In the past few years, UK-based firm Lenderwize has sought to address a gap in the market by providing what it views as a much-needed funding platform for the wholesale industry. Co-founders and Co-CEOs Lawrence Gilioli and Augusto Pellegrini detail their vision for bringing the two worlds of finance and telecoms together and why this is necessary.
Like any other industry, telecoms relies heavily on transactions and trade for carrying out day-to-day business. Deals are continuously being made around the world, acting as a catalyst to the market’s players being able to operate effectively and drive innovation.
Maximising this activity so the market can run as smoothly as possible therefore depends on a steady and reliable stream of finance, including robust methods for obtaining capital. Clearly, that means the wholesale telecoms industry, as a cash-intensive business, can benefit from having more efficient ways of obtaining finance to broker deals.
Enter Lenderwize, a UK-based fintech founded in 2016 to address gaps it has identified in the telecoms industry for access to finance. The two worlds have not previously intersected efficiently, explain co-founders and co-CEOs Lawrence Gilioli and Augusto Pellegrini. This means there is a call for a system to enable better cash flow.
“The bottom line is that there’s a very basic principle in any trading industry, which is the more cash you have, the better you can negotiate with your suppliers,” says Gilioli. “Lenderwize is solving the payment mismatches in the telecom wholesale industry, which affect the entire industry – both for tier-one operators and for tier-twos and tier-threes.”
One of the problems, says Gilioli, has been that traditional finance does not grasp the world of digital commodities, as nonphysical assets that cannot be seen. “A bank or a traditional investor is used to real estate – to cars, to yachts, to photocopier machines,” he says. “They do not understand the digital world, which is why the entire telecom wholesale industry is undercapitalised. Banks are helping out a bit, but it’s only a fraction of what the potential is.”
Funding need
A key issue in the wholesale industry is that tier-two providers that sell to the larger, tier-one providers may have to wait 60 days for their clients to pay them, but at the same time often need to pay suppliers up front. This means they can lose deals if they don’t have working capital at hand. Tier-ones can also benefit from financing by being able to pay suppliers sooner.
In light of this, Lenderwize is providing supply-chain financing to tier-one players and trade financing to tier-twos and tier-threes, whereby it either purchases their invoices or lends them capital using the invoice as collateral. The aim is to help customers do more business, increasing their revenues and margins, and lenders to make safe investments and earn interest on deals.
Apart from telecoms wholesalers and mobile operators, the company also funds customers including digital merchants, billing aggregators and video-streaming providers.
Gilioli says there have been new lenders emerging for the telecoms sector, proving the need for this type of financing, but Lenderwize has a key differentiator in the form of a dedicated fintech platform to make the process much more efficient.
The platform, which uses a funding API, acts as an invoice marketplace for digital commodities including voice, data and digital content. It includes a database that shows payment patterns and helps to reduce risks by tracking transactions, verifying data in real time to validate services supplied on each invoice, and ensuring the absence of discrepancies between a client and supplier invoice.
“The platform is extremely flexible and modular, and we design it based on the needs of our clients,” says Gilioli. “We have a very sophisticated technology that allows us to mitigate risks, fund clients and speed up processes – so it’s faster payments, safer payments and bigger volumes. It’s a win-win for the tier-one, for the tier-two, for the platform, and for us.”
With the aim of ensuring that its service is highly robust and reliable, Lenderwize goes through sophisticated credit-vetting procedures and analysis of company financials, as well as buying services from companies that do worldwide credit assessments.
Wide experience
Gilioli and Pellegrini have extensive experience in a range of different parts of the telecoms industry. This equips them with the means to look at the market from the perspective of different kinds of providers, and the side of both large tier-ones and smaller players.
Both Gilioli and Pellegrini worked at multinational telecoms operator Netnet Italy in the late 1990s, after which Gilioli developed a call-centre franchise network and worked for London-based player Voip4ex, the developer of an online platform for the aggregation of telecoms wholesalers.
Pellegrini, meanwhile, also held various roles at Swisscom, including in key positions in the wholesale market. In total, he spent six years there in two separate stints, one in the early 2000s and another from 2008 to 2011. In between those times, he experienced things at the opposite end of the scale as a partner at a small international wholesale telecoms company.
“After I left Swisscom, I opened a wholesale company with three colleagues,” says Pellegrini. “We had the experience and contacts, and we continued the work in a very fluid and profitable fashion.”
While there, however, he saw pain points that he hadn’t really seen when working at a tier-one provider, though he knew some issues existed. “We experienced the liquidity gap and I learned to sympathise with the smaller companies by becoming part of that. We were on the other side of the fence and we encountered the problems that our suppliers and partners experienced before,” says Pellegrini.
This has helped really inform his insight into the needs of players in the market, experiences that came to fruition in the formation of Lenderwize alongside Gilioli.
Given the initial challenge of getting institutional investors to better understand the concept and its potential, it took some time and persistence to get them to open their doors to it, says Pellegrini. But things have really picked up now, with the pair’s extensive understanding of the industry and its strengths and weaknesses helping to persuade funders to come on board.
“Little by little, we were able to convince them, until we were able to show them materially our proof of concept,” he says. After funders saw how the business ran operationally and that it worked reliably and could be profitable, they have now actually started knocking on the door to enter this world themselves, says Pellegrini.
Growing interest
As a culmination of this spreading interest, Lenderwize has dealt with €350 million of invoices in the past 18 months alone. The firm also recently announced that it had received €100 million in funding from Fasanara Capital, an alternative lender in Europe, and has partnered with Allianz Trade UK for trade credit insurance – helping spur significant growth.
While the company’s systems are a big help to give smaller players in the market access to funding, they also serve tier-ones and aim to help the entire industry run more smoothly, says Pellegrini. “By providing the needed liquidity, we help bring the two parts of this world together, and as a result everybody wins.”
Meanwhile, he says that the company’s recent success has been achieved with a small team of only 15 staff. “We’ve been able to do these numbers with a very little amount of people,” says Pellegrini.
Though Pellegrini says the number will have to rise amid Lenderwize’s growth, leading to the need for extra hands and an increase in size of the IT department to enhance its technological edge, the idea will be to keep the number at 30 or so employees to ensure the firm remains highly agile. “We want purposely to be always that lean,” says Pellegrini.
But mostly, Lenderwize is looking forward to expanding its footprint within the wholesale market globally in the coming years – and Pellegrini believes the company has exactly the tools to do that. “We address the liquidity gap, and it solves the problem of a potentially vast number of wholesale telecoms players,” he says.
