Josh Khoddami is the co-founder of Neu.Capital – the world’s first online marketplace for companies seeking $5m-100m outside the banks. Through innovative technology and a simple, transparent, competitive process, Neu.Capital ensures companies anonymously generate a wide range of offers from Australian and overseas investors in order to secure the best deal fast.
Investors such as: Private Equity, Family Offices and Mezzanine Debt Funds, gain instant access (at no cost) to a broad range of pre-diligenced opportunities across both debt and equity through their smartphone, tablet or desktop computer. Investors have total flexibility to propose their best solution to a given funding target.
… take a look at your current job, a past job or even your daily commute and go “what annoys me?”. Make a list, then brainstorm on how you would make that annoyance go away. This is a great way to get started with your first start-up.
Tell us a little bit about your idea and what made you decide to take the plunge and make it happen?
Today, there are more than 30 platforms globally that offer up to $1M of funding, but none that play in our space.
A lot of mid-market companies have grown with their banks and as a result don’t realise that there are alternatives to bank funding out there.
In small-to-medium companies alone, research shows one in six say a lack of finance prevents them from growing. And while there is a lot of focus on SMEs, there are no platforms for good, established mid-market companies that have been rejected for funding because they are outside the banks risk appetite.
Currently, mid-market CEO’s and CFO’s rely on small networks of who they know to raise capital outside the banks. This usually results in not reaching the right (or any) investor and abandoning their search for capital.
Technology can solve this problem by providing companies instant access to a diverse universe of investors who can solve complicated funding needs.
Please explain your business model for us?
The “Neu” in Neu.Capital stands for neutral. Therefore, we have been very careful about how we structure our fees in order to ensure there are no kickbacks that might cause a bias towards us promoting a certain investor or partner. This bias would eliminate the competitive nature of the marketplace and reduce the chance of the company getting the best deal.
To maintain this neutrality we only charge the company. There is a $5k listing fee and then we charge 1% of the final deal amount. We have purposefully kept our fees low in order to promote the use of advisors by companies. We want each company to successfully achieve their funding target but also gain the professional advice needed to ensure the structure of the deal allows for their long-term growth.
What are you working on right now and what are you most excited about in the next year?
We are putting the final pieces together for our launch in June which is very exciting after 15 months of development.
We are excited to be live and creating a healthy marketplace for Australian mid-market companies to get the capital they need to grow outside the banks.
How do you make ideas happen?
From experience. Edward Jones (co-founder) came up with the idea after spending the last 5 years going through the painful and time-consuming process of setting up competitive deal processes through the use of private networks.
What does your typical day look like?
I (Joshua Khoddami – co-founder) focus on our marketing efforts, Ed (Edward Jones co-founder) focuses on our strategy and product development while Cyrus (Cyrus Church – co-founder) is on the road meeting with companies and investors that are about to participate in our platform.
What challenges have you faced when starting or growing a business/organisation in Australia?
We were lucky to start Neu.Capital when the Tyro and Stone and Chalk Fintech Hubs were newly established. Both hubs have been excellent in guiding us through the challenges that every start-up faces. I would say our biggest challenge thus far has been finding the capacity to meet with all the parties needed in order to setup a healthy marketplace.
What is one idea you are willing to give away for free?
It’s not a specific idea but a way of coming up with new businesses. I would suggest to aspiring entrepreneurs to not get thrown off track by reading about the Ubers or Airbnb’s of the world and trying to come up with the next “unicorn” in an area where they have no experience. Instead, take a look at your current job, a past job or even your daily commute and go “what annoys me?”. Make a list, then brainstorm on how you would make that annoyance go away. This is a great way to get started with your first start-up. Best yet when you have to get funding the investors will see your past experience in that area as a huge asset.
Once you have gained experience in how to start a business then you can branch out with more “out there” ideas. I’m not saying you shouldn’t be creative, I’m saying the start-ups that I have seen be the most successful (not the ones in the news, the ones run by friends and family) all come from people working to fix a problem in an area where they are subject experts.
Who else do you think is doing really cool stuff in your industry, in Australia at the moment?
Skippr: They’ve built an amazing invoice financing platform in addition to cutting cash flow forecasting tools. On top of this, they are doing an excellent job educating SME’s and mid-market companies on cash-flow management. I’m a huge fan of companies that are put educating their clients ahead of making a quick sale.
Tyro Payments: Under the leadership of Jost Stollmann, Tyro has become the first challenger to fully compete with the established banks, which is incredibly impressive. Currently, they are working on some really innovative banking solutions including deposits and payment systems.
What about internationally?
Tesla, SpaceX and Hyperloop standout. Basically anything Elon Musk touches.
What role do you think business can play in affecting social change?
I personally don’t think businesses should try to create social change by themselves; it’s not what they are built for. Instead, they should empower their employees to drive social change by building in flexible structures that allow motivated employees to give back to the community. These programs shouldn’t be forced on all employees. Instead, it should be structured in a manner that allows motivated employees that believe in giving back to the community to use some office hours and company funding to affect social change.
Is there a particular charity or social enterprise you support?
I personally support Médecins Sans Frontières.
Name 3 websites you would recommend to our readers.
- Wait But Why – http://waitbutwhy.com/
- Both Sides of the Table – http://www.bothsidesofthetable.com/
- Tech Crunch – http://techcrunch.com/
We’re aiming to build a community of Australian idea makers helping each other. If you could have one question answered about startups, marketing, social media, accounting, monetization, product development etc., what would it be?
Where can we find some great stats on Australian mid-market companies?!?!? This market is mostly made of great Australian family run businesses and we think it is severely under-serviced by almost everyone. We would love stats on this market to see what else we can do to use technology to help their businesses grow.
What’s your favourite bar/café/restaurant?
Sabbaba – http://www.sabbaba.com.au/ – excellent food, it’s healthy and great service.