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Being a woman in the brave new world of alternative finance: Don’t let other people’s limitations hold you back – Dr. Louise Beaumont, Head of Public Affairs & Marketing at GLI Finance

Finance

Dr. Louise Beaumont is Head of Public Affairs & Marketing at GLI Finance. She was co-founder of Platform Black, which subsequently went on to become a key part of GLI Finance’s lending business. Louise is an Advocate for Tech London Advocates, a mentor at Entrepreneur Academe and an advisory board member for Verifeye Media.

Louise Beaumont
Dr. Louise Beaumont

“…I just don’t notice any more when I’m the only woman in the room. I don’t let it limit me… Partly it’s about the limitations that other people put on you and partly it’s about the limitations you put on yourself…”

My career: A series of happy accidents with a good dollop of bloody mindedness

My career has been a series of happy accidents with a good dollop of bloody mindedness. I’ve an endless curiosity where I want to fix things. I’m also curious about things which don’t yet exist – I like creating new things.

So I went to work for a large technology firm called Cap Gemini to do all the things you would usually bracket under ‘strategic business development’. Where is it we want to go? What is it we want to do? Who is it we want to sell to? How can we sell them larger, more valuable things? How do we market those and how do we check we’ve done it in a way that it has made money and that hasn’t just been low margin revenue, so some of it has actually been profit?

I did that at Cap Gemini and I did more of the same for Siemens, but then I set up on my own, selling strategic business development services to other large technology firms. I had clients like Hewlett Packard (a company that was then called Logica), Vodafone, Adobe, Microsoft, as well as Siemens and Cap Gemini.

Preferred supplier status – a blessing and a curse

It was during this time that I made two fundamental mistakes, one of which compounded the other. Mistake number one was to become a preferred supplier for Siemens. I had no right being a preferred supplier for them – I was a tiny little consultancy company and they are one of the world’s biggest companies. Companies like Hewlett Packard are preferred suppliers to Siemens, not companies like mine, but I wanted to be a preferred supplier because then I could do bigger deals, so I succeeded and joined their list.

When you become a preferred supplier you’ve just signed your name to a hundred page contract, and secondly, they stop paying you in 30 days and start paying you in 90 days. They prefer you to such an extent that they allow you to subsidise their cash flow.

Mistake number two: I then compounded this error by winning a bigger deal, but the problem was they then said to me that not only was I not going to get paid for 90 days, I had to use subcontractors they liked the look of, and all of them expected to get paid in 30 days, not 90 days, so it was a huge problem to me.

The banks weren’t prepared to lend me any money – they weren’t going to give me an overdraft, they weren’t going to give me a loan. The only product they did have, which they were trying to persuade me to take, was invoice finance – and it was a shocker – dozens of different types of fees. They said, “We’ll take all of your other invoices, but we’re not going to take the Siemens invoices. Too much of your business is with Siemens.” It’s called a ‘debtor concentration limit’.

Passing along the pain – there’s got to be a better way

I explained all my other clients paid me in 30 days, but Siemens paid me in 90 days, so why would I do that? They basically replied with a version of ‘don’t know, don’t care’ so I thought: “This isn’t a product that’s going to work for me.” So I did the deal every small company does – pay when paid, I’ll take the pain but I’m passing it along.

So we proceeded, but it just made me think: “There must be lots of people like me. There’s just got to be a better way.” So along with a couple of colleagues, I co-founded a company called Platform Black, which GLI now owns nearly 84% of.

An accidental pioneer

We founded that company, scaled that company, got on with it, so I am an accidental entrepreneur in that regard. Or more accurately, I’d describe myself as an accidental pioneer, because when I came up with the idea with my colleagues, there wasn’t anyone in the world doing it, and that’s really scary. Whatever you do, don’t do that!

I was smart enough to realise we were setting up a new company with new product, with new technology. I had to go and persuade customers that we were the right way for them to go and finance their business, but what I hadn’t realised was that in order to be successful, we also had to create a new sector, which you would now call the alternative finance sector.

If the cake is big enough, maybe everyone can get a slice?

Red velvet cakeI wasn’t alone in that endeavour – there were lots of other companies out there which sprang up around the same time, and formed this alternative finance sector.  One of the things I tried to do was to get people to band together, and that is not an entrepreneurial trait. The entrepreneurial trait is: “You must die for me to succeed.” You might attribute this characteristic to the Y chromosome, but I don’t believe that others have to die for me to succeed. I believe that you can work in collaboration and achieve more. If the cake is big enough, maybe everyone can get a slice?

I did a lot of work and sat on a lot of Government working groups, and I argued over a lot of new legislation and regulation, to try and create the sector within which alternative finance companies could be successful. So my job at GLI, which plucked me out of its investee company that I co-founded, Platform Black, is to create the environment within which alternative finance companies can be successful, and secondly to work with those alternative finance companies in our portfolio to help them be more successful.

I didn’t ever wake up thinking: “I must work in finance!” What I do like doing is solving problems, and I like solving problems with technology – that’s what makes it scalable, otherwise you’re running a cottage industry.

There’s nothing wrong with cottage industries – I’ve run one myself (my consulting company that got me in to this whole area was a lifestyle business so I’ve got a lot of time for lifestyle businesses) but you don’t solve systemic problems with lifestyle companies. You can make a nice living, and you can have a nice life, but you don’t solve systemic issues in the economy. But without realising it, that’s what I started to do.

Developing a better, more cohesive alternative finance sector

There is no such thing as a typical day at GLI Finance. Some days might be spent in thought, cloistered away having enormous thoughts all on my own, and so days are external facing – collaborating, trying to help people work together, because it we work together, we’ll get a better, more cohesive sector, within which alternative finance companies can be successful, or more importantly, that our target group of SME [small and medium sized enterprise] customers can be successful.

As I know myself from my days at my consultancy company, Vector, it’s really hard to borrow money so you can grow your business, so I’ve been campaigning for a number of years to improve the financing environment for SMEs, and that means having to persuade government to pass new legislation, so that might mean meeting with the Treasury and talking to them about the legislation changes, or working with the FCA [Financial Conduct Authority], or sitting on government working groups.

Increasing access to finance for SMEs

So when the Chancellor asked the question: “This FinTech stuff is really interesting, what do we need to do for the UK to continue to be world-leading in 2020?” I sat on the working group (called the Blackett review) to try to answer that question and to help government understand what was needed to create an environment in which the UK can continue to be at the forefront of FinTech globally. I’ve done my bit over and above being a taxpayer!

The market for SMEs to acquire finance is a really tricky one because historically, what SMEs have done is exactly what I did – they have decided they wanted to have access to some lending, and they’ve gone to their bank. Since the financial crash, the banks have been less and less able (and less willing) to lend to SMEs because they are seen as riskier lending. Also the banks have de-skilled in this area, so they’re not best able to assess the risks an SME might present.

90% of SME lending is delivered by four banking groups that are doing less and less all the time, because they’re pulled back from it, they’re less able and less willing to do it and so forth. It’s tricky. So where does the SME end up going? The facts tell us that they mostly go to their bank, and if their bank says ‘no’, even informally, they go home. They don’t even try the next bank along the road. They just give in. According to the banks, they’re not particularly persistent.

Helping SMEs find finance – where there’s a will there’s a way

Downing StreetAll banks basically have undifferentiated ‘vanilla’ products, so perhaps the SME is right in thinking: “If the first one turned me down, the rest will as well.” This is the question that Number 10’s policy unit asked a couple of years ago. They said, “We know nothing we’re doing is working. Have you got any other ideas we could try?” And as it happened, I did!

A number of other people were also of the same opinion, which was what the banks need to be mandated (forced by legislation) to refer outside banks, so SMEs had other finance options flagged to them. They liked the idea of the mandatory referral and I sat on that working group as well, and we ended up getting that legislation passed in the Small Business, Enterprise and Employment Act within 18 months of first coming up with the idea. They really moved incredibly fast on that. (Government can move fast when it so chooses.)

What that means is when you as a business go to your bank, and the bank says: “No – we’re rejecting your application,” one of the things they have to do it to refer you to what’s called a ‘neutral finance platform’, and I’d persuaded GLI to invest in Funding Options, which happily has passed the Government’s test to become a designated neutral finance platform – in effect where the banks have to refer SMEs that they reject to. It was one of only three to succeed – over 30 applied.

So having championed the referrals idea, input to the legislation, and persuaded GLI to invest in a company which did what the legislation was going to want, I then worked with that investee company, Funding Options, to ensure that they had the best possible chance of being successful. So in the autumn, the mandatory referral process will come to fruition, and if you go to the banks and say, “I want finance,” and the bank declines you, one of the options you will be given is to be referred to Funding Options.

What Funding Options does is really smart. It understands what you need, and then it matches you to the type of finance which would be right for you, and to the companies which provide that finance, and to the right product within their portfolio – giving you a % match so you can find the best fit for you and your business.  And, most importantly, it gives you complete transparency on the whole market.

Impact of the referendum result on SMEs looking to secure finance

European newspaperThe decision that the great British public has made is an interesting one for the economy. I was just listening to Standard & Poor’s evaluation. A number of agencies have downgraded their credit ratings for the country. Typically, in times of uncertainty, what happens, particularly with regards to SMEs is that they just hunker down, and put growth on hold, they pause investing in their business, they protect existing business rather than trying to sell more. And that’s a natural human reaction because you don’t know what your finances are going to be like, you don’t know if your customers are going to cancel things.

So SMEs may well become more cautious about their investment plans, and they may put growth on hold, but what they will need to protect is their working capital (i.e. to have enough money left at the end of the month) to ensure all of their bills are paid, and that they are a good going concern.

Investors, however, are going to need to know that they can continue to make a return because interest rates are only going to go down, not up. A number of alternative finance funding platforms and funds offer attractive risk rated returns, so as with any investment, you need to understand the risks associated, but there is the opportunity to make the return should you so desire.

Selecting the right type of finance

Selecting the right type of finance for SMEs depends what it is you want to do as a business.

Equity crowdfunding – giving away a percentage of your business in order to get investment to fuel growth – has its place in the world. It’s democratising access to equity investing and gives the man on the street access to investment opportunities they would never previously have had. There are some great companies out there – Seedrs and Syndicate Room are good examples.

One the lending side, you’re good two types of option. You’ve got the ‘vanilla’ providers like banks. And then you’ve got the specialists – the alternative finance companies which identify a particular niche, specialise in serving that niche, really understand that niche, and are able to swiftly and efficiently, quite often underpinned with some pretty smart technology, serve that niche.

Both as an investor and as a borrower you want to know that the companies have got knowledgeable people in them, that they absolutely understand the market they’re serving, and the niche that they’re in, as well as what their product can, and most importantly cannot do. All of these are critically important.

Understanding what finance is right for your business

If somebody is trying to work out what kind of lending would be right for them I would always suggest having a look at the Funding Options site, because if you go through that two or three minutes of answering questions about your business, it helps you understand what type of finance is right for you, who provides it, what product, and what percentage match you have with the financial services providers.

In a world where there are lots of different options but most of them are opaque to you, it’s a really good (and free) way to understand what your options are. And if you choose to proceed – guess what? It’s really clear! You understand what you’re paying, and why you’re paying it, and you understand the value that you’re getting. It’s a next generation technology-based broker and a next generation solution to the problem.

The unholy trinity of male domination in FinTech

Man and woman face to faceThe reality that financial services is incredibly male dominated, technology is incredibly male dominated, and the FinTech bit is even more so because start-ups are incredibly male dominated, particularly if they are the technology and growth-type.

I’ve entered the most male dominated area that I could ever have possibly found myself in. It’s technology, it’s financial services and it’s start-ups. That’s the kind of unholy trinity for male domination. But there are some real positives here… For a start, our executive team at GLI Finance is 50/50 – we’ve got two blokes and two women.

I just don’t notice any more when I’m the only woman in the room

The other thing is that having been in technology for twenty plus years, I just don’t notice any more when I’m the only woman in the room. I don’t let it limit me.

Partly it’s about the limitations that other people put on you, and partly it’s about the limitations you put on yourself. I certainly don’t let the gender I happen to have been born into affect my perception of whether or not I can get a job done, whether or not I can lead change, whether or not I can create new products, or create a new environment for a new industry to be successful.

Quite often it’s easier to get people to work together if I’m coming at it from the angle of me saying: “OK, let’s work together on this, guys.” This is no compliment to me, but it’s seen as less of a challenge coming from a woman, and I’m as happy as the next woman to exploit that paucity of thinking. If somebody is really going to be that limited in their thinking then I’m quite happy to exploit it.

The other trick, and it is a trick, is if I think a person is going to be more persuaded by a bloke, I send a bloke. I’m not fussy about the mechanism. If somebody is going to struggle with the idea that they might be getting orders from a woman, I’m going to exploit that.

I don’t have time to create some kind of massive societal change, nor do I think I would be capable of doing that. What I can win are skirmishes and battles.

Becoming a business mentor and donating knowledge

I also do a lot of other ad-hoc things like being a mentor for start-up companies and for new entrepreneurs. Why do I do it? Because I’ve done enough things and got enough things right, and enough things wrong, to have a perspective which could be useful. This doesn’t mean that I expect other people to listen to me, and I don’t necessarily expect people to follow my advice, but nonetheless, I do feel the responsibility to give it because not everybody has to fall into every bear trap themselves.

As a race we should be able to learn, so if I’ve done things and they have gone well or if I have done things and they have gone badly then I don’t mind donating that knowledge. It is very much in that sense of being a donor, even when I’m an investor in a company like I am with Verifeye Media.

Entrepreneurs are difficult people – I know because I am one. They don’t always want to listen. They don’t always want to do as advised, and sometimes they just need to get to a higher level of pain to register that it doesn’t always have to be that way.

Start-ups believe they’ve got some genius idea, and it very rarely is. Mostly the technology may not be great, the approach may not be great, but there might be something there where you go: “Maybe this could be interesting…” When something catches my imagination and I think the people are fundamentally sound – and I mean by that both competent and decent – then yes, I’ll try and help. I’m not expecting my help to be acted on necessarily because they’re going to learn at the pace they learn.

Advice for female entrepreneurs looking to access investment in competitive market with a shortage of female investors

Female entrepreneurI did a BrightTALK recently on women in business and women getting investment and on that I had loads of statistics about investment and why it’s harder for women. The reality is that it’s harder for women.

I’ve advised having co-founders. If people find it easier to invest in a bloke you could either challenge every one of their gender prejudices – which they may or may not be aware of – you can challenge the fact they have no female investors in their VC [venture capital] firm, and that they don’t even have any female partners in their VC firm, or you could say, “You know what? I quite fancy getting the money sooner rather than later. I’ll send a bloke.” Sadly I don’t have the time or the power to drive societal change, but I can exploit a weakness.

It’s true that there are very few female investors. It’s true that there are fewer female entrepreneurs than there are male entrepreneurs. It’s true (according to some pretty decent research out there) that an investment pitch by a male voice is more likely to get investment and more likely to get more investment than the same pitch voiced by a female.

So you can either bitch and moan about that, or you can exploit it. One is faster than the other. One is more likely to get you money than the other. That may sound really cynical, but it just depends how long you want to spend trying to drive societal change. So what I’d say is: “Play the system, understand the system and exploit it.”

Coming up next

Now we’ve been put in the position of Brexit I’m pretty excited to try and work out what it means and to try and reassure SMEs that there are routes to securing finance, they just need to become better acquainted with them. Even though I didn’t vote for Brexit I feel that I’d better make friends with it because it will have serious implications for businesses, so now we’d better work out what it means.

 

https://www.glifinance.com/

https://twitter.com/GLIFinanceLtd

https://twitter.com/LouiseHBeaumont

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