Boaz Yaari, with his bold fintech startup, has broken the paradigm that only large financial institutions can benefit from a financial right that every investor is entitled to . Sharegain, is a fast growing venture that has already attracted close to $80M from notable investors.
On the Dealmakers Show Boaz Yaari shared his lessons on leading from the front, spotting super trends, and how early you should start preparing for your next fundraising round. Plus how he’s created the Airbnb for securities lending.
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Leading From The Front
Boaz Yaari was born in Tel Aviv, to a mother who had survived the Holocaust. With some tough love, and eternal optimism, she passed on a glass half full outlook, and the lesson that seeing the positive side of things is a muscle you can train.
Growing up in Israel you have to perform your mandatory military service in the IDF, which is well known for churning out successful tech founders out of their intelligence and cybersecurity divisions.
In Boaz’s case, he became a paratrooper. He became a leading navigator, who led the unit, which led the regiment, which led that brigade and division. It is not a commanding position where you send instructions from a bunker somewhere. It required being outfront, leading from the front. With a lot of people counting on you to make the right decisions even under extreme stress, with lots of volatility, and little visibility.
For entrepreneurs that have launched their own startups in the past, it may sound like reading your own job description. It is pretty much exactly what it is like. Though usually without having to physically dodge the bullets.
In fact, some of his top advice for others seeking to launch their own businesses today is that while everything is new to you, the “psychological stress is much greater than any physical stress.” So, “it’s okay to be afraid, but just continue doing it, and continue pushing forward.”
At first Boaz was drawn to study law as well as business. Inspired by those courtroom TV shows he thought it would be an exciting and worthy career. Then the reality set in that being a lawyer actually meant mostly being buried in paper 80% of the time. He was also turned off by the mistrust and adversarial relationship between the different legal sides. That sapped his interest in continuing that path.
So, he decided to follow his passion for trading, and joined one of the Israel’s biggest banks as a FX derivatives trader.
Still, pre-2008 Israel wasn’t as globally financially engaged as it is today. Especially in terms of global macro and equity trading. He felt there was a ceiling there, so he jumped on an offer to go work for one of London’s prominent hedge funds. There he found much more diversity in capital markets, and lots to learn and be challenged by.
Again, he found lots of responsibility. This time taking care of investors and their hundreds of millions of dollars. He liked how clear cut the data and metrics were. He also learned about risk, how to manage it, and more lessons about decision making, and the downside of procrastination.
Then after seven years, Boaz found his frustration with a $3 trillion niche in capital markets sent him leading a new crusade to bring new options to the industry and democratize what was then considered to be the last bastion of old tech in capital markets – securities lending.
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He called up his friend, Liad Amit, who headed up innovation at a bank in Israel, and together they decided to tackle it as co-founders.
Taking on the challenge, they naively thought, well how hard can it be? Of course this is a heavily intermediated, heavily regulated, and heavily fragmented ecosystem. Which Boaz admits has meant an equally amazing and humbling journey since they set out on it.
Put simply, securities lending is a 60-year-old practice that enables holders of an asset like stocks to effectively rent them, and generate additional income on their portfolio. Just like people do in real estate.
Only around 20% of the players in the market could do this: the really big ones who have been doing things the same way for decades, and benefiting from this basic practice to the tune of billions of extra dollars every year .
So, together Boaz and his cofounder launched Sharegain, or what you might call “the airbnb for securities lending.”
This was something that was previously just too complex, and cost prohibitive for the majority of banks, brokers, or online intermediaries. It would take them years and at least $20M to open this line of business from scratch.
Sharegain’s concept is to provide them all with a plug and play solution, with no upfront capital expenditure, but which would create a new source of income for them. It was designed to be a no-brainer for them.
However, they quickly found that in this space, it wasn’t the technology or availability of product that dictated adoption and usage. It is mostly about trust. Still, they believed that if they built the best product, and proved it over time the hard way, they would get that adoption.
Of course, that would require capital.
To date, Sharegain has raised almost $80M.
Storytelling is everything which is something that Boaz Yaari was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
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That started with a very tough round during which 48 of the 54 investors they pitched said no. In fact, some didn’t just politely decline. Some were pretty harsh. Even going as far as saying it was the worst idea they ever heard, and absolutely not fundable.
They are very thankful for the angels and VCs that did believe and supported them throughout the years.
Landing following investment rounds required simplifying the messaging, as well as demonstrating the huge market they were in, and running military-like fundraising operations. In particular, for this last round they started preparing almost a year before they closed it.
Check out the full interview for more on:
- Spotting and riding super trends
- The future of securities lending