Rohit Arora is the co-founder and CEO of Biz2Credit which is a hub connecting small business owners with lenders and service providers, and seek solutions based on their online profiles. The company has raised over $55 million from investors such as WestBridge Capital and Nexus Venture Partners. So far Biz2Credit has provided over 15,000 companies with $2.2 billion in loans.
In this episode you will learn:
- The pros and cons behind fundraising
- How to build a team of A+ individuals
- Ways to deal with tough environments
- The essence behind a strong culture
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Rohit Arora:
Rohit Arora, CEO and co-founder of Biz2Credit, is one of the country’s leading experts in small business finance.
Since its founding in 2007, Biz2Credit has arranged $2 billion in small business loans and has helped thousands of entrepreneurs. For his efforts to help others and his pioneering business model, Rohit Arora was named Crain’s NY Business “Entrepreneur of the Year 2011.”?
Rohit is an often-quoted expert on small business lending for major news media, including New York Times, The Wall St. Journal, Bloomberg, Entrepreneur, American Banker, CNNMoney, MSNBC, Inc., and Washington Post.
A frequently sought guest speaker; he was a panelist at the 2012 New York Times Small Business Summit, National Association of Federal Credit Unions (NAFCU)’s Small Business Lending Conference;”? the American Asian/Asian Research Institute’s panel on small business growth; and the Harlem Business Alliance’s 9th Annual Harlem Business Economic Summit.
Rohit oversees the Biz2Credit Small Business Lending Index, a widely reported monthly snapshot of small business loan approvals. Its findings are reviewed by Federal Reserve and SBA officials, as well as the President’s Council of Economic Advisors. He has written columns on SMB finance for FOX Small Business Center, SmallBizTrends, Franchise Handbook, NewJerseyNewsroom, New York Enterprise Report, and others.
Connect with Rohit Arora:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello, everyone, and welcome to the DealMakers show. I’m actually very excited today because I have, I think it’s the very first guest from India that I’m going to have on the show as well. Another foreigner, just like myself. Then also, supporting small businesses. So, I think without further ado, Rohit Arora, from Biz2Credit. Welcome onboard today.
Rohit Arora: Thanks for the opportunity.
Alejandro: You are originally from India, and you also studied in Delhi. So, how was life growing up there for you?
Rohit Arora: I’m originally from India. I still have most of my family in India, and I go there pretty often. So, growing up in India was fun. Obviously, there was and still is an emerging country and a lot poorer than the U.S., so we had a lot less facilities growing up compared to the U.S. But I think it was a very good upbringing in terms of maybe you’re very street-smart and maybe you’re a hustler, and also the ability to think through many situations, and also deal with situations where you don’t have a lot of resources. So, how do you go through those situations, which I think it’s a great training to be an entrepreneur.
Alejandro: Got it. At what point did you decide or told yourself, “Hey, maybe I should go to the U.S. and see what’s going on there?
Rohit Arora: I actually, initially went to Singapore to work with GIC, Singapore, which is the sovereign front of Singapore. This was in 1999 during the dot-com boom. That’s when I got my first flavor of the internet and entrepreneurship. I was working, and I set up the first incubator for Singapore government in Singapore where we were incubating all of startups. We had been raising money, helping them to do things they couldn’t do on their own in terms of connectivity with the western world. Three years was a great experience for me. After that, I said, “What next?” Then I moved to New York in 2003. Actually, like any other immigrant or newbie, I first went to school. So, I went to Columbia University to do my Master’s program. During that period, there was a time huge noise outsourcing the benefits and the challenges. I got really interested in that, and I did some research at Columbia in association with a very seasoned and a famous professor of the name of Jeffrey Sachs. So, Jeffrey and I, we actually go and had a big paper on global sourcing, and that actually helped me to figure out how the corporate America works. What are the motivations? Then I started working here in New York consulting in the strategy practice after I graduated. So, I did that for two and a half years. Then I always wanted to set up my own company after my experience in Singapore. So then sometime in 2008, along with my brother, we started with the credit here in New York.
Alejandro: You also worked at Goldman Sachs. Is that right?
Rohit Arora: Yeah. I was there very briefly. I did my internship at Goldman while being at Columbia. I worked there briefly, but I was always very keen to work being an entrepreneur. So, at that point of time, I decided that I’m not going to go into the financial world per se in a job. I think that was a big decision I made. Then I stuck to it.
Alejandro: You mentioned that you have always been keen towards the entrepreneurial world. There are a lot of people that talk about entrepreneurs being born or entrepreneurs. All of us haven’t just gotten into it as a result of certain experiences. So, how was it for you? Do you think you were born with this, or is it at one point you saw stuff around you in your surroundings that really triggered that interest? Or, how was it for you?
Rohit Arora: I think that’s a very good question, and I also think very deeply about it. In my view, some of the attributes of being an entrepreneur, you’re born with that. So, whether you can believe with uncertainty, whether you can believe with your lack of resources, whether or not you also believe in yourself to go through, even [inaudible 4:28]. Literally, entrepreneurship is very tough. At the same point of time, I also think that to be a successful entrepreneur you need to have certain training. So, I tried my first business when I was just graduating out of my high school and into college, and I failed because I didn’t have the right training. I had the right mindset of being an entrepreneur, but I didn’t have the right training. So, I think it’s a combination of the two, but obviously, that mindset is something that you either have, or you don’t have it. That ability to be focused and not giving up. I think that’s something that you cannot get trained. But there are a lot of the training things that you can do in terms of how to build your networks, how to raise financing, how to go about creating value out there. How not to chase money. A lot of entrepreneurs make that mistake of trying to chase money, when you should be focused on creating value. I think those are the things that one learns over time.
Alejandro: Got it. Then Biz2Credit was born, and you mentioned it was 2008. Is that right?
Rohit Arora: Yeah, just before the financial crisis.
Alejandro: So, just the perfect time to start a business when the economy is going on a different direction, and we’ll get into that. But how did you come up with the concept? What was the incubation process like for you?
Rohit Arora: I was very curious to figure out what should I do in terms of my entrepreneurial journey. At that point of time, I was looking at more [inaudible 6:04], they were very hard. I looked at some of the other ideas. Then one idea that struck me, I was living in New York and working in New York. I used to meet with small businesses, not just in Manhattan, but Queens, Bronx, Brooklyn. One of the things that they at least talked to me was that it was pretty easy to get [inaudible 6:22 – 6:26] crisis, but it was very difficult even at that point of time to get money for small businesses, the people who were running their businesses and were working so hard. I went to a lot of banks often at that portion, and they didn’t have any clear answer to that. So, I thought at that point of time, what if platform that can actually take care of this whole process. That was pretty ugly because people had not really thought about going digital. Everybody thought of the outside world just to collect some needs.” We thought [inaudible 6:57 – 7:01] value. I think the whole idea came through a lot of experience that I had gathered by then. What is the value that I want to do? What is the problem that I’m going to solve? Is this problem a pain point or just a fact? Once my brother and I figured out that this was a big pain point which is not going away, then we said we need to double down. Then we started the business somewhere in like I would say March, April of 2008. For the first few months, we got fabulous response from business owners. Then all of the sudden, September of 2008, everything fell apart because the crisis happened. My business owners got even more desperate. All the lenders on our platform just went away. That was a big desperate at that point of time that we would be able to sell my work on.
Alejandro: Got it. The company, you actually built it with your brother like you were mentioning.
Rohit Arora: Yes.
Alejandro: My last company, I built it with my wife. So, I know that when you’re building something with family members, for us it worked out, but I want to hear more about you guys and what that process was for you because when you’re building a company with someone in your family, sometimes it’s very hard to say things the way they are because you don’t want to hurt their feelings. So, as a result of that, you may not become effective, or you may be becoming effective really doing what is right for the business. So, how has this experience been for you guys of building the business as brothers?
Rohit Arora: I think in our case we were already prepared when we started it. We were already mature, and we treated each other like professionals. I think both of us have their own strength and weaknesses, so we were and still very agreeable guys. So, I think that was a big reason for our success as it’s been to this day is that we have an understanding of what we’re good and what we’re not good at. Then we clearly assign tasks between us, and then we don’t interfere in those tasks with each other. At the same point of time, we’re always there for each other. So, I think that was one of the key things. The other thing was that growing up, as I look back, we always thought about, “What will we do once we’re grown up?” Our ambition was to set up a business together. So, we prepared for that. So, we didn’t do it on day one. My brother had set up a business. He was before; actually, he did it with some other co-founder. But I think we really got prepared before we jumped into it. By the time we jumped into it, we had the right attitude and the right temperament. I think the other thing was that we never let our personal issues crop up or affect our business relationship. That’s very important.
Alejandro: How did you decide to divide and conquer in terms of responsibilities.
Rohit Arora: I think my brother is a very good operational guy. He’s very good in risk management. I was pretty good at going and selling stuff, getting the vision really well, the ability to go and force change and things. So, I think that’s how we said, “What are our personality types, and what are the things we can do well?” I think that’s how we have done it. Now, I think there’s a lot more overlap because business has grown, but we also have more strengths that we can play around with. But in the beginning, we were very clear about, like there was a technology piece. If I was managing it with my CTO, then my brother was not while he was involved, but he was not really [definitive 10:44]. The operational side, he was doing most of it, and I was not really stepping into it, but I knew everything. I think we have reached a stage where we know everything that the other guy is doing, but we have our rules and responsibilities that we are expected to do, but we also, what we say we’re running a long marathon. So, whenever we are to take it back on from each other, we still do that.
Alejandro: Culturally speaking, and also from a dynamic’s perspective, the U.S. and more specifically New York City where you guys are at, and where I’m also at, it’s completely different from India. In my experience, completely different from Spain as well. So, I guess adapting and launching a business in a different country, different language, different culture, what were some of the challenges that you guys encountered?
Rohit Arora: I would say it’s very different from anywhere else. Having said that, I think something like Delhi in India teaches you a lot of hustle. It’s not an easy city to live in. There are a lot of people. There is a lot of starvation going on there. So, I think one thing that when we had come to New York, we already knew what hustle was all about, what’s being street-smart. But I think in New York, you can do well if you’re street-smart, and you’re that kind of a guy. To be aggressive, you have to be on-the-edge kind of a guy. I think Delhi is somewhat like that. Delhi’s not as professional, obviously, as New York. It’s less business-minded than New York, but it has its own dynamics of hustle, being aggressive kind of personality as a city. So, I think that was pretty beneficial. I think language, coming from India was not much of a challenge for us because, in India, the business lingual factor is English. So, you speak English. You think in English. You get educated in English from kindergarten. I think that was pretty easy for us. There is a big Indian network now here in New York, so I think that was good. I think what is different in New York is the pace, the legal surroundings, and the level of professionalism. I don’t think there is any other city in the world where you have that level of professionalism and that level of ability of people to do good and bad both for you.
Alejandro: How many people are in India?
Rohit Arora: We have over 200 people in India and around 75 people in the U.S.
Alejandro: But in terms of the actual citizens, how many citizens are in India right now?
Rohit Arora: The whole population?
Alejandro: Yes, population.
Rohit Arora: I’m sorry. We have now more than 1.3 billion people. So that’s why people do a lot of hustle because it’s really crowded. You have to just fight for everything.
Alejandro: I mean, 1.3 billion people and that’s compared to like probably 320 million Americans. I wanted to ask you here, having so many people in India, India growing like crazy, why did you guys decide that the U.S. was the place, and more specifically, New York, the place to launch this thing?
Rohit Arora: I would say when we had moved here, my brother had moved here in 2001 and I moved to the U.S. in 2003. At that point of time, it was not growing as fast as it is growing today. We had the same business now in India also. We are offering signs, technology platforms, two banks, and non-banks also there. I think we have leveraged India tremendously because I think talent in India is phenomenal. So, we have a lot of employees in India. We have a lot [inaudible 14:36], in India. So, I think this is becoming a very global world, and more than countries going global, cities are going global. Today if I see cities like New York, London, Singapore, Bombay, Delhi, all the English-speaking cities more and more. They are actually more connected to each other than the countries that they are in. So, somebody sitting in London is more connected to people in New York, or in Singapore, or in Bombay than in the inner land to today. So, I think the world has changed so dramatically over the last 20 to 25 years as you see global cities have become magnets for new job opportunities, business. I would say most of the wealth creation now is happening in bigger cities. I think that whole bet on being in a big city and being able to be able to do business with other big cities is actually becoming more and more relevant every single day compared to even 20, 30 years back when country boundaries used to matter more than anything else.
Alejandro: What ended up being the business model then for Biz2Credit?
Rohit Arora: Sorry. Can you repeat the question?
Alejandro: So, what ended up being the business model behind Biz2Credit?
Rohit Arora: When we started as an online generator of small business, customers were looking for access to credit, and we used to have banks and nonbanks at the backend we used to give these customers some underwriting so they can do the final writing and fund the business. But like any successful business, it needs to evolve over time. It needs to be really predicting things than being reactive. So, one thing we figured out by 2012, 2013 when the markets were coming back, and things were getting back to normal, was that most of the banks and nonbanks, and that’s true even today, are not ready to offer a digital experience to their business customers. So, we said that while we were providing them with the digital experience up front, things used to fall apart when they had to do the funding and all that. So, we said what if we bring the funding in-house, but we don’t want [inaudible 16:54 – 16:56]. Then sometimes in late 2012 to 2014, we added a lending onto our business where we collect money from hedge funds, credit funds, banks now, family offices, pension funds, insurance companies, and we give all that money based on our risk-scoring models. And now in the last year, we have put a lot of emphasis on technology, data science, we are white-labeling our platforms. That’s the next part of the business because what we strongly believe is that a successful business is one which can evolve and change itself every three to five years. That’s what we are always working to do.
Alejandro: Now, in FinTech, there’s just a lot happening. Also, there’s a lot of regulations that you need to navigate. What kind of challenges did you guys encounter when building the business, getting that business model together? What kind of challenges did you encounter?
Rohit Arora: I remember when we started the company, there was no word as FinTech. So, FinTech really started coming together sometime in 2012, 2013 kind of stuff. So, we were one of the first guys, and we used to go out and tell people. We didn’t also have much of an idea because it was all fuzzy logic at that point of time. But we at least had some idea of how things would look, and we used to go out and talk to people. There were no IPs, no micro-services, nothing. So, this quickly—at that point of time because it was not mainstream. Most of the banks and other FIs were not taking us seriously at all. They were like, “Yeah, these are like some guys. Okay. We’ll see. We’ll look into it” kind of stuff. So, nobody was very serious. So, the first two or three years were very frustrating in that sense. But it taught us a lot that when big change comes, it always comes slowly and then it happens all of the sudden. So, I think that was very instructive to us that you have to stick around. You have to play the game. You have to have some patience, and you have to constantly keep moving forward. You cannot stop. You cannot get discouraged. I think that was the biggest lesson we ever got there. And to put it ultimately, we’re all just doing the same thing because sometimes you look at our face, it happens a lot less now, but the key thing is that we need to keep moving forward and we don’t need to lose our edge. I think that’s the most important thing in business because once you start losing your edge, it is very difficult to come back and get that edge back.
Alejandro: Yeah. Absolutely. Talking about lessons, you were pointing to this before. You guys went through the financial crisis of 2008, and how did you guys manage to survive?
Rohit Arora: Well, it was brutal. So, I remember we were picking out the office [inaudible 19:44] district in 2008. We thought we would expand a bit fast, so we took a 3,000 sq. ft. office. At that time, that was a big office for us. Then all of the sudden in six months’ time we had the financial crisis. We had a few thousand dollars in the bank account. One of the decisions we took at that point of time, what should we do next? Whether we should—we had five employees, so we said, “Should we lay off these employees or should be continue and try to fight it out.” I think we took some very important decisions at that point of time. One was we weren’t going to lay off any of our employees. We said we will take a salary cut. I remember at that point of time not going on any salary for nine months and just surviving on our savings. Then we said we will keep investing in technology. We also said at that point of time we took a big decision that we’ll go fight it. Even if we don’t survive, we’ll still fight it out. We’re not going to give it up. I think looking back, that was the best decisions we made. We didn’t lay off any employees. We didn’t delete their salaries. We didn’t shy away from investing more money in technology, and we didn’t give up. I think by making important sacrifices, it also helped us, but it also helped us to do as leaders, and it also gave us a lot of respect in our team members because they also saw that we have accomplishment and a passion for something and it’s not just bad for us. When the good times were there, we were “Okay, fine.” And when the bad times came. Then it also gave us the ability and mental strength to go and fight it out because once you go through that kind of a time, then nothing can come and [inaudible 21:25].
Alejandro: Got it. There are a lot of people talking about a potential correction in 2019 or 2020. Do you have any thoughts on that and perhaps for the people that are listening how they could prepare as best possible for it?
Rohit Arora: Yeah, I think one thing we learned from that whole crisis was that we paid a lot of attention on this management, our loses, our portfolios of billions of dollars was very low. So, we keep very high reserves. I think one of the key lessons that we learned from The Great Recession was that we need to be financially savvy and financially disciplined. You need to execute like a maniac. You cannot talk and not execute. That’s not going to work for you. The other thing is you need to have tremendous passion because that will carry you through good times and bad times. So, between ’19 or 2020, the recession, everybody’s expecting it. Nobody knows when it’s going to come and what shape and form. But I think the key when you prepare for a recession is that there’s a saying that if you sweat more in peace, you bleed less in war. So, I think for the one year we have as we take a lot of step in investing a lot of money in this [inaudible 22:40], keeping our portfolios really healthy, and being a very profitable business. Not overextending ourselves in terms of our financial commitments. I’ll give a great example. A lot of companies during good times will take very fancy offices. They will sign long-term leases. When the bad time comes, that’s the last thing they can get out of. That creates a lot of financial stress for them. And also, investing in the right places. Right now, we’re investing a lot of money in technology, [inaudible 23:12] signs, automation, AIM, and that’s important because we feel that when the next recession comes, which nobody knows when it will really come, but we should be more ready. We should be more efficient. We should be more profitable because then we will be able to go through that crisis even then. That actually every crisis has an opportunity because a lot of your competitors are weak, are not focused, or don’t have the passion to make a go of it. So, survival is the most important thing during a recession, not growth, and if you survive, then you’ll grow on your own.
Alejandro: That’s great, great, great advice there. For you guys, at what point did you decide, “We’re going to raise some money for this business?
Rohit Arora: For the first three years, we had the business from 2008 to 2010, end of ’10, very frugally with our own money, and we were investing all the money. Then we started seeing some good growth, and VCs were already approaching us in 2005 before the crisis, and the best thing we did at that point of time was not to raise money because I think if we had raised money at that point of time, then the crisis hit, then a lot of investors would have panicked and that would have forced us to do things that we didn’t want to do. So, not having external pressure during a crisis is the best thing to happen. Then sometime in 2011 as the company was growing, the company was becoming bigger, we were getting some attractive offers, so we thought it was a good time to raise money, active balance sheet, and also, we had started dealing with a lot of strategy partners at that point of time, and also with banks. They wanted to be more comfortable that we had more money on our balance sheet, because they were doing more and more business with us. So, that’s when we raised our first round of capital because we thought—because raising capital is also very important. In this day and age, a lot of entrepreneurs think that raising capital is the milestone that they’re working for. While raising capital is only the start of the process. It’s nothing more than, again, I get some money from someone, but now the pressure and the expectations to grow is even more. I think the other key thing is that we always wanted to build a profitable business from the technology/economics perspective. We said whatever money we raise, we should put it in our growth, not to fund our loses. We have seen so many times businesses, [inaudible 25:39] they lose a lot of money, and they raise a lot of money, and then just lose their mojo. Then, in the end, they’re not able to control their destiny into anything.
Alejandro: Right. So, for example, in your case, how much capital have you guys raised so far?
Rohit Arora: Right now, we have raised around 9 1/2 million dollars, so we haven’t raised a lot of money while we are supposed to raise a tremendous amount of money over time, but we have been very frugal, very consistent in why we raise money. Now, the good thing is that in our profitability in itself has gone into tens of millions of dollars a year. So, I think now we are the stage where we are planning to raise more money, but we are raising it from a position of strength, and also for an accelerated growth.
Alejandro: Because, for example, this year would you be able to share with us what kind of numbers you’re projecting?
Rohit Arora: From a revenue perspective we will be around 60 to 70 million dollars and from a profitable perspective around 15 to 20 million dollars.
Alejandro: That’s very impressive for the amount of money that you’ve raised.
Rohit Arora: Yeah.
Alejandro: So, congratulations to you and the team. It’s remarkable. That’s for sure. So, for the business itself, for the lending site, how much did you raise as well, because here you have all the money that you raised for the business, and then also the money that you raised to be able to do the loans.
Rohit Arora: Exactly. So, on that, we have raised a lot of money because that’s a good sign that we raise more. Until now, we have raised almost 400 million, actually, and we are now expanding it. We are adding another 300 million in next one quarter because as our lending volumes are going up at a rapid pace, and that way we are expanding our balance sheets and we are doing a lot of different structures that we are putting into place right now.
Alejandro: In terms of metrics, how many companies do you have right now as part of your ecosystem?
Rohit Arora: We have two sets of companies that we also deployed every company [inaudible 27:53 – 27:57], whether they get money or not, they get this benchmarking services, the ability to determine their cash flow, do things in a way which are cost-effective and smart for them. That which was that platform is used by almost 200,000 businesses. From a lending ecosystem, we have around 25,000 companies that we are lending money to.
Alejandro: How many loans would you say that you’re facilitating right now per month?
Rohit Arora: Anywhere from 600 to 800 loans.
Alejandro: Wow. What would you say is the total amount of funding that you have facilitated up until now?
Rohit Arora: More than 2.2 billion as of now.
Alejandro: Wow. That’s certainly very, very impressive. Very impressive. At the end of the day, you’re building a marketplace. I think that marketplaces are tricky because it’s like launching two companies at the same time. In a model like yours, you have the business that you need to onboard, and then also whoever is loaning the money. So, what have you learned from building a marketplace like yours?
Rohit Arora: I would say the [inaudible 29:12]. This is very important because in our business from a lending aspect, I can lend as much money as I want and build short-term revenues, but then if the performance suffers, then the people who are lending money to through the platform will lose their money and that’s what we don’t want. So, I think the [inaudible 29:30] is very important. The ability to manage both on growth as well as the risk management is extremely important. Investing in technology, having that credibility also. If we say something, we do it kind of stuff, so I think irrespective of whatever investment we have to make. I think it’s a very important aspect that we need to take and [inaudible 29:50]. When you’re building a two-sided marketplace, you must have trust and confidence of both the participants and both of the participants should feel that they are getting the best deal out of it. And both should also feel that both of their interests, we are protecting it as if it was our interest.
Alejandro: In terms of the help of the marketplace itself, how have you seen like, for example, keeping the balance between the supply and demand?
Rohit Arora: I would say demand is always there for credit. I think supply is something that we are to manage very well, and also manage it at the right price, right kind of investor. Also, from a demand side, the key is that you have to have the right set of demands. You cannot think of business like we don’t take business to brokers and other people who [inaudible 30:42] directly to the customer or some of our corporate partners like paychecks and some of the other folks. The whole idea is how you spoke to your customers is important, but also how you fulfill their demand in terms of whether you’re giving them the right pricing, right term, right structures, and also, you’re not putting them in harm’s way by even over lending them. I’ve seen some companies that over lending businesses. Businesses are not able to pay back, and then everybody loses at the end of the day. So, I think we are going to balance both the sides and then at the point of time a very dynamic business, microeconomic site that really impacts us at any point of time for both good and bad. We’re also very cognizant about how do we balance it? How do we create that forward-looking stuff, and how do we learn from different aspects of the market whether they’re credit markets, industrial markets, demand in the small business space, that tax break that has just come up during the Trump administration? How do we take it and how do we marry everything together?
Alejandro: For a business like yours, I’ve seen that you’ve been everywhere. You’ve been featured on the New York Times, The Wall Street Journal, and also, there are really good comments that you provide and certain predictions that you talk about the loans for small businesses. I want to ask you; how do you see the overall picture for small business loans and what’s the future ahead that you foresee?
Rohit Arora: Obviously, compared to the crisis like we bring out small business lending index every month that we started in January of 2011 and that really shows where the access to credit was for businesses and their locale. Now, a lot. I would say a better picture, lots of improvement. I want to explain that we are now starting to see the digitization. So, businesses have to go digital. The banks have to go digital. The lenders have to go digital. All the intermediaries have to go digital. Those businesses which will be able to exploit the power of digitization, like how to apply online, how to maintain their reviews online well, how to conduct their own business well in an online environment will gain the most. And all of the businesses were not able to manage online part of their business will suffer, even if they started today, typically the last three or four years they used to get hardly 3.5% of their orders online. Now, it’s almost 30% to 40% of their business has gone online. So, I think every single industry sector is getting impacted by digital, and every industry sector needs to prepare for being not only going digital but also managing their digital [inaudible 33:36]. And that’s important.
Alejandro: What about the political climate? How do you think this is affecting small businesses?
Rohit Arora: Right now, I think the Trump administration has been very favorable to small businesses. There has been lack of—I would say regulations have been [going back to expurgate 33:54 – 33:58] is one of the biggest very fits for businesses because if you’ve seen this tax break, it was for businesses. This is not individuals really. That has really spoiled businesses to come back, invest more money, and grow their businesses. There’s more appetite for access to capital. And with the interest rates being still at record low, there’s a lot of [inaudible 34:17]. That means that all of capital sources are opening up in this space. This space, this smallest lending space is becoming more often of a mainstream asset class from being the alternate of asset class. I think that’s the one big change that is happening as we see. Even two, three years back that wasn’t the case. I think more low-cost money, long-term, permanent capital is starting to flow into this space, which is non-bank money.
Alejandro: I’ve heard you talk about as well the best places to be as a small business and to operate in. I’ve seen that you’ve said that New York City is the best city in America for small businesses. Why is this?
Rohit Arora: I think that’s very interesting because I also think about that it’s an expensive city. There are a lot of regulations, also cost, but what we have seen now, the businesses are moving away. The economic activity is moving away from inner land to more inner bigger cities every single day. Because of everything going online, there’s less manufacturing and more of services, and also services economy. I think that’s what’s creating the [dynamic 35:32] fact of big cities being more effective for more people. That means that more businesses will try. And as larger businesses are more concentrated in bigger cities, they’re opening the smaller businesses which support the larger businesses, lots of times more in cases where there is a lot more economic activity. The other thing that has happened that is very interesting is that any business, whether they’re small or big, needs to engage with more of the technology workers. More and more of the technology workers are preferring to live in the city. They’re not suburb people. They’re not people living in smaller towns anymore. I think that’s the attractiveness of a bigger city, in spite of the higher cost, is that we’re increasing every single day.
Alejandro: Got it. And by the way, I love New York City. I’m a little bit biased, but I would tend to agree that New York is an unbelievable place, and it has come a long way as well on tech startups. Like ten years ago, there was nothing like what it is now.
Rohit Arora: Nothing.
Alejandro: So, Rohit, I want to ask you what I typically asked our guests. If you could go back to the past and give yourself advice before you were launching Biz2Credit, knowing what you know now, obviously, what is that business piece of advice that you would give yourself and why?
Rohit Arora: I would give a piece of advice that I would give to myself would be that I look at the power of technology at that point of time where I underinvested it. I think if I go back and look, I should have invested more money in technology. I should have invested more in the infostructure and marketing piece of our business which initially, like any entrepreneur, if you were trying to conserve money also, and you’re not very sure. While we did all that stuff, we could have done it at a greater speed I would say. I think the other thing would be how to predict the future. I think that’s very important because the world is changing at such a rapid pace. I think that sense of emergency was always there in my brother and me, but even having these pieces of urgency, so now as a personal goal, my sense of urgency and the urgency that I’m coming to my team has [inaudible 37:53]. Because I think the lessons that I’ve learned when I started this business, I think the most important lesson would be that when the market has really gone bad, we didn’t give up, and we kept going on. We should have doubled down even more. I think that’s the lesson because you can execute and you can double down more when markets are bad. The amount of growth that you will see during good times will be extraordinary.
Alejandro: I agree with that. Typically, on times of contraction when everyone is kind of like reducing the cost and being more cautious is where you have like the biggest potential for upside. So, I agree with you on that. For the people that are listening, Rohit, what is the best way for them to reach out and say hi?
Rohit Arora: They can send me an email at [email protected] (Website: https://www.biz2credit.com/) I get all those emails. They can call me up. My number is there on my company directory. I pick up most of my phones on my own. I think that’s a way. I also do a FinTech Friday every fortnight. A lot of people actually come back on LinkedIn to me. I’ve found that a very effective platform to communicate with a lot of people.
Alejandro: Fantastic. Rohit, it has been a pleasure to have you on the DealMakers show. Thank you so much.
Rohit Arora: Thank you. Bye.