Two entrepreneurs used the financial challenges of their youth as the catalyst for a business venture, writes Anneli Knight.
Entrepreneurs Sean Teahan and Greg Ellis enjoyed easy success with an online business they built and sold in Britain 10 years ago. But the past decade has been marked by lessons learnt the hard way, which helped them understand their customers in their latest venture, small short-term loans start-up Nimble.
The company launched six years ago, and has enjoyed rapid growth, featuring on BRW's Fastest 100 list - which ranks the growth of small and medium enterprises - for the past two years. Ellis says this financial year's growth has been the fastest yet for the business, which employs 80 staff at its head office in Southport, on the Gold Coast.
"We're still really warming up," Ellis says. "We are now pushing the accelerator to scale big and fast without too much risk."
The idea for a business that offers small, short-term loans to help tide over professional, reliable borrowers came seven years ago, when Teahan and Ellis, both 38, were reminiscing over the financial challenges they faced in their 20s.
"I had a flat mate and we were paid fortnightly on opposing fortnights and we used to be mutually financing each other until our next pay. Sean and I started talking about the idea of having a small loan secured by someone's next pay day."
The business they have created after many twists and turns, Nimble, offers short-term loans for up to $600 that can be approved online in less than an hour for first time borrowers, and instantly for accredited members. The founders describe Nimble as a technology business first.
"What we're doing is unprecedented in Australia. We've created technology platforms using mathematical modelling and algorithms."
The software that Nimble has developed not only checks traditional credit risk data sources for its risk assessments, it also scours the web to cross-check with other data sources. The software also looks at the way people enter the information into their application form: such as what they're doing with their mouse and how much time it takes them to complete fields.
"That sort of information helps predict if people are defrauding, how much they can afford to repay, and whether they can be approved."
Nimble also has a strong ethical underpinning to its loans.
"The real goal of the business is to only make money when people can afford to repay and in the few instances where they can't afford to repay we actually lose money deliberately because we are trying to incentivise Nimble to make correct lending decisions so people have positive experiences," Ellis says.
"Nimble doesn't have the draconian features that a traditional bank has for its customers. Other lending models are not really clear about what is happening and if you make a mistake you get penalised and you don't really realise until afterwards. We find that sort of stuff offensive," Ellis says.
Teahan and Ellis know how hard it can be to find that extra cash to make ends meet, and not just from their experiences during their 20s. While the pair enjoyed fast success in their late 20s creating and selling an online recruitment business, A-Team Health Recruitment, connecting Australian and New Zealand pharmacists with British retail chemists, the road was slower for their next venture.
They originally began Nimble, which until November last year was called Cash Doctors, as a shop front space in Southport, giving small loans to people off-the-street.
"We'd look at each other when the person came in and be very subjective about it: 'Is this person good for it?' We lost a bit of money through bad credit risk decisions, we lost money because we had to go in and out of a shop-front: we had to break a lease and we spent money on a fitout which we didn't use very long."
After deciding to change to an online model, Teahan and Ellis bought out a third business partner, and they both mowed lawns in Brisbane for a year to repay their debts and to finance their new idea.
Ellis is proud that most of the business has been self-funded. They started with seed capital of less than $200,000 - made up of their own contributions and from personal networks. And the nascent business survived setbacks when successive changes to credit legislation forced them to change their software modelling.
Last year, Nimble attracted the attention of private health insurance selector iSelect founder Damien Waller and board member Les Webb, who made a combined investment of $1.5 million in the business.
The injection of capital has enabled a national television and radio advertising campaign, which has driven a 300 per cent growth in new members in six months.
"We really feel we're just scratching the surface and it really is ready to multiply now, as we've seen a couple of companies do in the world once the technology is in place and they pull the trigger."
They're hoping it will change the way people access credit.
"It will be nice for people to see Nimble as an alternative in their financial arsenal. You can still get a cash advance on a credit card, but that's old school; that will be like a Gordon Gekko mobile phone today."