Boaz Yaari has brought a whole new investment product to the market with his bold fintech startup. A fast-growing venture that has already attracted close to $80M from notable investors such as WestCap, Citi, EJF Capital LLC, Optiver PSI, Maverick Ventures Israel, Blumberg Capital, SixThirty, Rhodium, and the Kessler family office.
In this episode, you will learn:
- Spotting and riding super trends
- The future of securities lending
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About Boaz Yaari:
Boaz has 20 years of experience in capital markets, from derivatives trading to portfolio management in banks and leading European hedge funds (Brevan Howard Asset Management, BlueBay Asset Management). During that time, Boaz discovered the inefficiencies and inequalities in the securities lending market and developed the vision from which Sharegain was born.
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Connect with Boaz Yaari:
Read the Full Transcription of the Interview:
Alejandro: Already hello everyone and welcome to the deal maker show. So super exciting founder that we have today building scaling financing I mean all the above. We’re going to be talking about it and we’re going to be talking about going from the banking or hedge fund industry to really you know, starting your own business. And all the above so without further ado. Let’s welcome our guest today bos yari welcome to the show. So originally born in Tel Avib so um you know quite um, you know, remarkable parents.
Boaz Yaari: Um, thank you a None for having me.
Alejandro: You know your your mother you know a survivor you know also of the holocaust. So tell us you know, give us a little of a walkthrough memory lane. How was life growing up.
Boaz Yaari: I said you know Tel Aviv back in back in seventy s eighty s it was I felt like ah like a village and and it grew. Um, super interesting time at a fairly good childhood and my mother you know as you said correctly, she’s a holocaust survivor. Um, she was a small child and a baby but back then but the holocaust but but you know but the stories that you hear and and how the the way that she was brought up is yeah puts everything in life in perspective right? and so we had a lot of a lot of love. But but but I just like to call it tough. Love. Um, um, but yeah, but but the remarkable thing you know, but my mother is that she’s ah she’s she’s ah she’s an internal optimist as I like to call it. She always chooses to look at the glass half full with everything that she’s gone through she always chooses to say to look at the glass half full and always tells us you know it’s a muscle. So from my point of view I think this is something that I always try to remember and take away through my through the journey of my life.
Alejandro: Now it’s interesting because in your case you know is he no no background in tech and and here you are you know in the in the tech startup world right? and and we’ll talk about that just in in a little bit but but for you you know like as part of being in Israel. It’s important to to. To to do the army right? And it’s it’s you know the training that you have to go through and in this case, you were a paratrooper and you know I’d like to ask you how I mean for for everyone in Israel. They have to go through this but I guess for you what kind of ethic you know work ethic and and and and. And perspective and desire did it give you to really you know tackle your life in the way that you do right.
Boaz Yaari: Yeah, it’s a great question I’ve been thinking about this a long time and and I think I was you know a lot of tech founders. The Rovi Israeli tech founders have you know coming from different units from the Israeli Army Intelligence units that have been. For decades. Um, you know the bedrock and and and um for for for cybersecurity and software engineering and I and I was as as they like to call in. You know the ones that are being pushed out of planes. Um, but but moreover than not, you know the thing about being a pararoop and I in the last year was also the leading navigator of my team that led the unit that led the the the regiment that led the the brigade that led the division if you really think about that and and and and then you you know that thing has led. Ah, me through my life if you know a leading navigator means that you’re not commanding the force but you’re you’re the you’re you know you’re the ones that go you know you’re the the one that goes upfront and needs to take a lot of decision and a lot of people are counting on you and there’s a lot of you know, um, you know working under. Extreme stress and and and and very little visibility and and a lot of volatility. So if you think about that and and and I love that and I love that throughout my entire journey back when you’re you know, 19 or 20 don’t really grasp, but what you were doing in terms of having responsibility on the lives of. You know hundreds and if not none of people. But I think that also led me to be you know also a portfolio manager in different hedge funds. Um, because it’s the responsibility right? managing you know millions and hundreds of millions of of of investors money. And then leading share gain and it’s all about you know, founding a startup and and and tackling a big problem I I guess I guess I kind of like being you know, leading leading and being front and and doing everything firstly by myself and then leading the way. And maybe having the responsibility of of all the people you know with me probably something that if you look back I think it goes across it weaves through creates ah interesting tapestry.
Alejandro: Now your case after this, you studied a combination of law and business. But you didn’t do much with law. Why was that the case.
Boaz Yaari: Ah, yeah, um, yeah, it’s ah yeah, my interesting story. Why did I actually choose law right? It’s so far away from me. But um. Being the geek that I am I used to there was back back then the show in the eighty s I don’t recall called la law and la law. You know I used to love that show and I and I saw them you know that. I saw them in the in court and everything and I told to myself I want to be exactly like them and then you find that reality is not really like that and that actually being a lawyer means you know you appreciate papers and 80% of the time. It’s very you know it’s very arduous but I always found that you know the fact that you know, um. The one that you’re dealing with is your adversary and and it’s all about and it it. It created a lot of mistrust this is a lawyer you create a lot of mistrust and I didn’t like that right and I wanted to build and and and it’s at the age of back then was it 20 um, 26 um I I found to myself. You know my band back then woke up one day and I told my girlfriend my wife I told her you know I don’t want to go to the office and she told me if that happened you did 26 what have at the age of 40 that day I resigned. And I thought to myself. This is not a way to to to so you know follow my career and and and one of my biggest passions was trading so I thought to myself you know, let’s find a job in trading how hard can it be? um and from there on I became an fx derivatives trader and one of the biggest banks in Israel and the rest is history. Um, but I being I found that you know following your passion is something that is extremely extremely important and you shouldn’t be afraid of you know, even if you did a mistake taking a stopless understanding and trying something else.
Alejandro: And in this case I mean you, that’s that’s the way that you enter the financial services space. But but you ended up switching to hedge funds and you know going from Israel to London so how was that transition like yeah.
Boaz Yaari: You know when Israel Israel capital markets has always been and back in the days I’m talking about 2004 to so 2005 you know up until 2007 and 8 before the global financial crisis um Israel was almost an island of its own right? The ethics ex was the biggest. You know, equity and equity trading wasn’t a big thing um or wasn’t as evolved as it is right now and and back in 2007 I felt obviously I got an offer from ah from a great hedge fund back in the days. Ah breven howard asset management which was one of the prominent hedge funds in Europe back then but moreover. I felt to myself that you know there’s some sort of a glass ceiling in Israel and and and and for me the way to really leapfrog and and try to you know, challenge myself was to you know, throw myself into the unknown one of the things I love the most is being the stupid person in the room. Because you know being the smartest I don’t like it I feel that you know I like to learn stuff I like to learn stuff I like to challenge myself and others. So the fact that I be you know from feeling them one of the um, strongest in the israeli market to one of the um. Less experienced and in the Uk market which is extremely extremely interesting and and and diverse in terms of capital markets make me feel really good and super stupid interest me and challenge me.
Alejandro: So how was that experience you know in the hedge fund you know on the buy side because I mean you did that for 7 years so I mean it’s a quite a bit of time.
Boaz Yaari: Listen I It’s ups and downs right? A lot of volatility right? You’re very Happy. You’re you’re as happy as your p and a is it like when you make a lot of Money. You’re very happy and your ego is very high and when you lose a lot of money you blame everybody else, but yourself, but but but at the end of the day extremely. Extremely extremely important part of my life because that taught me a few stuff that taught me, you know how to um, how to look at risk how to manage risk how to understand that not taking a decision is taking actually a decision so procrastinating is taking a decision not to take a decision. And sometimes that is actually more costly than taking a wrong decision. Ah um, and the fact that you know no Politics. No Bs Um, you’re as good as you know when you see a Pn L every day and you see whether you want a lost and you can sugarcoat it as much as you want but at the end of the day it doesn’t it doesn’t hold water right. So I think that’s one of the things that I have the most because everything is extremely extremely transparent. Everything is very in your very much in your face and and if you are and you you you don’t have to be Loud. You don’t have to be the one you know to be pushy. You just need to sit down. Think very hard and and and and then implement different strategies right? Um and I think that teaches you a lot in terms of um, long-term you know the smart people who put in the energy the time and the effort and you know win.
Alejandro: And in your case too I mean it was same interesting there because late late 30 s you have a midlife crisis sort of speak. So what what happened
Boaz Yaari: Yeah, everybody says to me that you know shergan was ah was was born out of a midlife crisis at the age of 38 so you know, kind of end of 2014 I get to a place where um. Basically sheggen was born out of my call it frustration from the securities lending market and and and and and that more less started from you know 15012? um, started digging and understanding this ecosystem called securities lending and the more I dug the more I understood how you know how deep the rabbit hole goes if you will. And and and and and obviously keeping my day job that became some sort of my crusade and and back in 2014 when I thought that I I understood the you know the the problem and I thought that I have a solution in place I was very naively. I called one of my best friend back then who headed the innovation at Apoine Bank in Israel he you know his my co-founder since then the ad amit. Um, and we thought to ourselves. Well we understand the market when this done collaboration when they understand fintech. Um. Find a good cto and how hard can it be only to understand that you know that um, that’s actually it’s extremely hard, extremely hard cracking it a a heavily intermediated heavily regulated heavily fragmented ecosystem and and it’s been A. Humbling experience in the last seven years but but you know but an amazing experience. Nonetheless. So for me ah Shegen was some some say that was born out of my ah call a midlife crisis early midlife crisis at the age of 38.
Alejandro: Now for you, you know and and and I guess for the people that are that are listening to really get it. What ended up being the business model of sharing gain. How do you guys make money.
Boaz Yaari: Yeah, well you know shegen is ah is um I remember when I started talking about cheging back in 2015 I said securities lending everybody should ask the securities what se securityities lending se security is what and securities lending is is very simple right? We have a. We you know investors um have an asset a financial asset pull a stock a bond etf. Um, and that stock is a financial asset. You have that you can benefit from the appreciation or depreciation. You can you can um benefit from you know, purely installments like coupon little dividends. Um, but there’s a None revenue stream which is the ability to rent out the asset now I know it. It doesn’t sound really intuitive right? Um, but then but then if you think about real estate. It’s very intuitive to rent out an asset in in in the in in capital markets. You are able to rent out as a benefit as a holder of stockons native as the owner. You’re able to rent them out. It’s a it’s ah it’s a financial right? The issue is that this is an existing ecosystem. It’s been there for 60 years and why would one actually want to borrow stocks because you know every every strategy that involves short selling requires. Um. Boeing se security is against it. But little do people know that only tend to you know about 10% of the use cases are for what we call directional sort selling because I believe that the stock is going down. There are many other use cases for that.
Alejandro: Got it and.
Alejandro: So what were the um, what were the early days like you know of this when you guys got started back into lesson 14
Boaz Yaari: As well.
Boaz Yaari: Yeah, so listen. So shagan is all about I like to call it like like the airbnb for securities lending I don’t like using airbnb for that. But I think that gives you the right context and I think for us we looked at the market back then and we said wait a minute There’s an issue right? You’ve got um. We all have a right to rent out our asset and derive another another source of income. Um, but but in essence about 20% of the users. We all none and None of securities which is you know the black rocks the vangos. The know the big fashion institutions of this world are able to lend out their securities but you and I a ato. And unable to exercise to benefit from that from that basic right? and we thought and we saw that the issue is is usually because our banks or brokers what we call custodians are usually unable to provide that service because they don’t have the right infrastructure they don’t have the right? Um feature product line and so on. Because it’s how to build a securities lending proposition. Um, it takes a lot of money and a lot of time you know 2 to 3 years 15 to $20,000,000 to build it so we thought to ourselves if we can actually create a um, a solution that enables every financial institution to almost. Plug-in play and and and offercurities lending to itself and or to its underlying clients without building. You know, starting from scratch in a model what we call Len as you go almost pays, you go kind of a thing then that becomes an extremely compelling proposition because. No capexs. You don’t really need to invest too much into it and and you generate an an additional source of income and if you don’t generate anything. You don’t pay anything and so it seemed to us at the beginning like ah like a win-win like like a slam dunk. Why wouldn’t you lend? Why wouldn’t you generate an additional return. Um. On your on your securities right? Especially if you don’t need to pay anything upfront only to understand that it’s not that easy. Um, again, heavily fragmented heavily inter intermediated heavily regulated ecosystem as a whole what we understood very quickly is that um you need to really. Um, in in in capital markets technology or product is not the none thing that dictates. Ah um, um, usage or or dictates. um um distribution what actually is trust and trust. Um. You gain. You can only gain what we call the hard way which is very slowly over time do doing stuff so we always felt that we had the the best product but it took a long time until we started getting proper adoption. Um, and I think.
Alejandro: At what point do you realize that you had adoption our point what when did that happen.
Boaz Yaari: It’s a few points right? There wasn’t like ah am because it’s a B Two B B Two B and B Two B Enterprise Even um, it’s not really, it doesn’t happen overnight. But what we started we were so I think we were shouting out of every rooftubb.
Boaz Yaari: And when we look at the market but and that was premature back in 2015 that one of the biggest trends in capital markets is and and it’s going to change a lot of things in capital markets and what we call private investor participation if you think about Robin Hood back in the days 2015 everybody was just picking in. Thought to this is probably one of the biggest trends out there and if we go back to what I said about a trade being a trader um a good trader you need to spot. You know what we call the the super trends and if you ride those super trends then you’ve done 90% of the work and we thought ourselves this is going to be a super trend. You know, private investor participation in capital markets. But if this is a super trend and supert trends has you know a couple of legs right? The first leg in the vol evolution is democratizing giving access so we thought to ourselves all of these the you know the robin hoods of this world. You know all these Neobrokers online brokers wealth managers. We compete none thing on giving access to private invests letting them trade and theyll but and and we said it’s going to be a price wall and and then we saw Robin not launching their fee freee share trading. Um, but that’s stage one and I think the evolution of this industry has ended only last year early this year right. Which is give as many get as many as many clients as possible. Um, and and and forget about costs forget about how do you monetize the business get as many as many millions of clients as possible second stage of the evolution because these are very you know heavily regulated financial institutions. Um. Then and all a lot of them. Vci backed and how do you monetize the business and if you monetize the business then there’s ah then there’s a transactional leg which is you know fees for for transacting and maybe payment for orderflow which we know is heavily scrutinized but then what do you do with the assets. You’ve amassed. You know you know clients are coming to you. You’ve amassed ah none and none of assets which are sitting there either collecting dust instead of collecting income and if you look at the big fashion institutions. None of the things that they they master they know really? Well you know all the big prime brokers or the big investment bank. They know really well how to really squeeze the only hardware in terms of. You know monetizing the assets creating income from the assets themselves not just from a transactional flow and none of these online brokers or most of them didn’t have that capability right? because you need to really have the expertise but then the technology to do it and we thought to ourselves this is a trend and. That if we provide them the solution in our api-based custody agnostic geographically agnostic solution that is almost a plug and play then this is something that will be extremely valuable because they’ll all at a certain stage will need to start thinking. How do they monetize the business and how to do they monetize the assets.
Boaz Yaari: And and and we saw that all the you know all the providers insecurities lening today. All the big custodians that were providing securities lending back in the days. None of them had a solution for wealth managers and and.
Alejandro: So so obviously so obviously that’s the what led you guys there. But I guess you know one thing that is very important here that I think that you know you guys are being quite successful on to is is on raising money because you know building an operation like this it it takes capital. So. So as part of of that you know progress progression of events. You know how how much capital have you guys raised today almost 80,000,000 and how has been the journey. You know how how how would you say that those cycles you know you were obviously walking us through the.
Boaz Yaari: Almost 80000000
Alejandro: Lifecycles of the business. But how would you say that in parallel to that those financing like financing cycles have also transitioned to.
Boaz Yaari: It’s an aljado and I’m sure you’ve interview with a lot of people in this thing in in in dealmakers and I’m sure you’ve heard many times. It’s ah um, it was very challenging and very humbling right at the beginning. You know capital mon it’s fintech there and yeah, what we call cold call b two b capital monk in fintech. There aren’t many and back in 2015 there were very very few. Um and so for us going to Vc and trying to pitch different Vc is trying to pitchcurities lending. You know people were asking securities. What security spot. Really understand and you know back when we’re raising money for the none time which was like partly seed partly c series a talking about started doing in July August Two Thousand and fifteen um you know I have it in my record you know 54 investors 48 said no and and. Some of those 48 it was ah it was ah a painful. No, it was a no that this is going to this is ah I remember None specific that told me this is one of the worst ideas I’ve ever heard. Um, um, and so these are and and you take these things and it’s a humbling experience. Especially coming from a hedge fund. You know, thinking that you know I’ve done my bid you know, ah brand millions hundreds of millions you know and then going to people saying basically what you’ve done is absolutely um, non-fundable. Um, but but it was but we went through it and we raised money. Um. You know, see the investors that we were very thankful some vcs some angels um, and from you know we the vision was so big. Um that and that you know more and more people got bought into the vision. But I think it’s very simple if you think about the value propositions. Quite simple. Ah, you know, generating money generating money for for for for investors right money and assets. They’ve already owned and I think if you think and I think that simplifying it distilling. It was was you know captured a lot of people’s mind that plus that it’s a huge market. Um. But it was very hard, very challenging. Um, and and I think but we got better and better and better at it and and obviously the businesses you know, start performing well and and and in February and through the rounds we had like None different rounds but and I think the latest was and in February. Um. this year where we close a $64000000 round led by you know westcap ventures with growth equity fund and city and Citibank and others and I think for us that round was we were very proud of it not because of the amount but because of of.
Boaz Yaari: The way that we’ve repair to it. We started preparing to it back in March like a military operation if you think about again military so like a military operation. We started preparing in March April um, you know having the right list of of of vcs that we think that understand what we do. And and can buy into the vision. Not just money ah people that are running checks but actually the ones that understand and have invested in things that have some correlation to what we do um with many of them. We had connections that we started very very very early. Almost every month or every two months getting them. You know, making sure that they’re updated and then we got ready back then if you recall 2021 when we got ready to the the round. Um, we wanted to raise it from ah the the lead to be a us investor and don’t forget us back then was closed for for foreigners right. Because of covid so we got everything ready we hope that it would open and then when there was a sign that it’s going to be open we got everything ready and we waited for you know for the president to announce that that you know the us is open for business again. um it was it was um I’m very proud of my team because it was it was managed like a military operations if us was open for business for foreigners on the eighth of November that’s one of the anecdotes right on the eighth of November we were everybody told us wait until Thanksgiving and then come right? because we’re we’re not sure what people will be in the office or no we said no. Going for it right? We went on the eighth on the eighth it was open for business on the the week of the thirteenth we were in New York road showing. We started all the week of the none until the none or none and then if you recall correctly after a week um Um, us broke into and everybody was in the office in New York very much looking to to meet us some of them haven’t had a personal in-person meeting for 2 years ah so so so the vibe was great. The vibe was great. The them. The conversations were very good. And then everybody went to thanksgiving and then we um oomicon hit and the us closed again. So we had a gap of two weeks of which we took five days um to to actually pitch and I think that was the thing that that got us to a very successful round. Meeting people in in person getting that that that great vibeage you can really get through Zoom that enthusiasm that authenticity that real kind real conversation face-to face which I think are you know are priceless. Um, we got it. We got it. None people say to us very much all the time you were so lucky so lucky I don’t think luck has luck has.
Boaz Yaari: A lot to do with it but not everything right? We that was a plan really good plan that ah impeccably executed.
Alejandro: Well as they say lucky is a preparation meets opportunity. You know So so good stuff.
Boaz Yaari: I like I love exactly I love one the I think I think was it Napoleon and Julius Caesars it says I’d like I’d rather have a lucky general than a small general right? So I like being that lucky general.
Alejandro: That’s it. So so let’s talk about here about the future Imagine if you were to go to sleep tonight and wake up in a world where the vision of share again is fully realized what does that world look like.
Boaz Yaari: Wow, that’s a better that’s amazing. Vision. So we think about it you know shegen wants to be your skill is lending is part of what we call abm asset based lending right. And where we think about ah a world where private investors are huge false or um, almost a determining factor within capital markets in in None ars time then we want to be if you think about plaid for payments or currency cloud for Fx we want to be um. You know sha in for you know what? we call full full wealth managers for online brokers. We want to be that b two b that gives them everything for for asset-based lending you want securities lending connect you. There’s an app. There’s an application for that. You want a margin lending. That’s that you want you know if you want digital lending. Npl non-purpose lending everything to do with with asset-based lending and which is a huge business within capital mons. It. Ah um, it doesn’t sound very sexy but it’s a huge business. We’re talking about none and trillions of dollars um instead of opening a line of business each wealth manager that is going to do that they can connect to shegen and shegen provides them that whole thing a marketplace um and the platform the tech the whole thing business is a service.
Alejandro: I love it I love it now imagine that I put you to a time machine and I bring you back in time maybe to that moment that you were having a midlife crisis right? You were coming out of your you know office in the the hedge fund and they’re in London and. And you know you’re able to to let’s say grab that younger self and sit that younger self for ah for a coffee or a cup of tea right? Like as you guys you know would say there and they imagine you were able to give yourself None piece of advice before launching a business. What would that be and why given what you know now.
Boaz Yaari: Oh there’s so many. There’s so many advices right? But I think.
Boaz Yaari: As a founder it really tradeblazing. What do you call a category category defining your category of None I think I always used a quote by Rory Vden and as of you know it’s called take the stas. Um, great book by the way I highly recommend. Um. There’s a great saying about something to do with nine eleven I won’t boy you with the details of the story but he has a great saying said it’s okay to be skilld just do it skilled right? So so the feel you know feel when you’re a founder none time founders. Well everything is new to you. Everything is new to you. Everything. So. Psychological fear is much greater than any physical fear right? and so you’re afraid to look at this. You’re afraid to deal with things that you know, not that good right? So dealing with this thing so making understanding that you are. It’s okay to be afraid but just continue doing it right? and and continue pushing forward and continue. Um, you know a lot of people say don’t be afraid. Yes, it’s okay to be afraid but but just continue operating with that fear inside and recognize that feel and move forward. Um I think that is something that you know I would go and tell my younger version of.
Alejandro: I Love it. So both for the for the people that are listening that want to reach out and say hi. What is the best way for them to do so okay.
Boaz Yaari: Myself seven years ago
Boaz Yaari: You know they can they can jump on our website you know http://sharegain.com or Twitter or Linkedin I am I’m available on Linkedin Twitter and obviously the company as well. Um. Very much love to if if anyone is financial institution that wants to hear you more about che getting happy to have a chat.
Alejandro: Amazing! Well hey, boss super nice to have you on. Thank you so so much for being on the dealmaker show today. It has been an honor to have you with us.
Boaz Yaari: Ah, hello. Thank you for inviting me. It was a great Thanks! Very much.
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