing this analysis as well?
Nima Karimi 17:33
That’s exactly how it works. But to add on that those in your example, the three lenders that are not a good fit for that customer, that doesn’t mean they’re not a good fit for any customer. So that’s where the matchmaking comes in. So, so yeah, and it’s a waste of everyone’s time, if I send this customer to those three, it’s a waste of that lenders time to assess and give an offer. So the matchmaking helps on both ends and makes the customer experience better and faster. But our lenders really appreciate the fact that once they get a so called lead from us, it’s a high quality lead and chances of conversion is high thanks to that engine that we have. So how do
Michael Waitze 18:08
they compensate you for that read, because getting that high quality lead is actually can be expensive at some level, right? Because they have to go out and find that person. And there is a little bit of what’s the right word. People can be intimidated, if they’re kind of at the border for like, I should probably be able to get this loan, but I might not be able to. So I’m super afraid to go into that fancy bank. Do you know what I mean? How do you bounce that out as well?
Nima Karimi 18:31
Okay, two questions. There are lenders and I’ll share your business secrets here. But I will tell you, generally our model, obviously, we don’t charge anything on the consumer side, it’s free of charge for the consumers and the borrower that our lenders pay us generally what we call success based commission, so they only pay us if a loan actually gets dispersed. So as you can imagine, and a lender can be on our platform for years, and if they think he gave offers to a variety of customers or not get a single loan paid out, they won’t pay us a dime. Obviously, that’s not gonna be a good experience for them. So but in theory, that’s the situation is successful. So we’re very aligned with the lender in that sense, unless they get the customer we’re not getting paid them recently. And we said, you know, it can be expensive. I consider us quite cheap in that sense, because compare us to their other options, which is advertising on Google or advertising on Facebook or doing a TV ad or whatever that could be, that jet might generate traffic might generate applicants might generate loan disbursement. Yeah, compared to working with vanilla knowing exactly what you pay and being able to calculate your ROI. That’s something our partners really appreciate,
Michael Waitze 19:37
from a UX experience and maybe a partner experience. How focused Are you as a tech company right to make sure that the experience that the lenders have is as great as the experience that the borrowers have don’t even because as an online platform, as a mobile platform, right, you want that customer experience for you, the people that are born want it to be super smooth, super seamless, right for unless they can do it while they’re at dinner like with their wives or husbands, like kind of give me one second, I want to make that loan application. But on the bar on the lending side, it should be just as easy. How do you how do you fix that side as well? Like, is it a two sided thing that you’ve built?
Nima Karimi 20:13
For sure. And that’s actually one of the things I love about love about the model. And while we do that, we are in this position where we need to offer a win win, otherwise, no one wins. Yeah, it’s a consumer has to be happy, and the borrower, the lender has to be happy. And I mean, to be blunt about it, who is our customer, our lenders are the ones paying? Yes, we call them our partners, maybe use the word partner, even during this interview, we created a partnership, it’s a long term partnership, we’re aligned with them as you start out with the business model, all the way. So unless we can get that customer all the way to the final step, we’re not actually going to get paid for just it just from that point, we are very aligned. What we learned early on was, we can come in and think of ourselves as a disrupter that we’re going to come in and teach lenders how they’re supposed to do things or teach banks are supposed to do things. But that doesn’t work. No. And so we consider ourselves more of an enabler that we meet a partner, we ask them how they work, how is their process currently, and we adapt to that. So it you can see this across the border, either through how we build API’s, because we don’t have a set template API, we ask the lender, what is your solution? And we’re going to build an API that works with yours. And we’re become very good at building API’s. Thanks to that. That’s just one example. Another one is the interviews we do when we onboard a lender, we sit down with them, and it goes through their process exactly how they take a customer from giving an offer to doing KYC to doing the the signing of the documents, what is it they need to collect, and then we adopt we adjusted that we adopted. So that’s, that’s almost a philosophy that we have that we will sit down and figure out how you do things and we can adapt, it doesn’t mean that we won’t give them advice and say, Hey, we’ve been doing this quite a long time. And we have some other lenders, maybe you can streamline this, you can do this faster, but it will only be to their benefit.
Michael Waitze 21:59
Yeah, I mean, I think one of the biggest misconceptions that a lot of startup founders have had in the past is if they’re gonna go in and disrupt an industry that has, you know, a trillion dollar balance sheet just because they have, you know, just because they can program in PHP, I’m exaggerating to make a point. But I think you understand, right, like Ruby on Rails is not going to take down HSBC, for sure.
Nima Karimi 22:19
I think the FinTech industry has understood that now. Right? That idea of disrupting Banks has gone now everyone is working with?
Michael Waitze 22:27
Well, yeah, because if you’ve ever worked inside a bank before, look, when I was sitting on the trading desk, we outsource almost all of our trading technology, because there were other people building it externally. And it just didn’t make sense to dedicate all these resources. Plus, they had all the modern technology that was hard internally to manage people that had been, you know, programming in C, or on a mainframe, and then have them you know, do I can’t remember.net which they just didn’t know, do you know what I mean? Like you couldn’t square those circles. So I completely understand the bank looks at a startup and goes, those, those gals can help us. And it’s sort of so smart, they say we can help them, we don’t want to disrupt them. So many things to ask about, you get all this data, right? Is there any way that you can use some of that data to then create new and like innovative products that maybe the banks hadn’t considered or that even that the borrowers hadn’t thought that they needed? If that makes sense?
Nima Karimi 23:18
I can share that we see a huge demand for helping a lot of customers manage their debt, that there’s there’s just not really solutions out there for customers that have debt and a lot of customers have debts, you know, whether it’s credit cards or or personal loans or something else. And they they have I would say like, it’s there’s not an easy way to get an overview over your debts if you’re if it’s spread across multiple lenders and banks, and also understand what are the different interest rates? Where am I overpaying? Is there if I transfer that loan to a different lender? Would that make a difference? That scenario that we believe we can add a lot of value? And we already are?
Michael Waitze 23:57
That’s so interesting. Look, once I’ve always feel like once a company like yours gets to become part of this sort of transactional business, right? Where people are moving money from one place to another place, whether it’s borrowing or lending, or even, like credit cards. I feel like once you get the trust of your customers, and I mean, both sides, yeah, your partners on the lending side, but also your customers on the borrowing side. Once they trust you, you should be able to sell them other financial products besides just loans. Yeah, like do you consider doing credit card stuff? I mean, you just talked about now about this product where you look at, you know, debt management, which I think is really important for people that only most people understand, like you said, like where their debt actually puts them and where the risks are right. But also you come out of an insurance background. You have if you’re doing I don’t know how many transactions a year or you’re seeing all these transactions every month. You also have the opportunity to sell other financial products. Is this something that you’re considering as well, particularly where the biggest buzzword today is not just embedded finance, but embedded insurance. Right? What does that look like to you?
Nima Karimi 25:08
Short answer, of course, you know, it’s on on our agenda. It’s on our roadmap, longer answer is, I, I think we have a position as an intermediate and independent party in this in a very complex transaction and and very opaque industry, right. Like, from a consumer point of view. Also, I look at it from that point of view, what other areas can we help as an intermediary, adding transparency to an opaque industry? So when you say, I don’t always look at it, like, Okay, what other products could we add, as an upsell or cross sell or something like that is not what other problems are similar? And the truth is, the lending industry is so huge, and there’s so many lending products that have the same problem, whether it’s SME loans or car loans or mortgage. So we have, we have more than enough time. Yeah. You know, we talk a lot about the tech and the product. And I have been doing that for five years. It’s a tech startup, I’m supposed to talk about the tech but but over the last years, what I’ve noticed is what we actually are doing, which, which I’m very proud of is we’re helping customers in a very lonely experience. So the borrowing experience is quite a stigmatized, experience. Not, okay, let me take a step back, like mortgage, not a big deal. We talk about our mortgage we share with friends, what do you pay, what do I pay, that’s a premium product, but who talks about like a personal loan, or how much credit card debt they have? That’s there’s a lot of stigma around that. And some markets more than others, some of the markets were in a lot more than others. So it becomes a very lonely experience. And we see this we see this hands on we see husbands applying not telling their wives we see, you know, kids applying living at home, not telling their parents. This is something that I started noticing early on that there’s this huge demand for just someone to help you just listen to you and give you advice. And, and that’s honestly, tech for tech startup and all that. But that’s probably the biggest value add we’re offering right now, the fact that we’re the only company that you can go to and talk to and because we actually have a back office team that can pick up the phone, if you call and help you through this very lonely experience.
Michael Waitze 27:20
Can I make the case that you don’t care for us second, if your clients meaning your borrowers think that your tech is like, the best tech ever, all you really care about is if you’ve solved a problem for them. And I think this, again, is one of the disconnects. It’s like, I need to have the I’m a tech startup, I’m gonna have to have VC funding, I need to be really fancy with my technology, when in reality, all you really want to do is provide help to somebody. And if the tech facilitates that great if they don’t need it, not necessary. And I think this is the point you’re trying to make. And I think I almost never quote Steve Jobs. I think he was like, if the tech is really great, it just feels like magic to the people that are using it. And as long as you’re giving them the magic, they kind of don’t care how they get it. No,
Nima Karimi 28:00
yeah, no, no, you’re right. And to add another layer to compare it to an Apple product is no one really cares about our product. I’ll tell you, I have this fortunate situation. I come from insurance and lending. No one cares about your product. No one cares about insurance. No one cares. What they want is what the product gives you. You don’t you don’t care about a travel insurance, you want the trip, you don’t care about the loan, you want the car, you know, like so knowing that it’s a humble, it’s a humble position to be in an industry. And I’ve been in both, I think the only two probably there are no one no one, it’s not I’m not working for BMW or Apple. It’s like no one cares. They just never just want to get through this process as fast as possible. So they can get to the next step, which is that thing they want to buy or the investment they need to do? Or, you know, whatever it might be, it was the same insurance for nine years, like no one wants the home insurance, they just want to buy the home. They needed actually living life.
Michael Waitze 28:53
So one of the things that we wanted to talk about was venture capital funding. Can you talk because you’ve raised money, but not in a while? Yeah. Can you just run through that experience? What you think about it? You’re smiling at me, but I’m really curious about this.
Nima Karimi 29:05
Oh, what do you want to know?
Michael Waitze 29:07
I don’t know. What advice would you give to founders?
Nima Karimi 29:10
So yes, I have raised money. I have raised money from VCs. And I’m actually closing around now. So hopefully, we’ll all be all starting soon. So yes, I have taken the VC route. When I started, I had no idea what that meant. I didn’t understand what BC route meant when I say that and what maybe I still don’t know fully. But one thing that comes to mind when you say that is like VC funding isn’t for everyone. That’s obvious. The first thing that comes to mind is not every startup is a VC type startup. And you know what I mean with that is because you might think like, okay, so I’m not going to get up. Nobody’s gonna invest in me. That’s not what I mean. It could be actually the biggest mistake of your life if a VC does invest in you, right? That’s what I’m referring to, like some companies need to just grow at a certain pace and you can’t push that growth and VC funding requires rapid growth. And there’s a certain expectation that comes with VC funding and how funds are set up and what the expected returns and there needs to be a second round and a third round and an exit. you’re tying yourself up to a certain trajectory, when you get VC funding. And I think, you know, there’s this romantic, around romantic image about getting, you know, becoming a startup founder and being an entrepreneur and that I think there’s there should be more training there. Like, what what does it mean, like before you jump into it, to understand what you’re, you know, jumping into, and why you’re doing it. That’s one thing that definitely comes to mind. And, of course, there’s more to unpack there. One thing I learned, you know, seeing now, and I think we’re all learning that and seeing it, it’s like high valuations like being overvalued is not always good for
Michael Waitze 30:45
you, like not always, never good for you. I’ll make the case. Yeah, I have to have two words for you. We work I know, it’s only one word, but you know what I mean?
Nima Karimi 30:57
Ya know, exactly. And something I’m learning on the end, and I’m not overvalued, so thank God. I don’t know what that sounds good or bad. But I think like we’ve had a I’ve been lucky that it’s been a fair valuation every round. I now learn about things about liquidation preferences, and anti dilution and all that. And now I’m still after five years. I’m like, Oh, okay. Like, this could end up being that everyone has an exit except me. You know, this could end up with like, everyone has a good a good return in the end except the founder.
Michael Waitze 31:28
Yeah, I mean, look, I’ve said, I said to so many founders, I’ve seen so many deal sheets were investors at of all classes, right? Tried to just kind of write stuff into it. Liquidity preferences is one of the best things. But there’s so many examples. This is the founders, like, Should I do this, I need this 2 million bucks. And I’m like, No, you can’t do that. Because at the end of the day, you’ll never be able to raise the next round or the following around because you won’t have enough equity. And then your next level of investors won’t believe the election, even stay around. There’s so many intricacies for this ride. But you’re right. That’s just the VCs modus operandi, right is to invest at the stage where they feel the most comfortable. And then to help that company grow as fast as possible to get to the next round. So then they can make some money at the next round, as well to bring in they have a funnel of people that deal with them. And they want to give the their best investments to the next round of people so that they can fund the growth and they can fund the accelerated growth. And if you’re not ready for that type of experience, you should not use that one should not take that money, because it’s it accelerates stuff in a way that most people have not experienced before. No.
Nima Karimi 32:33
Yeah. And I think what’s happened the last two years is really good for the industry for the start the sobering and look, going back to fundamentals, like, you know, we spoke period, I think everyone forgot that the purpose of a legal entity or a company is to deliver value to shareholders, and that the value is in term in profits and dividends. Like we kind of just forgot all of that for a while. And I think it’s coming back. And I think it’s really good. And I look, I say that knowing we’ve a lot of us have gone through a lot of pain, including me because of the ad very hard to fundraise having to justify, you know, valuation and all that. Yeah, I think it’s actually the best thing that’s happened the last two years for us. And, yeah, sobering is the word that comes to mind.
Michael Waitze 33:13
But I mean, you also said it’s painful, and it can be super painful. You know, if you look at what’s taken place, just in the biggest companies that we know, in this region, I mean, look at what happened to the grabs back, people just got carried on on the stretcher, right? The whole funding mechanism for some of these companies just really hard to deal with. And unless you know the ins and outs of it. It’s a it’s a difficult environment. So one last thing that I’ll ask you before I let you go, this has been a great conversation, by the way, and I really appreciate it. But now that you’ve been in Singapore for how long, you said, five years. Boy, it goes by really fast, doesn’t it? It really does. But now can you just give me like an overall assessment of the growth of not just Singapore itself, but just sort of the fundamental Southeast Asian startup market, just from your perspective, because you’re in the FinTech space, which means money’s connected to everything else that happens. I know, it’s a consumer thing as well. But you’ve also raised some money, too. So you’re deeply involved in this? What’s your view on how it’s changed? And where do you think it’s going?
Nima Karimi 34:08
I think from from a startup point of view, are we talking? Yeah, just to put it like in frame it in the right context here. Keep in mind, we’re a startup that actively chooses developed markets, Singapore, Hong Kong, Australia, which is sometimes also going back to the VC discussion that it’s not to our benefit. A lot of VCs, they literally have a mandate to invest in non developing markets. I didn’t make it easier for myself by choosing these markets. But that’s where my answer will come from that might where my knowledge is, of course, I do. I’m a little bit worried about the startup ecosystem. I think I saw three Singapore’s obviously pre COVID, during COVID After COVID and from B COVID. I mean, it was all about FinTech all about high growth startups, very big funding rounds. Everything was on fire in the in a good sense. Hot and now we see almost the opposite of course, what but what I actually want about what you talked about, about grab and this bag, so we were all waiting for these, these IPOs. Right? And that this was going to release money into this ecosystem into the ecosystem. You know, we’re like, this is like the Silicon Valley, flywheel it’s gonna, you know, bring in new entrepreneurs and money into fun new entrepreneurs. And that’s not obviously being good. That didn’t become a success story, like the joke. I said, like, you know, your friends went to work for bank, you went to a startup and your friends are like, what’s wrong with you? And then the whole point was, the story was supposed to go really well, you’re gonna come out of the millionaire, that your friends like, oh, I chose the wrong career. But now it’s like, oh, no, actually, they chose the right career, they still have their job at the bank. So I was really hoping for that. And so that worries me a little bit that we didn’t get these success stories. And then, of course, worries me that it is there’s we don’t see any light at the end of the tunnel right now. There is no, I mean, we had a couple of IPOs a few weeks ago in the US, but not amazing. And we need to get some liquidity in the market, we need to see some success stories. For that it trickled down to a small startups like glenella that were you know, so we can grow and come to that level. Maybe I hope I could share something more positive, optimistic, but I’m wondering like, how it where’s that kind of come? Where is that lightened? And
Michael Waitze 36:15
what do you think about this a lot, too. And I’ll leave you with this thought. I really want to see companies go public here. Right? If you really want to make a difference, you shouldn’t move to Silicon Valley. And then listen to NASDAQ. Right? Because if you really want, like you said, if you want that thing to happen, that people were talking about 10 or 11 years ago, where we’ll build these companies. And then we’ll list them here, we’ll exit here, big corporates will buy them here. And that will unlock a bunch of other capital because they’ll see the success stories, and then they’ll manifest other success stories. And that has not happened. So even when some of the biggest companies that were built out here went and did their IPOs. And I’ll put that in quotes. In the United States, it was just like, really, you’re supposed to be building something here. Anyway, it’s neither positive nor negative to me, per se. But it’s a bit of a cop out. I thought, just That’s my opinion. I’m not putting words in your mouth. I’m just saying that. That’s my opinion. Anyway,
Nima Karimi 37:11
I look, I mean, my optimistic side is also what I mentioned earlier, it’s also good with this sobering, it’s good that we can slow down is not the right word when you’re running a startup, but you can just, you know, focus on the fundamentals and big build something good. And how do we make it long term? How do we make it profitable? Those are the questions that like the last couple of years have surrounded me. And that’s been very good. And I think that’s happening. For a lot of startups here. You’re not really chasing that fixed back. You’re actually building something because you want to
Michael Waitze 37:41
there’s a difference between being in a hurry, and having a sense of urgency. And I think before people were in a hurry, and now I just want people to have a sense of urgency. Anyway, I’ll leave you with that. Nima Karimi, the founder and CEO of Lendela. That was awesome. You have to come back. I really appreciate your time today.
Nima Karimi 37:59
Thank you for inviting me