Prominent major investors recently provided Zurich-based fintech startup Teylor with 275 million euros to provide loans to SMEs. As company founder and CEO Patrick Staeuble explains, banks have neglected this segment.
Mr. Staeuble, Teylor is causing a stir among foreign financiers. What is the fintech's business model?
We focus on SME lending in Europe. If a small company needs a loan of 300,000 euros to expand its business, the entire loan process at a German bank branch can easily take three to four months. In Switzerland, it's similar. It's often an archaic and, above all, paper-based process that ties up enormous capacities. Smaller loans are therefore often not as attractive to banks due to the amount of work involved. At the heart of Teylor is a lending platform that offers a web-based application process. It simplifies this process and helps reduce costs.
What does that mean in concrete terms?
The entire lending process is digitized and automated, from customer and contract management to risk assessment. Using the platform enables much faster and more efficient lending to companies. With us, approval for a corporate loan takes just ten minutes.
«If you don't get through such difficult moments in the beginning, you will never really achieve great things»
We monetize that ourselves with investors who finance SMEs through our platform and through our fund. But Teylor also licenses the platform to financial partners, for example, banks that handle their loan processes digitally through our platform.
You are a young entrepreneur. Were you born with an entrepreneurial spirit?
No, my parents are not entrepreneurs at all. My father is a geologist, and my mother is a physics professor. I founded my first company during my studies, a translation platform. I found that very cool, exciting, and challenging. In 2014, I moved to another Swiss startup in Zurich, which grew so fast that it felt like I had a new job every three months. In the process, I was always learning something new, which was a lot of fun. That's when I realized that I wanted to start my own company again.
The path of a startup is riddled with stumbling blocks. What is the most important lesson you have learned as a founder?
It takes a good and professional team to build a company. Because you can never do everything alone. You also need staying power and great stamina. A few months after our launch in the summer of 2019, the Corona crisis broke out, the lockdown paralyzed large parts of economic life, and investors baled out. We could have just said, we're not going to do it. But we went through with it. If you don't get through difficult moments like that at the beginning, you'll never really achieve great things.
«I've always admired Travis Kalanick of Uber»
Which entrepreneur particularly impressed you as a founder?
I've always admired Travis Kalanick, the co-founder and former CEO of Uber. I never met him, but you hear that he managed to motivate the whole company with his energy, even in sometimes difficult times. The employees simply said to themselves, «We have to move as fast and as aggressively as we can every day.» Getting up every morning with that energy and urgency is very important and necessary to be successful. You can't lose that energy.
What were the biggest challenges in the early stages?
External factors such as Covid, the energy crisis in Germany, and the interest rate turnaround were the main burdens. In addition, a startup always has to demonstrate a certain track record in order to even get into talks with larger partners, banks, or other stakeholders. When our process works and the loans come back, we had to provide this proof of performance and grow at the same time.
Does Teylor still face that difficulty?
It's less of a problem now because Teylor is a certain size and has been on the market for a good five years, so that helps, of course. However, it is also difficult to find the right employees. There are always good people, but finding specialists who fit into the company, who want to work for you even though they probably earn less than they would at UBS or McKinsey, will always be a challenge.
What makes your company better than your competitors?
When I look at the market for digital SME loans in Germany or Switzerland, I see that the banks are hardly innovative in this segment. Over the last ten to fifteen years, most financial institutions have completely neglected the SME segment.
«It's my impression, German banks are more open to fintech and digitalization topics»
With our solution, I think we offer the best possible customer experience. Every customer has one point of contact, always the same one, and we always respond immediately. We also go out really aggressively in sales and try to win customers over. I don't think many are doing that right now.
What makes the German banking market different from the Swiss banking market when it comes to lending to small businesses?
It's my impression, German banks are more open to fintech and digitalization topics. If only because Berlin is an internationally important fintech center. Regardless of the specific SME lending topic, they are more open to talking about how to set up a fintech process. I think Switzerland is also a more difficult market for us because in Germany there is simply much more data that is publicly published and can be accessed. That is very important for our data-driven approach.
How many banking partners does Teylor have now?
In total, we have a dozen institutions using our platform. A third of our partners are traditional banks, plus alternative finance companies such as factoring, leasing, and private debt funds, as well as other fintechs that need our complete platform for their lending business.
Teylor recently received a 275 million euro financing agreement from Barclays, M&G, and other investors for a debt vehicle. How do you come up with millions like that?
After many sleepless nights and hard work. First, we analyzed how large American and British fintechs proceed and how they finance themselves. Then we pitched numerous financial companies, in Switzerland, Germany, the UK, and the US.
«There are now many more banks or investors looking to talk to us»
With Barclays and M&G, we found two partners with strong roots in the European economic area. They spent almost six months conducting due diligence on Teylor. As soon as this was completed, the management consultancy PwC put us through our paces. We also modeled our entire portfolio down to the last detail. This enabled us to achieve two decisive goals at once: First, of course, the closing of the fundraising. Secondly, we now also enjoy great confidence in the market because we were able to convince leading financial institutions of the robustness of our portfolio and our credit processes.
This financing has suddenly put Teylor in the spotlight. What has changed as a result?
Of course, it helps that Barclays and M&G are first-class major investors. There are now many more banks or investors looking to talk to us. That opens some doors for us. People now also realize that we're not just a fintech startup with a good PR department, but that we have a convincing and promising business model.
Are there any other transactions of this kind in the pipeline?
Not at the moment. We can work with the funds raised for the next one to two years. We are now preparing equity financing in the order of probably 15 to 20 million euros. I would very much like to have a Swiss bank involved. That would also help us to position ourselves better in the Swiss market.
How large do you estimate the market volume for SME loans to be?
Last year, 170 million euros in loans were financed through our platform under the Teylor brand. This year, we are aiming for 300 million. That makes us the largest fintech in our field in Germany. However, these are still small volumes compared to our large, traditional competitors. The German SME lending market alone has a volume of around 100 billion euros per year; across Europe, it's many times that. And the market is growing by around 5 percent a year. That opens up attractive growth opportunities.
Are acquisitions already in the cards?
Yes, acquisitions are an issue. If we want to become big as quickly as possible, we have to take advantage of a certain window of opportunity to be able to take a really dominant market position in the future. At the moment, there aren't that many other fintechs in our field, and most banks are still reluctant.
«I envision that in five years we will be active and have customers in every European country»
However, an acquisition must make sense from an earnings and revenue perspective and fit our strategy. Opportunities also arise from the interest rate turnaround, as refinancing has become more difficult for many fintechs.
Which business areas would you be interested in?
I could imagine taking over a factoring company. That's a very profitable business and a good addition. Companies that are active in the SME lending business but address different customer segments than Teylor are also interesting.
Where do you want Teylor to be in five years?
Our business model works, we have proven that in the DACH region. Now it's all about scaling. We have the opportunity to become a leading credit platform across Europe. I imagine that in five years we will be active and have customers in every European country. Ideally, we will also be listed on the stock exchange by then.
An IPO? In Germany or Switzerland?
I would prefer an IPO on Wall Street. But those plans are still a long way off. In general, I think there are few successful public openings in our industry in Switzerland.
Let's assume we meet again in a year's time. What would be the main topic of our conversation?
My hope is that I can say we've made it. We've hired the right people for our growth strategy and we're out in ten countries. I think this is the next big step for us.
Patrick Staeuble is founder and CEO of Swiss lending platform Teylor. Launched in 2018, the Zurich-based fintech startup is focused on lending to small and medium-sized businesses. The young entrepreneur studied economics at the University of Zurich, during which time he founded his first company specializing in translation services. The now 31-year-old started his career in the financial sector at Swiss fintech Numbrs, where he was most recently Head of Business Development & Store.
