Small businesses are hard, risky endeavors. 28 million small ventures that are truly the backbone of our economy. From the neighborhood pizza joint, your favorite bodega, to the caterer at your wedding, all the way to the fine folks reviving manufacturing in the rustbelt. Small business are the heart of our economy. To grow, businesses often need financing to take advantage of a great opportunity like that second location across town or that big wedding which can make rent and payroll for the next two months.
Yet, bank lending to small businesses has declined every year for the past five years. It seems banks often think it’s too risky and costly to serve small businesses. Your definition and my definition of small business may also be quite different from that of banks – in the US, banks often define small business as companies with up to $50m+ in sales!
In June 2013, my colleague Rodolfo Gonzalez insisted we had to find a way to meet this company he had been tracking for a long time. OnDeck had the best reputation of the industry, and we were intrigued. They had just rejected an acquisition offer from Wonga and closed a funding round. They say the best time to build a relationship with a company is when they are not raising. Sure enough, a string of mutual visits ensued. I was impressed to bump into Noah Breslow and team all the time on the road – at conferences, talking to customers, knocking down big partnerships. Customers and partners love the company. Noah’s caliber is only matched by the quality of his team. I am still struck by their single-mindedness of achieving the mission to fund small businesses.
At Foundation, we know that it takes unique focus to transform financial services. This is absolutely reflected in OnDeck’s culture and focus on technology that changes small business financing. Noah’s personal responses to Yelp reviews and his multiple customer tours across the country attest to it. Stories of sub-teams taking multi-hour long calls out of closets as the place is bustling remind us of the sacrifices that scrappy small business owners make to build their business. A view into Noah’s office can attest to how special OnDeck’s culture is. We at Foundation Capital are deeply honored to be part of OnDeck’s journey and celebrate our second IPO in the financial services space in one week.