PODCAST TRANSCRIPTION SESSION NO. 249-STEPHEN DASH Welcome to the Lend Academy Podcast, Episode No. 249, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of the LendIt Fintech Conference. (music) Today's episode is sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today's challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com Peter Renton: Today on the show, I am delighted to welcome back Stephen Dash, he is the CEO and Founder of Credible. Now, Credible is a really interesting company, they're an online loan and marketplace in several different loan verticals and we get into all the details of that, of course. They're also interesting because they did something that very few fintech companies do, actually went public on the Australian Stock Exchange back in 2017. Stephen talks about why he did that, he's a fellow Aussie just like me so, there's certainly a connection there and he also sold his company in 2019 to Fox Corporation which was a very interesting move and so we go into some depth into the details of that transaction, why Credible did it, why Fox Corporation did it and what it means for the future. We also talk, obviously, about the current situation today with, obviously, loan volume down in many verticals. Stephen goes through all the different verticals and so gives us an update on what's happening and what his loan partners are doing. It was a fascinating interview, I hope you enjoy the show. Welcome back to the podcast, Stephen! Stephen Dash: Thanks for having me, Peter. Peter: Of course. So, last time we chatted it was back in 2016 and quite a bit has happened since then, irregardless of what's happened in the last two months. So, maybe we can get started by giving the listeners just a little bit of background about the last couple of months, what it's been like for Credible. We'll get into sort of the acquisition thing a bit later, but let's just start there. Stephen: Yeah. Well, like a lot people, it's been a challenging couple of months in the operating environment, obviously, with shutdowns and all that kind of thing. The way we've dealt with that, the whole company started working from home in sort of mid-March, before the official shutdown started, and that was I guess a real benefit of being built on modern infrastructure. www.lendacademy.com ©2020 Lend Academy. All Rights Reserved. We were able to very quickly mobilize the team to be working from home, we had all of the kind of core infrastructure in place to do so and so we implemented a couple of policies and procedures and a little bit of training for the team, but that was.....you know, looking back over the last few months, it's been really quite seamless, that's been good. The second thing we did is we implemented….. we paid for everyone's health insurance in the company for six months to take some pressure off a lot of the stresses that we knew that our team members and the families of our team members we fighting so, that was also very well received, but, it's been a tough environment from a lender perspective. Our lenders have been under some pressure, particularly those that are funded through wholesale funding markets and ABS, etc. So, we've been doing a lot of work with our lenders trying to help them through and where we can, you know, try to provide data insights and things like that, but it's certainly been a different operating environment over the last couple of months, not just for us, but for everyone. We're carrying through and very happy with how the team is working in this more difficult operating environment. Peter: Right, right, okay. So then, I want to go back and start this sort of conversation back in 2017, right, when you did an IPO, an IPO in the Australian Stock Exchange, it's not typical for a Silicon Valley-based, or California-based fintech. So, tell us a little bit about why you decided to go public, one, and then why you decided to go public in Australia. Stephen: They are linked, I’ll say that, and also say that it's becoming more popular. We were one of the first, we're certainly one of the first, it's becoming more popular as an alternative to growth stage capital, go public in Australia. Now, the ASX, the Australian Securities Exchange, is positioned as, or is positioning itself as a junior NASDAQ and I think I use those words where a growth stage company can go public much earlier than they would in the US or the NASDAQ, or the New York Exchange. And so, we basically lined-up our capital alternatives, our funding alternatives in really was private capital in the US, or would go public on the Australian Exchange. And, when you do the metrics of pros and cons, going public in Australia made sense for us and there are really three reasons. The first, majority of our investors pre the IPO, so our seed investors, our Series A investors, our Series B investors, are all from Australia, or that part of Australia and Asia and so, we had a reason in that sense from an investor perspective and a following in the investment community Down Under made it attractive. Second reason was ongoing access to capital. So, many people don't know that in Australia, on the Australian Exchange, it's very normal to raise capital on an ongoing basis in the secondary market and that's a function, as you'd know, of having many mining companies and mining explorers listed on the Exchange down there. So, there's a mechanism where you can raise up to 15% of your market cap per year and it's actually waived at the moment. I think it is 25% through the crisis through, basically, placement of securities so it's a low dock, quick process to www.lendacademy.com ©2020 Lend Academy. All Rights Reserved. raise additional capital. Ultimately, we never needed that, but that ability to raise capital...you know, of course things need to be going well and so on, but raise capital quickly was really appealing when I lined it up against private capital. And then, the third reason, from a capital perspective that the ASX was attractive, is when you IPO, as you know, the capital stack falls away. So, all of the terms and things, the preference stack, etc. associated with any capital that sits ahead of common stock for the employees and myself falls away when you go public, whether you go public in Australia, or you go public in the US. So, when lined up against private capital, for us it made sense and it was an attractive alternative so we went down that path, we listed in December 2017. Peter: Right. We should also point out what the Australian.....it's unusual for smaller companies to list in the US, but it's really very typical in Australia because it’s not the VC money that you get in Australia, companies tend to go public early on, Afterpay have been in public for a long time. Whereas, in the US, most of the companies are just staying private for a very long time. Stephen: Yeah. Incidentally, we were the largest technology IPO in Australia in 2017, US$200 Million so... Peter: Yeah, yeah, wouldn't have made the top ten in the US. Stephen: Not quite, and the costs are different as well. The cost of listing is different in Australia, it's sort of set up for growth stage. The growth stage investment market is really a listed...a public market. Peter: Right, right. So, I want to fast forward through to 2019. Yeah, you were a public company for a little while and then we all heard of it one day that Fox Corporation had agreed to acquire you guys. So, maybe start with telling us a little bit of the back story there. I mean, did you have connections at Fox, it did not seem like an obvious acquiror of someone like Credible. Stephen: Yeah. So, the short back story is we were talking with Fox about a commercial partnership. For a lot of fintech companies, customer acquisition is the number one thing that keeps people up at night, like I've got a great product and they're obviously all linked, but how do I acquire customers, how do I scale the business. And so, we've got hundreds of partners ranging from alumni associations for our student loan business, to financial aid officers, to online affiliates and publishers and content sites, and the media was a natural conversation as a category for us to have conversations with. So, we started the conversation with Fox principally around the Fox Business and FTS, the local TV stations that are owned and operated by Fox Corporation, but, principally, Fox was looking to and is now in the process of implementing a strategy around Fox Business that's focused on personal finance, among other things so, that's where the conversation started.