Performance AI
By Santiago Bustamante, Jiawei Huang , Ernesto Nam, Roy Lu
Executive Summary
When we think about redesigning finance, it is essential to take into consideration the problems that minority entrepreneurs face. These are hard working people that are looking to build meaningful businesses, while helping their communities thrive. With our team, we did a lot of research about the story of these entrepreneurs and how they are trying to kick start and scale up their businesses. We were expecting to hear the normal development cycle of a company, where they find a problem, develop a solution, test it, iterate it, hit product market fit, raise capital, and then scale.
Problem
However, we saw as a common pattern that these entrepreneurs hit all of the first five milestones without being capable of going forward and raising capital. On the one hand, they believe that VC funds are going to dilute their ownership and they feel that they can’t perform at the speed and scale that they demand. On the other hand, when they want to get access to credit from debt banks or debt funds, they are rejected immediately before even looking at their performance. This happens because these entrepreneurs don’t have the network nor the “stamps” of expensive, elite universities nor of working background in finance or bigtech.
However, these are entrepreneurs that are growing their businesses 60%+ per year with very healthy margins and with a lot of potential.
That is why under this context we are committed to changing this reality. We want to allow entrepreneurs to get the fuel they need to not just grow their businesses, but to achieve the underlying missions that these organizations have in the world.
Solution
Performance AI allows entrepreneurs from any background to access capital from lenders worldwide by showing their business’ performance, hence overcoming barriers such as not having a strong network of debt funds/banks or even race & background. Through Performance AI, entrepreneurs get an indicator of their business which is based on objective metrics that evaluate the company’s potential. These metrics are trustworthy because they range from past performance to even founders’ background and commitment for their community. The AI developed behind this has performed exceptionally in giving entrepreneurs an indicator. Entrepreneurs then use this indicator to apply to top-class and global lenders who use the platform and keep track of the entire process: they can visualize who viewed their performance indicator and how the fundraising process is looking for them.
When an investor accepts the deal from the entrepreneur, they get connected and move forward from there. By doing so, entrepreneurs from any background, as long as they’ve demonstrated a solid track record and growth, not only have access to top lenders or other institutional capital opportunities, but they also overcome challenges that could have affected the visibility of the entrepreneur’s business when getting access to capital. Additionally, Performance AI seeks to give the entrepreneur more ownership and authority throughout the process by allowing them to set the terms they prefer.
From the lenders side, Performance AI becomes a continuous source of deals and it allows them to quickly and trustworthily identify businesses with the potential they seek. Signing up to the platform can be done in a matter of minutes and they will be receiving applications constantly. Moreover, it is an opportunity for lenders to advocate for entrepreneurs that may otherwise be overlooked and strengthen their thesis even further.
Conclusion
As innovators in the financial sector, we have listened to the storylines of various entrepreneurs and identified the segments with the most drastic drops – aka pain points. One of the critical pain points is the lack of access to funding and contract consideration. Current funding environment leads to network-based accessibility and biased considerations.
Performance AI will bridge a gap to create an entrepreneur funding environment that reflects the diversity of the world we live in. Performance AI provides an objective, network-agnostic marketplace to match promising startups and vendors with potential customers, lenders and venture capitalists.
The end result is that institutions such as Apple and SVB would have the tool to remove bias in the selection process of vendors and funding recipients who may be net accretive to their ecosystem. On the other hand, under-networked entrepreneurs have widened opportunities to get the fuel they need to achieve their mission. Performance AI provides an inclusive marketplace and objective platform for URG entrepreneurs.
On May 25th, 2022 the Redesigning Finance students presented their work to a panel of in-person and virtual panel of experts working within Apple, Silicon Valley Bank, and entrepreneurs in various industries.
