Fintech Payments

Sam Kawtharani from Seedlify on Capital-as-a-Service

Sam Kawtharani from Seedlify on Capital-as-a-Service.
Written by Phil Siarri

Phil Siarri talks to Sam Kawtharani, co-founder of Seedlify, a Montreal-based startup that specialises in Capital-as-a-Service (CaaS).

Hi Sam. Can you tell us about your background and your company Seedlify?

I grew up in Beirut, Lebanon, where I majored in Computer Science and Business Administration. I left the country in 2006 to join a UK-based company (KnowledgeView) as a remote project/product manager, and finally decided to move to Canada in 2009, and I’m happy that I did.

I’ve been working in the fintech space for the past seven years, specifically in the payment processing and alternative lending industries. As a product manager in the lending space, I noticed how the products out there are still structured in a traditional fashion. Technology has evolved, but the loan product itself hasn’t. Traditional financing doesn’t work for early growth and revenue startups. Exploring various way of finding entrepreneur-friendly risk capital, and after remembering a couple of Shark Tank episodes, I came across revenue-based financing (a.k.a. royalty financing). That’s when I decided to launch Seedlify, and brought my co-founder KC Chan onboard.

Seedlify is Canada’s first Capital-as-a-Service (CaaS) provider of marketplace revenue-based financing for early stage growth businesses. Our revenue-based financing is positioned as a credit facility that provides entrepreneurs with access to flexible capital for long-term growth without the restrictions associated with traditional debt financing or equity dilution. Our no-fixed-repayments approach means a business isn’t put under strain.

I like to consider Seedlify as a long-term partner for our clients. We establish relationships with business owners. That’s why we call it Capital-as-a-Service; making capital available to companies as and when they need it. It’s less risky for lenders and borrowers, and more likely to lead to long-term success.

What made you want to help small business owners and young ventures? Do you have a specific target market?

Working in the lending industry, I noticed how our underwriters rejected a lot of applications that could potentially qualify if there was a product that fit their needs and business model. Many startups in the early revenue stage don’t have a stable cashflow to commit to a traditional financing plan. To grow your revenues and business, you need more cash, and unfortunately there aren’t a lot of options out there. This is where we come in – filling the funding gap between VC/angels and traditional financing (banks, and so on).

Seedlify is focused on the tech industry, such as software, SaaS, tech services, digital media or similar online/digital businesses. Basically, any company with a stable recurring revenue in that space. Ultimately, we plan to expand our product as we see fit, but we want to stay away from the retail industry (mamas and papas shops) as we think it’s properly served right now.

What are the minimum criteria to qualify for financing with Seedlify?

Our risk models are still in the genesis mode, but we’ve already established our minimum criteria to pre-qualify a business. Seedlify’s minimum criteria are businesses in the industries I just mentioned (software, SaaS, IT services, and similar verticals). Because our financing plans start at $25k, we require a minimum of $8-10k per month, preferably from recurring revenue sources. The business doesn’t have to be profitable, but we require a gross margin of at least 25-30%. A business pays its monthly payment as a percentage of revenues, so anything lower than that can hurt their cashflow.

Seedlify is an FCP Fintech Studio member (a hub for the fintech community in Montreal). How did this partnership come about? Do you collaborate with other entrepreneurs within this collective?

When I first started Seedlify, I was looking for some financial help regarding a different project. I remember reaching out to the Montreal startup community on Facebook and I received a message from Tim Nixon (CEO of Payment Rails, an FCP Studio member) and Philip Barrar (CEO of Mylo, an FCP Portfolio company) about FCP and what they do. So, I reached out through their public Slack channel and I met with Dom Ferst and Jori Lacroix. Long story short, after a few interviews/meetings, they introduced us to the fintech community and offered us a space to work.

FCP Studio is a great space for fintech entrepreneurs. The studio is based on the concept of knowledge sharing and collaboration, which is very important when starting a company. We personally learned a lot, and the different discussions we had there helped us pivot to our Capital-as-a-Service product. Also, I think that the different events they host gives great visibility to the studio members and is a great networking opportunity.

What do you predict for the Montreal and Canadian fintech ecosystem in the next five years?

In general, the Canadian fintech system is two years behind the US, but there’s light at the end of the tunnel. The fintech space is growing and we’re seeing more startups with very interesting products at all verticals. The existing Canadian financial system allows for more innovative fintech startups to create something new, and collaborate to enhance the customer experience. That’s why the fintech revolution started in the first place.

The Canadian fintech system is two years behind the US, but there's light at the end of the tunnel Click To Tweet

I’m personally excited to see how the banks and regulators will adapt to the growing fintech scene. It’s already happening in the UK and US. I’m confident that we’ll start seeing growth at the level of insurtech, regtech and digital currencies, not at the level of startups only, but at the level of regulations and playing nice with the financial institutions.

How far are you in the product development cycle at the moment? Are you facing any regulatory challenges in regards to the CaaS model?

Seedlify is currently in the minimum viable product (MVP) development phase, and KC is spearheading the technology side with the amazing interns we have. Our current plan is to soft launch our MVP in April 2017 and test our model and platform accordingly. Seedlify carries all loans on the balance sheet, so we’re good to go at the regulation level, as we’re not dealing with any securities or related matters. We just need to follow the regular know your customer (KYC), know your bank (KYB) and privacy compliance rules.

Any plans for Seedlify to expand beyond Canada down the line?

Our plan right now is to bring a product that has been tried in the US and UK to Canada. For now, we’re focused on succeeding at home before expanding to other markets. The US market requires lending licenses per state, and we’re trying to start lean at the beginning to test the waters. However, we’re planning to expand beyond Canada down the line, and we’re already differentiating our product from the potential competition in other markets.

READ NEXT: Jean-Sébastien Drolet on crowdfunding portal RealStarter

About the author

Phil Siarri

Phil Siarri is an innovation management professional and fintech observer. He has been selected as one of Canada’s top 40 social influencers in finance, innovation and risk by Thomson Reuters, as well as top 50 fintech influencers in Montreal by FinFusion.

Leave a Comment