A Q&A with FastPay founder and CEO Jed Simon. The Beverly Hills, California-based company was founded in 2009 and raised $25 million in new funding in late June from Wells Fargo Capital Finance and SF Capital.
SUB: Please describe what FastPay is, and the value proposition you offer to digital media companies.
Simon: FastPay is a tech-driven finance company enabling digital media businesses to accelerate receipt of payments from their revenue sources. We provide large, scalable lines of credit to growing businesses quickly and with minimal friction. We aspire to be the Amazon Web Services of finance.
SUB: Who are your target users?
Simon: Our target users are growing, creative digital businesses—media publishers, ad networks, rep firms, DSPs, creative agencies, marketing businesses—for whom cash flow is a growth-limiting factor. We want to help these businesses succeed.
SUB: Who do you consider to be your competition?
Simon: Well, commercial banks simply are not lending to those who need it the most so they’re largely absent from our sector.
Angel investors and venture capital can be complementary products to ours, in some instances businesses using FastPay may not require any outside equity and in others, they can stretch out the timing between rounds increasing their valuation and minimizing dilution. Venture debt is an option to a very small subset of our potential client base, but venture debt is high-friction, inflexible and not readily available at the tempo our clients do business.
SUB: What differentiates FastPay from the competition?
Simon: Everything. Traditional lenders present 80 page applications which take months to process—our application takes 15 minutes—if you’re a slow typer—and we can approve clients within 30 minutes. Other lenders have “teaser rates” then load up on hidden fees which can double or even triple the cost—our pricing is completely transparent and straightforward.
Also, we don’t require personal guarantees—we base our lending limits upon the strength of a business’s customers—entrepreneurs are already “all-in,” so should they really be asked to put up their house and personal assets to get business credit? Finally, we don’t require long term commitments, or minimum uses—competitors try to lock you in for multiple years. We need to prove our worth to clients every day and like that challenge to deliver value.
SUB: When was the company founded and what were the first steps you took in establishing it?
Simon: The company was founded three years ago. When the music business started to decline, we sold DreamWorks Records to Interscope and I took a job in London overseeing international distribution and marketing for the DreamWorks’ film company. Very quickly I realized that I wasn’t excited about what I was doing—that’s when I started spending time researching entrepreneurial opportunities in digital media.
SUB: What was the inspiration behind the idea for FastPay? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Simon: It was more of a cultivated ‘aha’ moment, if that makes sense. I set up meetings with many of the growing digital media businesses in Los Angeles, listening to their challenges and seeing what we could build to solve problems. In back-to-back meetings, I heard the same challenge regarding timing of cash flow—I said I had the solution and then scrambled to raise the financing to offer it.
SUB: What have the most significant obstacles been so far to building the company?
Simon: By far the biggest challenge we had was finding a lender willing to work with us so we could leverage our own balance sheet. It took over a year, cost us hundreds of thousands of dollars, and was a painful process. For me, it clarified and validated our value proposition—we had a client visit us this week who joked that he had to fill out more paperwork to rent a jet ski last weekend than for his business to receive a $1 million credit line with FastPay.
SUB: You recently raised $25 million in new funding. Why was this a good time to raise such a substantial round, and how do you plan to use the new funds?
Simon: Initially, we had always envisioned our product to service smaller businesses seeking $250K credit lines. Unexpectedly, we’ve been getting approached by bigger and more mature businesses who need larger facilities and were attracted to our no-nonsense product. We did this larger raise to service this next opportunity set and to keep bolstering our infrastructure to improve our product and help more clients.
SUB: What are your goals for FastPay over the next year or so?
Simon: We want to keep growing, but to do so responsibly without sacrificing quality. For every hire we’re making on the marketing and sales side, we’re adding a position on the operations side to ensure we maintain this balance.
FastPay – www.gofastpay.com
