00:00Over the last couple of years, actually, Caroline and I have tracked very closely the valuation of private, I wouldn't even say just fintech, you know, it's more specific, modern banking services, multi-platform offering.
00:14But just to start, why raise that money? What do you need it for? How does it help out with growth?
00:21Yeah, so we're in the fortunate situation of being cash flow positive, so we don't need.
00:25It's effective, you might say that, yes. But as we think about the evolution of the company, we're sort of getting closer to taking the company public.
00:36This is probably our last sort of pre-IPO raise. So it was a good opportunity to sort of check on where we stood in terms of building up shareholder value and also create an opportunity for liquidity for existing employees prior to an IPO.
00:52That's quite a definitive statement, our last pre-IPO raise. So you have a plan in place and a roadmap to do that?
01:00Yeah, I mean, no certainty. Obviously, it always depends on the market and on our own sort of growth in the next 12 to 18 months.
01:09But, yeah, we're feeling good about the direction we're going.
01:11Renaud, what's so interesting is the way in which Upgrade gets new customers. In many ways, you're cash flow positive because I'm many ways looking for that profitability metric because you don't have to spend loads on marketing because you partner with big businesses.
01:27Just tell us about how the business model has helped you weather what has been a real downturn for other neobanks during the 2021 earlier era as well.
01:34That's right, Caroline. That's really what makes Upgrade unique. It's our multi-product, multi-channel strategy.
01:43So we're fortunate to have six different products, mobile banking, credit cards, personal loans, and then some indirect products like BNPL, home improvement financing, and auto loans,
01:56where we work with partners to deliver financing at the point of sale, and increasingly these indirect products are really turning into good source of customer acquisitions,
02:09where we can acquire a customer for a not alone at a local dealer or for a home improvement financing at a local roofer or person who installs new windows.
02:20And then these become Upgrade customers, and they can, in turn, benefit from all upgrade products, including credit cards, including mobile banking.
02:32So we really created that ecosystem that benefits from multiple products.
02:37And many know you from Lending Club. Was it those relationships that helped you on the other side?
02:42Could you repackage these loans, perhaps sell them in bulk to, well, a community bank if it's relatively risk-free, or onto a private equity house if it's relatively risky?
02:51And I think auto loans come to mind when we're thinking about risk at this moment.
02:55That's right. So we've, I think, helped provide 45 billion in loans since we started.
03:03It's all, it's not all on our balance sheet. So we are certainly sort of, sort of, setting loans to loan buyers, and that includes a very broad range of buyers from small banks and community banks
03:16and credit unions that are going to focus on the, sort of, safest loans, to, sort of, private credit funds,
03:24securitization structures, where you can allocate the risks differently, and where, sort of, investors might be, sort of, willing to chase higher yield.
03:36Renaud, jurisdictionally, would you just reflect on the experience of leading this company and this startup?
03:41What is it like being a neobank under the Trump administration, for example?
03:45Are they friendly and cooperative in the things that you want to do versus their governance of traditional banks?
03:52Right. So, yeah, it's certainly a very business-friendly environment right now.
03:57But some of that translates into maybe a little bit less stringent, sort of, regulations at the federal level.
04:05But lending is also regulated at the state level.
04:09And I think whatever sort of relaxed standards we are getting on the federal stage, we're not getting at the state level.
04:20So, state regulators, I think, filled that vacuum left by federal regulators to a certain point.
04:27So, I don't think there's a, sort of, meaningful change in how, sort of, tight the regulatory environment is.
04:36Renaud, memories are short, but I just want you to reflect for a minute on Lending Club and what you learned there briefly,
04:42because there were issues there, and you did have to step down.
04:44I'm interested as to what you've learned from it.
04:46Oh, yeah, so much.
04:51Yeah, so I think the Lending Club was really the first, sort of, phase of FinTech, right?
04:57It was really, sort of, building up an entirely new industry with, sort of, very uncertain regulatory and compliance framework.
05:06Upgrade, ten years later, has really been part of that, sort of, second phase of the industry,
05:12where there's more of a, sort of, established framework, established rules of the game.
05:17And I think we've all been benefiting from that, and the FinTech industry has been, sort of, able to grow
05:23and now really, sort of, be a, sort of, strong challenger to the, sort of, more traditional banking industry.
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