In the Masters of Growth series, the founders of high-growth ventures across all of MaRS’ clusters share how they overcame the growth challenges surrounding going to market, hiring for growth, developing processes that scale and more. It’s a rare behind-the-scenes look into how these founders successfully scaled their companies.
Founders: Peter Kalen
Industry: Retail, fintech, merchant financing
MaRS cluster: Finance & Commerce
Team size: 50
Flexiti Financial is a Canadian sales financing company founded in 2013. It helps retail businesses increase sales by providing instant consumer financing at the POS, with higher approval rates and superior customer service compared to other providers.
Using Flexiti Financial’s award-winning mobile application process, customers can apply for financing and receive approval within minutes – no paperwork, no scanning and mailing, plus retailers get paid within two business days. Today, Flexiti financing is offered in over 2,250 locations across Canada. The company was named Best Emerging Consumer Lending Platform by LendIt, which recognizes Flexiti Financial’s platform as having the greatest potential to impact the future of consumer lending. Flexiti Financial is backed by some of Canada’s leading investors including Globalive Capital Inc.
Flexiti Financial has grown substantially since its founding. What were some of the unique challenges you faced when evolving from a startup to a high-growth venture?
We provide consumer financing at the point-of-sale, a system that requires a revolving credit card platform that benefits both the retailer and the customer. Managing a revolving credit card is significantly more complex than managing installment loans, which are typically employed by new entrants into the consumer finance space. The home improvement and auto lending spaces are well suited to installment loans, but the retail world requires a different approach.
Building credit card platforms and consumer lending offerings is notoriously hard. The capital requirements alone are daunting. To be successful, you need to have access to significant capital to create the necessary infrastructure and maintain the business. From the outset, we had to build a stable and secure technology platform and hire service staff, a sales team, plus senior experts in the credit card business and the adjudication process, before we made our first loan. This is a significant upfront investment for any startup.
With the fundamentals in place though, we were able to scale fairly quickly. Our sales and marketing team then became critical to building awareness and credibility amongst retailers to get them to switch from their current POS lender to Flexiti Financial.
Finding talent and building a team for a high-growth venture is difficult. How have you built such a talented team that’s already aligned to process and ready for growth? What are some of the tools, processes and thinking behind creating a culture that attracts good talent?
I spent the first 22 years of my career in the financial services industry, working for large financial institutions like Canada Trust, Citibank, PC Financial and Sears Financial. Throughout that time, I worked with a lot of really talented people. When I founded Flexiti Financial, I turned to many of my old colleagues, peers and employees to join me on this journey. The good news? Many said yes! As such, the team brings deep experience in the credit card and financial services industry. They know what needs to be done in the lending space, which is critical to our success.
The company continues to grow rapidly. In the past year alone we scaled from 18 to 50 people. Joining a company at this stage means candidates not only have to buy in to our vision, but also have to feel confident that we have the fundamentals in place and the leadership team to achieve our goals.
We foster a culture of ownership and innovation. Early on in the hiring process, all candidates are made aware that this is an organization of people who identify issues or challenges and are empowered to create and implement solutions. Finding candidates who align with this vision is crucial for our growth.
We work hard and play hard, with frequent monthly team-building events, staff lunches, and our soon-to-be unveiled ‘Flexiti Office Staff Lounge’.
How has Flexiti Financial landed larger clients, who might normally be resistant to working with startups since they believe it’s too risky? Was there one project or customer opportunity that became your tipping point? What channels have worked well?
Flexiti puts the mindset of retailers at the core of everything we do. We work harder than our competitors to understand the day-to-day realities merchants face in a fiercely competitive market. We offer extensive onboarding, training and marketing support to make sure retailers and their sales teams understand how to use our POS financing platform, and can effectively promote financing as a compelling option to drive sales. As a result, we’ve had some great success stories we can point to. Since implementing our process, retail partners have cited increases in sales that use POS financing of up to 380%.
This deep understanding of the retail space, coupled with our partnership-first approach, has helped us win over larger companies.
Many founders have experienced hardships on the journey to success; times when they did not think they were going to make it. Do you have any of these stories you can share, and how did you respond?
Flexiti Financial was born out of Wellspring Financial, which I founded in 2013. Wellspring was on a very positive trajectory, acquiring merchants and achieving new sales records on a daily basis. In September 2015, however, our senior lender pulled its funding due to circumstances beyond our control. This was a potentially fatal blow to the company, and I was left to raise emergency funds from existing shareholders to service the financing load. Sales continued at an incredible pace, but the funding wasn’t enough to cover the rapid growth.
I immediately began to source new partnerships and potential buyers, but each time, just as I felt I had found a solution, the deals fell through. In October 2015, I made the difficult decision to stop originations and let go of staff, in order to try to properly recapitalize the company. It was a very tough time for me personally, not to mention my employees, but I never gave up. By March 2016, I finally found another investor and was back in business. We rebranded to Flexiti Financial and I started rehiring staff. Many actually quit their new jobs and came back, which really meant a lot to me. We immediately started originating new loans and by June of 2016 won back our biggest client. We haven’t looked back since!
How would you describe where Flexiti Financial is on their growth journey and what’s next?
We have experienced very rapid growth over the past year – since April 2016 we have grown by almost 4,000%. The platform is now used in over 2,250 merchant locations and continues to break monthly sales records. Flexiti is hiring across many departments. We have great momentum.
Standing still isn’t an option of course. Like I mentioned, our retailers are our partners, and we put them at the core of everything we do. The retail space is a very challenging one, and merchants are looking for every advantage to drive sales and customer loyalty. Our job is to give them what they need by offering new technology and services to make point-of-sale financing easier and more readily available for their customers. We have a number of initiatives launching in the new year that we think retailers will find very compelling, including financing solutions to address the growing adoption of ecommerce in Canada. These are exciting times for Flexiti Financial. Stay tuned!