He is at the forefront of a revolution in financial services. Banks are ripe for disruption with the innovative technology that peer-to-peer lenders use to facilitate investments.
“Equity crowdfunding is a beautiful thing,” says Goncalo with a smile, flashing a neat row of white teeth.
SyndicateRoom is an investor-led equity platform that helps entrepreneurs raise cheap capital, providing better rates than banks for both consumers and investors.
It has raised nearly £17 million for users through its platform since launching in 2013.
In a short pace of time, UK P2P platforms have raised nearly £1.5 billion of funding for British businesses and individuals. The Peer-to-Peer Finance Association, a trade body, forecasts that lending will exceed £2.5 billion this year alone.
But in the US, the nascent consumer loans industry is rapidly growing. P2P lenders have already raised a total of $8 billion-plus for consumers and businesses.
Lending Club, the US’s biggest P2P lender, recently listed on the New York Stock Exchange, surging to a valuation of $8.5 billion. The company recently topped $5 billion in loans since its inception.
Renaud Laplanche, Lending Club’s founder and chief executive, graduated from the MBA at HEC Paris, a leading French business school, in 1995.
Renaud says its goal is to transform the banking system. “We believe we can make the system more cost-efficient, more transparent and more customer friendly,” he says.
Renaud is one of a bevy of MBA graduates at the helm of ventures leading the battle against banks.
In addition to SyndicateRoom and Lending Club, both CrowdBnk and Indiegogo, one of the biggest US crowd funders, were also founded by MBA graduates, the latter by Danae Ringelmann, who earned an MBA at Berkeley’s Haas School of Business.
While each business is slightly different in its approach, all four are led by entrepreneurs who count some of their success to the world’s top business schools.
Without an MBA, Ayan Mitra says he would not have launched his venture. “It changes your outlook towards life,” says the founder and chief executive of CrowdBnk, an equity and structured debt crowdfunding platform.
Ayan, who spent 17 years working in technology at companies including supermarket chain Marks & Spencer and Orange, the telecoms group now known as EE, launched CrowdBnk in 2011, after graduating from London Business School.
In that time it has raised and co-invested £7.4 million in funds for mostly SMEs, including the £1.5 million raised for LumeJet, a company that develops inkless printing technology.
Ayan acknowledges he would have a higher salary and a higher-profile job if he had stuck with his corporate tech roots, but an MBA spurred him to take what he calls a “journey”.
CrowdBnk differs from some other crowdfunding platforms because it directly invests in companies alongside the investors on its platform. As a result, it takes a minimum of three weeks for a project to get funded, “a lot slower than what the industry is used to”, Ayan says.
While other alternative finance providers are strictly equity-based, CrowdBnk also handles structured debt.
Debt is more liquid and less risky than equity, Ayan says, the latter a market in which angel financers are looking for the next Facebook or Google – so rare that investors call them “unicorns”.
Ayan believes that debt is the segment of the P2P lending industry that will “disrupt” traditional lenders, which cannot move as quickly and often lack technology.
“Alternative finance platforms are here to stay and [they] will change how the world works,” he says.
Many crowdfunding platforms are moving into the debt market. This includes Crowdcube, the world’s first equity crowdfunding platform, says Kieran Garvey, business development manager.
“It is always going to be far bigger than equity,” says Kieran, who studied a business-related MSc at Imperial College in London.
Crowdcube last year raised £36.5 million for more than 100 businesses, he says. “We’ve grown extraordinarily rapidly over the last few years." The platform expects to have 200 businesses funded by the end of 2015, he adds.
Traditionally, equity crowd funders have raised finance for small companies and start-ups.
But the trend today is that much larger companies are looking to raise substantial amounts of money in the alternative market, Kieran says. “That’s the really exciting area that we’re going to see a lot of over the coming year and beyond.”
The key to the sector’s growth is to generate sustainable returns for investors, say platform founders.
“It has to work for investors for it to be sustainable,” says Goncalo at SyndicateRoom. The company boasts success stories, such as Apta, a biosciences business that raised £1.85 million in funding through the platform, and e-Go, a maker of lightweight aircraft, which raised £950,000.
Goncalo believes his MBA has benefited the business greatly. He values the mind-set and confidence that business schools tend to spur, and also the network – his met his co-founder at Cambridge.
“Everyone wants to chip in with ideas. We had really valuable feedback,” he says. It also acts as a safety net. If his venture doesn’t ultimately succeed, he knows that he has the academic credentials to find a job and get back on his feet, he adds.
“It gives you that credibility. It opens doors,” says Goncalo, who worked as a senior engineer at Transport for London, the UK capital’s public transport network, before beginning his MBA.
This is a sentiment echoed by Ayan at CrowdBnk, who has hired heavily from London Business School in the past, he says. “The network has come in good. People back each other; that’s what you buy into.”
I have met the most competent and diverse batch in this school. These people not only thrive on their own but also makes sure that you are doing it with them. The professors will take your had and walk you through all milestones and make sure you are not left behind. I have found their extracurriculars extremely engaging. There was always a room to have social life after academic life. The only hindrance is the location of the school, it is slightly outside city and living in city is expensive.
Internationality and diversity of opportunities
About my programme I would say it is very international and flexible: we have the opportunity to choose exactly the courses we want. But at the same time, the frame of the campus is crucial in students' life and enable us to create friendships.
Great selection of people
While HEC's MBA is highly selective, I really enjoy the type of people HEC's selects to make sure everybody gets the best out of their MBA experience and networking opportunities. Not only it's an incredibly diverse pool of people (~60 nationalities) but most importantly they make sure to let in friendly empathic and curious people.
Best in France for Grande ecole
A prestigious business school. Languages are important. It is better to have a scientific baccalaureate with excellent grades in high school and good assessments. The courses are well designed as per the latest trends and practicality of learning in stressed upon. Overall, a very good experience.
Diversity and quality of fellow students
Very international and interesting place to be and opens a lot of opportunities, however the administration is very french and facilities are subpar (gym, classrooms) meaning the academic affairs is pretty much useless and lastly we are graded on a curve which can create a toxic environment because of the competition. With that being said the pros outweighs the cons by far.
The quality of the teachers, the campus, the clubs
The school is very international indeed, we have courses with international students and share things with them within the extra academic life (in the social clubs especially). We have great career prospects if we prepare ourselves well - however, the global curriculum is still very finance-oriented, which is a pity for other interesting domains of the company world, which does not rely on finance only. The social clubs are good practice for the management and for now, are quite independent.
HEC Paris awaits you
HEC Paris is really a nice place to do a master's in business. Many classes are useful and interesting (corporate finance, financial accounting, contract law…), some are less - but the curriculum is to be reviewed in the year to come. Regarding the student life, it is incredible, with about 130 clubs, lots of great parties with even greater people. The Jouy campus offers a lot of opportunities to do sports, and you can breathe fresh air every day. HEC also helps a great deal to find an internship or a job.
A dream institute
Enrolling in the HEC MBA was by far the best decision I made for myself. The people and faculty are great, with lots of opportunities to meet people and expand your horizons. Very nice campus where I have had some good running sessions. The alumni network is superb and very helpful. It also has a good support system for entrepreneurs. Would definitely recommend it!