Disruption of private capital markets

Nelson Chu is the founder and CEO of Percent, a global leader in lending innovation and the single source for seekers of private capital. Founded in 2018, the company leverages proprietary technology, integrations and data to bring unprecedented transparency and efficiency to lenders and credit transactions.

Prince: How does your private credit investment platform connect investors to originators, and vice versa?

Chu: Percent is more than an investment platform. We are a core infrastructure and service provider for all participants in private credit transactions, including investors, originators and beyond. Our bespoke institutional offerings help connect originators to hundreds of millions in capital.

For originators, we designed Sync to help them efficiently manage all their debt capital needs. Sync helps accelerate the growth of originators of all sizes, providing them with the ability to raise debt capital on Percent at the lowest possible cost, through our dynamic market pricing and standardized terms. As this side of a multi-trillion dollar market is plagued with inefficiencies, Sync helps originators streamline all aspects of their business.

On the investor side, we offer investors and institutions high yield and often short-term investments in notes from our growing list of originators. An originator can easily set up and manage a new investment opportunity using Sync, opening it up to thousands of investors on our platform. These types of investments were once only available to a select few, but Percent makes them accessible to any accredited investor in the United States. Institutional investors have the possibility to invest in tailor-made offers adapted to their needs and mandates. Best of all, our investors love it, as over 68% of them have invested in more than five deals on our platform.

Prince: What lending industry need has Percent been able to address with its technology platform?

Chu: The private credit market holds untapped potential, especially in the explosive space of technology-backed, venture capital-backed non-bank lending. These disruptors and innovators are becoming a central part of the lending market, but since they are not banks, they need access to debt capital to lend. Prior to Percent, they were beholden to legacy markets where there is no infrastructure to support the arduous process of raising and managing debt capital.

Percent was created to solve this problem and more, bringing efficiencies to the lending market like never before. The combination of Sync for originator lenders and our investor platform for capital allocators is a powerful combination. By seamlessly connecting capital seekers to capital providers and using technology to optimize pricing and market demand, what was once a six-month process can now be completed in weeks with better results for all. the people involved. Lenders benefit from the lowest cost of capital in the market thanks to investors seeking yield in this low rate environment.

Prince: What do you think has most influenced the lending industry over the past year, and what’s next on the horizon for this space?

Chu: Covid-19 has had a significant impact on the lending industry. Alternative lenders have taken the initiative during the pandemic to continue to support the livelihoods of consumers and small businesses who have been disrupted by systemic shutdowns of the economy, while banks have cut all non-essential lending. Fintech startups stepped in and facilitated PPP loans and extended other forms of capital to small businesses at a faster pace with more transparency, while banks’ legacy infrastructure crumbled under the demand hitting their sites. website.

This has fundamentally changed the way many borrowers view loans, and the private debt market continues to grow as more small and medium-sized businesses turn to fintech lenders for their capital needs. Percent is the partner of choice behind the scenes, powering many of these up-and-coming fintech lenders and their hundreds of thousands of borrowers, both small businesses and consumers.

In the years to come, the maturation of the basic infrastructures developed by fintech companies will enable a level of efficiency and transparency that would rival traditional public markets. As a fintech company taking full advantage of these advances in the ecosystem, Percent uses transparency to help generate more liquidity in the market. With greater transparency and efficiency, there is more interest, more demand, and ultimately more capital to support the growth of credit markets.

Prince:How will Percent evolve to meet any changing demands in the private credit space?

Chu: The low interest rate environment that has persisted for several years has led to significant demand for private credit. We believe this will continue even if rates rise slightly this year. As a fintech company with no legacy infrastructure to slow us down, we easily adapt to any situation that arises: interest rate hikes, bearish macro indicators, steep stock market declines, and more.

The Percent platform is well suited for growth in the rapidly changing private credit space. The data we capture and synthesize for originating lenders lets them know how the market is reacting to their assets in near real time. Whether rates are rising or holding steady, they will know precisely how investors are feeling and, by extension, how much capital is available to them at any given time. During the extreme volatility of March and April 2020, Percent’s platform let the market determine prices and, in turn, we were one of the only platforms to continue to extend capital when these lenders had the most. need.

We are focused on pursuing innovation in space. Efficiencies that compete with public procurement offer opportunities to create new products that reflect the changing interests and needs of market participants. Our new blended ratings embody this as they were a direct response to investor feedback on the increasing diversification of trades in their portfolio. In an industry that has seen only direct investment in specific lenders, we have stepped outside the box to create something truly unique that reflects the changing needs and demands of a private credit market that matures every day.

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