Dublin Startup Stories: Linked Finance

Dublin startups tell their stories, powered by DCU Ryan Academy.

Meet Peter O’Mahony, Founder & CEO of Linked Finance.

Tell us about your service…
Linked Finance is a P2P business lending website that connects trustworthy Irish businesses with a network of more than 10,000 individual lenders. We are the perfect example of a ‘win-win’ business: our borrowers get the funds they need quickly and at competitive rates. They also get the opportunity to promote their business and build connections with our network of active lenders. Our lenders get the opportunity to make much better returns than they would with a savings account. They also get the chance to support their local economy and to avail of exclusive offers and discounts from the businesses they support.

What inspired you to start Linked Finance?
I first had the idea back in 2010, when the economy was struggling. Martin McAleese had launched the ‘Your Country, Your Call’ campaign, asking people to come up with ideas that would benefit the nation. My idea was Linked Finance. Being a business owner, I knew what SMEs were going through. It was difficult to access credit and I found it really frustrating.

We all knew that there were billions in household savings sitting there earning very little interest. We also knew that there were great businesses crying out for funding. It made sense to connect the two. The banks sitting in the middle of it all seemed happy to do nothing. That’s what inspired me to act. I felt that if someone could develop a clever piece of technology that brought the two together, we could get things moving again.

What market is Linked Finance targeting and how big is it?
The total Loan Book for Irish SMEs is €23 billion so the Irish market is very big. We are built to connect business borrowers with individual lenders. Irish household deposits currently stand at €90 billion so there is plenty of potential to increase our lender base. We’re here to serve trustworthy local business owners who need funds to grow and hard-working individual savers who want a better return. We’ve already facilitated loans to more than 300+ companies with total bids on the platform of more than €12.5 million. We’re only getting started: there are 28 markets in Europe for us to target as we grow.

What’s your business model?
Our model revolves around adding value on each side of the loan. For our lenders, we bring them the best SMEs in the market, we do all of the credit checking and screening, we manage all of the repayments and we give them access to a great platform that allows them to bid on loans every day. On the borrower side, we provide a lot of support and we work closely with the business owners to promote their loans to our lenders. In return for all of this we take a small fee on each side of the fence. For borrowers, it’s 2.5% of the loan amount and for lenders it’s 1.2% of funds deposited. All in all, it represents excellent value for both parties.

What was the funding process like?
I’ve heard some real horror stories about the trials and tribulations of trying to find funding but we were very lucky. We didn’t have the luxury of spending years tweaking the platform before bringing it to market. The SME credit crisis was persisting so we couldn’t hang around. We got our site off the ground and started bringing the concept to business owners and lenders across Ireland. It struck a chord. We got our first loans on to the site in 2013, more businesses and lenders soon followed and we were able to show that the idea had real potential. That made attracting investment a lot easier for us. We were able to show that we had real market potential. We didn’t just have a great piece of software or a unique concept, we had a viable product that we were already selling.

Who are your investors, how much did you raise and why does that matter?
We were lucky enough to develop a relationship with a VC company called Frontline Ventures. They have been great. They’ve recognised the potential and given us both the funding and more importantly the support to take this thing to the next level. You can’t underestimate how important it is to find investors you can work with. People who share your vision and are able to help you realise it.

What are the biggest challenges Linked Finance faces today?
The biggest challenges for us now is scaling. We have ambitious plans for growing the business over the next 18 months. That means our small startup is going to have to do a lot of growing up, while ensuring that we still provide the same great service to both lenders and borrowers.

What do you think motivated your investors to write that check?
The fact that we had proven the potential of the product. We’d shown it could work and we’d shown that there was huge potential.

What milestones do you plan to achieve in the next six months?
Since our first loans in 2013 we have seen bids totalling €12.5 million on the site. By the end of 2017 we are aiming to exceed €250 million.

What advice can you offer companies in Dublin who are just starting out?
Work hard and surround yourself with great people.

Tell us something you love about Dublin as a startup community and as a city?
I love this city. I think it offers the perfect blend of big city buzz and small town charm. You’ve got access to a great pool of talent. It’s a great place to start a business.

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