Last September Grupeer has launched #GrupeerVisits series, which introduces our partners to our investors and tells you their story from the first hands. Our first visit was to offices of a promising Latvia-based start-up Monify. They are specializing in lending to small and medium businesses up to Eur 100,000 in less than an hour! Currently, Monify operates in four countries- the Baltic States and Poland. If you want to read their premier article, press here.
This time we decided to give our investors an update, as plenty of new exciting developments took place since then!
Old spirit, new ways
There are so many new achievements that happened since autumn, however, what really stands out is that the company has entered the new development circle and can confidently say they are not a start-up anymore, but an established business with revenue, profits, and standardized work processes.
The biggest achievement that Monify’s CEO Artur Geisari highlights are that in February 2019 they have passed a significant milestone- issued Eur 1 Million in loans per one calendar month, 50 loans issued with average cheque Eur 20,000. This figure is achieved thanks to the introduction of a new product- 1-month free loan for up to Eur 30,000. This is a lucrative offering and many businesses decide to try.
Mission and principles have changed too: previously the mission was simple- issue business loans fast. The new mission that Monify wants to achieve: Instant and affordable business funding available 24/7/365 to every entrepreneur, at any stage, at any part of the world.
The new goal is very ambitious and to achieve this it was required to change the culture a bit. This sometimes is painful, especially in a relaxed atmosphere as it was before when people could play PlayStation to unwind. Now, every month each employee has a meeting with their manager to “sell themselves”, explaining what they did and why the company needs them. This sometimes is a tough procedure; however, it keeps the motivation level high and the employee productivity has improved dramatically- everyone works to their fullest. The culture at Monify was always inspiring and it is always welcomed to challenge accepted wisdom or the processes if they have something to improve.
Artur says that people are actually very keen to work in Monify and no-one ever decided to leave. Currently, the team consists of 26 team members. Some banking professionals are coming directly to Monify to pursue their career here. This happened with Andrejs Ananjevs, who previously was a head of lease department at Swedbank and he came straight to Monify to continue his career there. Also, the sales team has increased and is headed by the previous operations employee of Mogo. The brand recognition has definitely increased, especially after creative campaigns in Latvia that Arturs together with Chief Marketing officer Roman Shedlovskiy were authors of. On the recent TechChill event, an annual digital start-up and fintech conference, everyone knew who was Monify and gathered by their stand.
Addition of experienced banking professionals has brought more standardized procedures and systems to the workload. Artur has matured as CEO too, he changed his management approach, being more connected to employees, having lunches with each of them, talking on topics not connected to work. This helps to develop a trustful atmosphere in the company and to raise the team spirit. Also, it helps to know the real motives of team members, whether they want to grow or not and what are their goals.
The meeting room in Monify’s offices is decorated with funny icons, and when we asked about what do they stand for, it appeared they represent the serious new direction and values. For example, the picture of middle finger means that whoever is responsible for a certain function, needs to know everything that is going on there, “I don’t know” is not taken as an answer; or the picture of the brain, means you have to be alert all the time and use your brain. These funny reminders are setting serious principles for employees.
Transition from start-up
Monify is changing their legal set up and is becoming a joint stock company soon (they used to be a limited company before). Moreover, the company has already agreed to get their financial accounts audited by one of the big four accounting firms, to be able to access more affordable funding and have full account transparency. Also, it is important for themselves, to get confirmation that they are on the right track. The audited reports will be shown on their homepage, even though they are not required to do so by law.
The core competitive advantage that Monify achieved is the speed of issuing the loans. It takes 20 minutes to process a loan application, another 20 minutes to check the documents. Overall the client receives an offer within 40 minutes. Historically it was already fast enough- just under 2 hours, but there are no limits to perfection. No one on the market sends an offer to the client in less than an hour, so this is an absolute victory for Monify! They managed to achieve this due to the automation of many processes.
Monify mostly is not requiring the balance sheets, nor income statements to make a decision, as they don’t represent the current situation of the businesses. What they require is a bank statement for 1 year. In some countries, the client can connect their internet banking and submit the required information to Monify directly via secure API connection.
Contract generation is absolutely automated too, which is impressive given that Monify operates in 4 different countries with its own legal specifics and offers several products. With the click of the button, the client gets a contract in two languages- local and English including the electronic signatures. This has contributed to loan issuance in less than an hour. In the future, Monify wants to automate even more processes including marketing, accounting and to teach artificial intelligence to self-improve and make decisions based on criteria that are not even visible to the human.
Another significant achievement is that Monify has launched a new product and now can be proud that it takes just one week to do so. Also, they know that opening office and issuing loans in a new territory takes less than 2 months. Besides that, bad debts were collected 100%. The bad debt collection department has improved its work, using psychological tricks that help to improve the recovery rate.
Overall clients have matured together with Monify. Monify doesn’t lend to start-ups as often as they did before. The presence on the market and positive word of mouth have brought the confidence of more mature companies, with revenues from Eur 1 Million to Eur 10 Million. This has happened all over Baltics and Poland. The tendency towards less risky borrowers has brought the interest rate lower. They started with APR 60%, now it is around 48%. Moreover, the banks started to lend to small and medium enterprises more conservatively, especially in Latvia. A lot of established businesses were caught by surprise when banks closed their credit line, so they turned to Monify not to have operational disturbances. This has helped Monify to expand their client base and market share. The lending policy has changed to lower sums – now the first-time borrowers receive up to Eur 50,000 and returning clients up to Eur 100,000, previously the maximum loan amount has been Eur 250,000. The current loan portfolio is more than Eur 4 Million, consisting of around 300 clients.
Overall, the spirit in the company is very positive, as there is enormous demand for their services and they are ready to grow even more. The only thing that holds them, from expansion to new geographies is that there is room for growth in territories they are already operating. Monify has the capacity to lend more, however, they are becoming more standardized too.
Monify has built a win-win model. The investors earn interest and borrowers, the SME’s use money to increase their revenue, and don’t fall into the debt spiral. Loans are used not for luxury purchases or for indulgence, but for real business needs. Monify will grow even faster with the help of Grupeer investors and our investors will earn a premium return!