Building an embedded lending infrastructure for SaaS platforms
About Richie AI
Ermek: At Richie AI, what we do is basically called embedded lending infrastructure, helping various B2B sales platforms. We enable marketplaces to do lending to their existing merchants. Think of it this way, there’s a large platform you probably know, Amazon, and they help their merchants grow by providing them with capital. That’s what we do with other platforms. We provide them with infrastructure so they can do it and help their merchants grow. We provide them with access to lenders with technology capital and compliance support. Basically, everything is in one place, and that’s what we would do.
The problem Richie AI is solving
Ermek: Ultimately, our biggest problem is we’re trying to help platforms grow. Let’s think of a B2B sales platform, and they have. 10,000 merchants. They just keep growing, but at some stage, they’ll just reach their full potential, and the growth will stagnate. Usually, when they ask merchants what would actually prevent merchants from growing, like the small guys? The biggest problem will tell you is that they do not have access to capital. Basically, the goal here is to help platforms find a way to help merchants grow. That’s basically where we come in.
If most platforms realize that today, they will need to do it themselves, it will take them six to eight months to launch. Instead, they can just come to us, and we can do it in as little as a day. That’s basically the key solution there. But capital is definitely needed. All merchants need capital to grow. Platforms have so much information about merchants they can make those loans cheaper for the final guy. And that’s one of the key aspects that we also push. Because just having some additional data on the, we can make loans cheaper. And that ultimately helps the final guide, that small merchant, with his growth potential.
How does it work?
Ermek: Once the platform decided that they actually want to want to help merchants grow and they want to do lending. They’ll come to a solution like ours, and we will integrate everything. We run a pre-qualification algorithm. What it does is that it goes through all the merchants of the platform anonymously, so we do not actually access the merchant’s personal data, just sales and transactional data. We can identify about 5-10% of merchants we think have the highest probability of getting an offer. Those guys will have an offer presented right on a dashboard. And if the merchant likes it, he accepts it. The platform has most of the data, so we collect that data, take some additional data, and then if that works, the loan gets funded, and then we collect money from every future transaction, the merchandise on the platform. And then the process just keeps repeating with merchants once they pay off the loan and so on.
Richie AI costs
Ermek: We actually do have a subscription plan for platforms. That can usually be somewhere between $500 to $2500 a month. Those are large platforms that actually utilize us, and that’s why it goes up. I’d say that the top three features of Richie AI are pre-qualification. It’s an opportunity to basically pre-qualify the guy and find the most qualified merchants. The second one would be to actually be paying from his future transactions, and the third one is the fast deployment, which means that we actually do a no-code solution that can be deployed in as little as 20 minutes. These are our key advantages and features.
How competitive is your market?
Ermek: Actually, this is a relatively new market. Embedded lending is almost like a fresh market. There are only two players playing on this field. A company called Parafin works with Amazon, and they started doing it a couple of months ago. So they’re doing it with Parafin. There are a couple of other players, but those are smaller. We work in more of a stripped environment where we make an open API. Any platform and specifically smaller platforms, not these huge ones like Amazon, but smaller platforms can launch lending, and that’s what basically differentiates Richie AI from the competition.
Starting Richie AI
Ermek: We started in 2019 and have been in business for about three years. I worked in lending for a long time. Actually, my personal background is in finance, and I worked in financial investment analysis and financial engineering. We started a couple of companies before, and then I landed in lending, basically, we got into lending. That’s when we got backed by a venture fund for the first time in 2019.
We started as a marketplace for small business loans ourselves. And then scaling, we tried to address some more significant problems, like how can we make loans cheaper? Data it’s understandable that the data is the way to make loans more affordable. We said, okay, data is the way. How can we make data? How can we access data? And that’s how we came up with the idea. Right now, we are nine people, plus we have a few scouts, so that would make the Richie AI team around twelve.
