Fueling Entrepreneurship Through Equitable Capital with David Taliaferro

Chris Byers: Having technology be used to better support access to capital for all. For David Taliaferro, there is untapped potential between technology and capital for more collaboration at the CEO and co-founder of Lender Foot and a past principal at Access Ventures. David's work is to help increase access to equitable capital for entrepreneurs across the nation. As we get into this conversation. We'll talk with David exploring his various roles while also learning more about his fellowship with Kiva, an organization that crowd funds micro loans for entrepreneurs. Based on his experience, it's clear that David has a passion for fueling small business. What's the motivation behind that passion? Let's find out in this story. When Chris Byers of Formtack and this is Ripple Effect, a show celebrating the positive impact your decisions create. Welcome to the show, tell me, is there anything we missed in that intro?

David Taliaferro: No, you touched on a lot.

Chris Byers: Maybe just to dive right in. Was there an experience that kind of happened in your life that the catalyst for you doing what you do,

David Taliaferro: It was graduating from school, going into the workforce somewhat quickly, getting into an analyst type position where there wasn't as much interaction with customers and just sort of become more and more fascinated with local economies. And so I think that probably a pivot point in my life that led me in this direction was just getting five, six years into a role like that and led me to looking for a new position. And that transition occurred in moving to access ventures as they were setting up really just getting started and setting up a microloan program. That was something that had interest me. Interestingly, I had been watching Kiva for about six years or so, even prior to that role. And when the managing director approached me about collaborating with Kiva, I was really ecstatic. And we set that program up. And that led to several years of assisting Kiva in designing local strategies, local Implementation Strategies for Their Communities program, which allows local communities to rally around this platform of crowdfunded zero percent interest loans. And then all the while, we were building our own non collateral, noncredit based small business loan program here in the Louisville, Kentucky region. And we started to realize that that the lending industry, and particularly the commercial lending industry, was really ripe for the application of more human centered design principles. And that was something that was just really core at excessive interest from the very beginning. And we kept meeting small business after small business that had multiple employees was creating a great return for the community and for themselves. A lot of value creation there. And if you sat them down and interviewed them and asked them all about their financials, they could specifically speak to those. But if you put them in front of a banker or a traditional loan application process, a lot of times they're so busy running their business, they see all these terms that aren't necessarily yet familiar. And on paper, they can come across as seeming not that loan worthy. And then on the flip side, we had spent the last four or five, six years making loans to individuals that don't look that great necessarily on paper. And the majority of them were paying back just fine. So, yeah, so that got our gears turning and started thinking, OK, what would it look like to create a front end that really demystified the application process and not only in doing that solved all of the lenders sell as many challenges for the lender as possible. Yeah, and then we just continued on that path. And it seems pretty clear to us that one of the most uncontrollable aspects of the application is how your applicant's response, how quickly they respond, how much they're able to understand based on how much work that you're having to do to educate and provide that understanding.

Chris Byers: Really interesting about that, what you've just described there, especially in this past year, we've been learning a lot about difficult access to capital, especially for people of color, for those that aren't maybe from the suburbs or whatever it happens to be. And I've always pondered. Yeah, is it a real thing, like a real problem that that creates this inability to get lending, or is it to what you're describing? It's more just teaching people how to be responsive in a particular way or how to connect the dots for lenders, because ultimately it doesn't matter, race, et cetera. There's plenty of people who can manage a business. It just looks a little bit different maybe than what those lenders are used to. I'm curious, do you think it's a fairly true statement that you've found that there are a lot of very bankable, wonderful people and entrepreneurs out there that just have been blocked by language and these artificial barriers?

David Taliaferro: I think one of the artificial barriers, it can definitely be just geography and location. And if you're in a poor neighborhood, most of your friends and family are going to be similar socioeconomically. And the number one way to start a business is with your own savings and friends and family money. And so right out of the gate, you've got an access to capital issue for lower income entrepreneurs that tend to be more minority type entrepreneurs. And there's just a quite a disadvantage. The other aspect, too, is I think almost sometimes the more value a business can provide to its local economy, the more work it can be. That's a generalization. If you're producing something, if you're selling some sort of tangible good, it takes a lot of time. You need to have the lights on in the doors open. At least covid into the business of these businesses is something to consider. And whereas a larger entity might have someone whose full time job as a CFO is to watch the finances and develop relationships with bankers, you've got the caterer down the street that spends up to 30 employees during key events like the Derby here in Louisville, Kentucky, but is working 70 hours a week to keep the business going. It's just a business type and geography and location and systemic issues can definitely hamper access to capital.

Chris Byers: What do you want people to think about when it comes to unequal access to capital? What do you want to hear in this conversation?

David Taliaferro: I think what I would do want people to hear is that not that a lot of people are just talking about how they didn't qualify for a loan when they're hanging out with their friends. But I think there is a stigma in the United States at times where if you're not eligible for capital, be it be a business capital or personal capital, you're somehow a little lesser. And it's a sad thing that I think that has been sold to us ever since we've been kids. If I if you can't qualify for this, like, there's probably something wrong with you. And so I think that's one thing in this era where businesses are closing or giving a hard time accessing capital that I just want to be cautious of is just saying, hey, someone's ability to access capital is definitely not connected with their identity and with their value to the world. And yeah, I just think that there's going to be more businesses that are struggling. Maybe some companies that go under, again, might not be because that business owner, that entrepreneur is a bad business owner or somehow not skilled. There are truly systemic issues at play here. And even if it's not a designed, intentional system, there are certainly market forces at play where just like you would tell any business to really focus on what they're more profitable at, that's the dynamic that's happening in the financial world as well. If it's more profitable for a lender to focus on these larger loans until something changes or a different organization steps in to focus on and thinks through profitability differently, it's just going to be challenging for smaller businesses and for some of the smaller loan amounts that are oftentimes the most meaningful.

Chris Byers: You've identified that technology is obviously a can bridge some of this gap, and you've talked about that a little bit, but maybe dig into that a little bit more. What do you think technology can do to fill what's missing?

David Taliaferro: There's a trend in technology, I think, moving forward that everything is becoming a little bit more B2C, like everybody has the experiences that they have on their phone and with other modern applications and things. And it's getting to the point where in business and work, people are wanting the same convenience of just there's alert buttons in the message or it's easy to send a message or just as visually easy to understand and intuitive. So just walking through it from a simplicity perspective, if I'm working six hours a week and I've got kids and and it's not until 11 o'clock at night when I can start on an application, I need to have the most effective focused bite size chunks about what is this app looking for? What format does it need to be in? Is there a video tutorial? Is there a little bit of guidance on how to do this? If I have a quick question, how can I get that question in without having to think about what subject line do I need or how do I phrase this? So I look good. There's a lot of trepidation among small businesses when interacting with lenders because they don't want to look like they're not eligible. And so you ask too many questions and maybe you think that you're giving them a vibe that you're going to be more risky. But yes, too few and you get frustrated and give up or you lose your place in line or you name it. And there's this tough dynamic where, you know, just because someone's asking questions during the application process doesn't mean that they're not going to be a good borrower by having a platform that could educate. Being able to have those really precise conversations is really what what applicants need it while they're running their businesses. They need to be able to stay focused. A lot of these insights have really come from this impact mindset, just thinking through this bigger picture of impact. And what are these people actually experiencing? Are there false positives that people are receiving, such as an applicant dropping off the radar for a couple of days? And maybe it's because their kid got sick, but the lender might be thinking, oh, gosh, maybe this person will be reliable as a payer. So just even little things like that where even in the platform that we've built, we've built in these both kind of subtle and overt reminders to applicants where if they have taken three or four days, so they'll get an automatic reminder from the platform instead of the lender having to do it and then get weekly updates on Monday and these kind of various reminders throughout the week to continue and just updating them to where they're at in the process.

Chris Byers: Who is it you want to see impacted here? Who are the people that after they interact with you and you connect them with the right lenders, who is it you're trying to impact?

David Taliaferro: It's several. It's the lender as much as it is the small business. What we're identifying in here is that most solutions for lenders are really based on the customer discovery that's done with lenders and not with lenders and their customers. And so we want to understand their customers so that we can provide the best solution to the lender. But from an impact perspective, all small businesses are creating impact. There's always this debate around social entrepreneurship, et cetera, et cetera. You're creating value. If you aren't creating value, you wouldn't be open very long. But from my perspective, if we can impact the lending world, then not only are these lending teams able to offer more loans, so on the benefit, you can manage more applications at once, hundreds of applications instead of dozens. So not only are they able to grow their businesses and provide more value, but their clients, every client that they able to serve and get that funding out to, chances are it's going to impact jobs, job creation, local resources, local value creation. It as if you're working on a platform like this. It's a chance to really help both sides of the coin, if you will, not just. Our capital out to small businesses, but lender growth and lenders abilities to do the same thing, grow their team and provide more value through more capital gets distributed.

Chris Byers: What do you think people would be surprised by when it comes to raising capital or having access to resources? What are some of the things you have discovered?

David Taliaferro: People just don't realize how different accessing small business capital is from, let's say, a mortgage. The process is similar. You can navigate both processes on linear fit, for example. But the risk profile, everybody's doing mortgages relatively the same way. If you've had a job for so long, if there's an appraisal, if you have a certain amount of income, there's tons of really great stats out there. But that loan is mainly tied to a large asset. And when it comes to commercial lending, it's very different. One lender might say, oh, you've got five years of industry experience. That's great. You're probably have really high odds of succeeding while the other lender down the street might say, we don't really care about industry experience. We want to know about your management experience. Everybody, when it comes to commercial lending, again, there is some kind of bread and butter approaches to commercial lending, but it's pretty unique from lender to lender. And and we saw this as well, where people would go through and try to get small, smaller business loans and they just been approved by mortgage. And they're like, I don't understand why I'm having trouble with this business loan. Like, I just got approved for a mortgage and the business is pretty different. So I think on the most basic level, I start to talk about just, hey, this is a really different way of underwriting a loan that things could be going great even for a business, things could be going great. And then all of a sudden maybe they get sued or maybe some policy changes and it becomes harder to do what they do from a tax perspective or there's a certain aspect that needs more verification or you name it. There can be things that jump up that just aren't typically happening. And in more of a home loan, car loan type scenario,

Chris Byers: we've mentioned the importance of local economies. Obviously, we all hear about the national economy a lot. And in fact, it really probably didn't even register to me until you mentioned it earlier, that we nearly never hear about our local economies, at least in a way that's digestible and feels much different than the kind of national narrative. What do you think the importance is of the local economy

David Taliaferro: when cities are bringing new folks to town, for instance? I'll give Louisville examples because I'm here in Louisville, as Warby Parker was considering a Louisville. I was out with a friend one night at this local gastro pub place called Holy Grail. And sure enough, the mayor shows up and they show up with the team and humanized great skyscraper downtown. And we got home either urban or suburban, and that's it. This seemed like a fun place to live. Probably not. And the difference in between and really what tend to be a lot of the culture creators in a community are the small businesses, is that local economy, not to mention the fact of the army of small businesses that it takes to really support these larger companies in what they're doing, and that life would be incredibly boring without that local economy. And then also going back to the whole job creation side of small businesses and how they're the main employer in the US. We live in a world where it's a lot easier to catch attention with some company raising fifty billion dollars is fifty billion dollars is a lot of money where if we take a step back, maybe the majority of our time should be really looking a little bit more into our region or our local the health of our local economy or celebrating it, figuring out a way to celebrate and promote what's happening local.

Chris Byers: You know, it's a really cool thought there that I think of cities I've lived in before. And obviously the culture is what you get bought into. It's yeah, it's location. And but plenty of people live in poor weather places because the culture there is something they just buy into. But I haven't really thought about the fact that culture is really built by those small businesses. The gastro pub is not a big chain. Likely that is coming in is a big corporation. They're relatively small business and it's a really cool idea. You're talking about this idea of really almost bringing equity to how capital gets raised. How do you define equitable capital?

David Taliaferro: I think that there's an aspect of equitable capital that is about having the ability to pursue a legitimate idea. And in while it's tricky to establish really what is a legitimate idea, the truth is there are people with similarly legitimate ideas that are getting capital and some aren't. And so how do we create systems and how do we affect systems to where it can become easier for the lenders of the world to review everybody and have a standardized review process across the board? The smaller loan amounts, it takes the same amount of time and effort to do a large loan as it does small loan typically. So getting back to this idea of equity capital and small businesses, if you can come up with a solution or a system that allows each lender and its own prospective area to do smaller loans or to look at more loans at once, then I think you're getting a little bit closer to a solution that's going to help out and help to turn the tide a little bit on equitable access to capital.

Chris Byers: So I think you've made some really obvious examples of how really those who want to borrow money could benefit from wondering what's going to motivate the actual lending institution to say, oh, I. I need this product and what's going to cause them to maybe want to dig in and figure out if you'd be a good fit for them,

David Taliaferro: 2020 has really exposed the gaps in personalized automation and the ability to really do a lot of applications online, a lot of aspects of the application online. It's hard to help everybody understand kind of the scope when PPI hit and these emergency funds came around, you had teams that we're seeing easily, maybe even 50 times in a month, versus what they normally see application wise. And so they had their core team that already, I'm sure they were optimizing. And so maybe not for peak time. And now you had this big time that comes in that's just unheard of, unfathomable, really, and a lack of digital or online platform. That's going to be a huge problem. We're entering this phase where and most lenders knowingly admit this, where it's going to be harder and harder to distinguish the advantages between various financial products. And therefore, it really does come down to that service aspect. When I asked lenders, hey, do you think that those business owners you're working with are hanging out with their friends and bragging about how much money they borrowed, or are they talking about how painful it was to get the money or not get the money and get someone in? That conversation is going to say, well, it was pretty easy for me. And then those two business owners are going to want to follow up with that lender next time it comes down to we've started to write some articles around this around, hey, on the surface, you might think that managing a lot of applications is a is a technology issue, but the application part is where you're interfacing with the client. And that's the part of your your job that's the most out of your control. How do you focus on this application volume and this scalability for your team, even when it's not covid? How can you solve all of the customer service side? Because you don't want to put it on our network and get the loan done, only to have a customer that would never use you again because of their real experiences with that application process? That's just a few of the reasons why A IF is attractive. We're not coming in and saying this is a rip and replace solution. I think a lot of startups like this idea of saying I'm going to build this whole new Indian tool and we're going to sell it for six hundred thousand dollars and it's going to take a year and a half to sell. And then the lender is going to have to take two years to implement it. And that's not a very appealing process for anybody. Then the trick is if these other platforms are really designed pretty well for what they do well, which is the behind the scenes tools, how can we become a really premier front end solution? How can we lean into the front end, make sure that we're connecting with these other tools that have our day in and day out, be continually making that experience better for the customer of our customer and for our direct customer, the lender, knowing that those two things are symbiotic and are going to improve efficiency for both groups.

Chris Byers: I would love for you to talk a little bit about how you got involved with Kiva. Sounds like a few years back as a Kiva fellow and what it is and how that's impacted what you're doing today.

David Taliaferro: I was just hanging out on Saturday mornings at a local coffee shop and an older gentleman sat next to me and saw the book I was reading and he started talking about several topics, but among them was Kiva. And that was that. It was the first time I'd ever heard of Kiva at this coffee shop, just chatting with the stranger on Saturday morning. And he's like, yeah, it's real interesting. There's an international component to Kiva, which is how they got their start. And he was talking about how you could lend twenty five dollars to some fishmonger in Uganda and et cetera, et cetera. And I just thought, wow, that sounds brilliant. And this started a multi-year, probably six year off and on research campaign of mine, just learning more about micro lending, microfinance and just and thinking through these different solutions. As time went on, I had my eye on Kiva and it really wasn't until I had started Alexis Ventures that we realized that I was made aware of the US program. And so their US program was taking a lot of what they had learned on the international front and applying it locally. The big difference in the US was the ability to have crowds directly fund entrepreneurs that they in a lot of cases, they actually knew. Now it's not limited to regional. One of the most empowering and amazing things is I worked with entrepreneurs that were using Kiva was their ability to go on there. And they started their campaign and they saw their friends around town were giving, lending them twenty five dollars or whatnot. And then once they made it to a certain amount, they made it to this public period. They started folks lending to them from Kansas and from Florida and from Michigan and then from England and then around the world and is even more or equal to the capital that they got off of the platform. At the end of those campaigns, they would nearly be in tears of just, gosh, I've gone to holiday after holiday where my own family has told me to give up and go get a real job, you name it. And here are my customers and here are people around the world that believe in me. And they're letting me this money at zero percent. And so it just is this amazing caps out the highest Loan there was 10K. So it's not meant to be some go big or go home type platform. It's meant to say, hey, if you're one of those entrepreneurs that is struggling with friends and family capital or just needs that bump to get that first. Our time in play or whatever it is, how can we help be the catalyst so that one day you're that company that's looking for the million dollar loan with your local bank? And so that fit really into the mission of the mission that that I was assigned at AVX was was to increase access to capital. And so it didn't have to be just our solution, which we call the growth loan. We saw that helping to promote Kiva and much Kiva alongside the growth on would be even better. And that's where just personally, I think if there's ways to look at existing solutions or ways to collaborate or team up with other groups, either locally or nationally, that that have resources like this and help to optimize them, why not? Why why does your solution have to be the main solution? So we actually started to morph the growth loan in to incorporate incentives to use Kiva. So maybe do a smaller loan amount on Kiva, then you can do a larger loan with the growth loan. You pay that back, go back to Kiva, etc. and really trying to think of a solution stack of how do we create layers of capital to where we can get that person bankable, mainstream, bankable, and with the larger company and larger loan amounts. And it was aligned with our mission and we had the available resources and the desire really to go into communities and beyond Louisville and to share what we had done with Kiva locally and to continue to optimize that as an off the shelf solution for regional economies and small businesses.

Chris Byers: That's excellent. Each conversation we have on the show ends up highlighting innovative ideas, fresh perspectives. And as you can see, David has reimagined just a better experience for lenders and their customers. If you could give advice to our listeners, how do you think they can unlock their genius to think differently?

David Taliaferro: One of the approaches that we've taken on lender fit as we we do want lenders to be able to easily try new things out. And so we've taken this approach of click to create and you can create any sort of application workflow you want very easily customize it, notifications, alerts, all that sort of stuff. And most people aren't going to be a lender. That's going to be a customer benefit. But anybody who's listening, I think, to really take advantage and think outside of the box of the tools that allow you to click to create obviously forms, that is one of those and forms is a great option. Regardless of the entity that you're doing or even if you're exploring some ideas, you can create some pretty powerful solutions on form stack alone around gathering information and producing documents that can allow you to prototype and experiment in ways that don't require you to go raise a hundred thousand dollars or a million dollars to get started. And obviously there's a lot of tools that can allow you to do that. But more than ever, the world we live in, the tools at our fingertips to start something, create something that really cost pennies compared to what it was like even 30 years ago is just amazing. All the times I sit here as a co-founder, I'm like, if everybody knew that they could access all these tools to build things like what? How many more entrepreneurs would you have said? I think that's one thing that people can do is if they are feeling creative and they feel trapped just by software that allows you to start building something and maybe some software, maybe it's tools in your garage and you start building something. A big fan of a building, tangible solutions, real world solutions, as well as technology.

Chris Byers: Yet it's a wonderful thought. And I think the the idea that you're really bridging two things together. One is this like how do we use technology to connect people who aren't really even trying to use technology? It's just the way you're solving the problem for them. But also this whole idea that there are so many effectively no code tools out there, you don't need to necessarily go get a degree. You don't need to. If you spent a little bit of time trying to understand how those products work, you'd be a marketable kind of entrepreneur to businesses who are just trying to solve basic problems. So it's an awesome idea. I'm curious, you've obviously desired to make an impact while you're doing business day to day. What are you thinking about in the future? How do you think that might change for you in the future?

David Taliaferro: I guess over the last six years or so, one of the things I really enjoyed about designing and promoting some of these solutions was just giving you a chance to meet so many people and just live vicariously in a way through them and and their small businesses. Since getting up off the ground. It's just it's still pretty incredible to see a problem, to build something and have it be out there in a way that people deem it worthy of paying for is just an awesome experience.

Chris Byers: To learn more about how people are reimagining their world of work, head over to formstack.com/practically-genius. Thanks for joining us today on this episode of Ripple Effect.

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