Nick Raphaely, 40, is from Sydney, Australia. He started his finance business, Assetline, in 2013. Assetline is a leading Australian personal asset lender, enabling entrepreneurs, business owners and high net worth individuals to borrow against their high-end personal assets in an environment that is confidential, flexible and secure. They lend from $5,000 – $1m against gold and silver, jewellery, diamonds, luxury watches, fine art and antiques, cars, luxury boats and fine wine collections. Assetline addresses a market need currently not catered for by private banks.
Starting the Business
Q: Where did the idea for your business come from? Where were you in your life and career?
A: In the aftermath of the Global Financial Crisis (GFC), it became apparent to us that banks had become excessively / unduly prudent and conservative in their lending practices. In many cases, creditworthy borrowers were not being funded. This, we felt, opened up opportunities for a focused, niche lender able to carefully identify and manage risk. At the same time, we observed from overseas that disruptive lending models, empowered by technology, were challenging the status quo in global banking. We saw this in areas such as peer-to-peer lending (both business and personal), merchant cash advance, FX and of course the model we chose to pursue, personal asset lending.
Prior to co-founding Assetline, I had been running a private funds management business, Ashton Advisers, which I had co-founded in 2005. The funds management space, while extremely scalable, I found to be very impacted by the swings in the market. This led me to look for a business model which could be resilient across business cycles.
Q: What was the biggest challenge you faced when starting out?
A: In establishing Assetline, we were creating a new category in lending in Australia. Educating the market was therefore our biggest challenge. We observed that owners of high-end luxury assets (valued from $5,000 to $1,000,000) who wanted to borrow against them had nowhere to go. Private banks were happy to hold their cash on deposit, lend to them secured against property and provide wealth management solutions but were unable to recognise their valuable personal assets as loan security. The pawnbroking model, at the other end of the spectrum, was entirely ill-equipped to service them. We therefore saw a gaping hole in the market. But to educate our clients and referral base as to our offering required a lot of time and resources.
Q: What is the one thing you know now that you wish you knew when you started the business?
A: 2 key assumptions that we made in starting the business proved to be wide off the mark. The first was that we thought the business would be very strongly technology driven. In hindsight, technology has proved to be a powerful enabler for lead generation, but our business is at heart an old-fashioned lending business, not a technology business. The second is that we thought that mandating a media company to run our marketing campaign and throwing a lot of cash at this channel would bring us a lot of customers. After dipping our toes in the water a bit, we realized we were much better off developing the networks ourselves via the different verticals in which we operate as channels for lead generation. This has been very successful. We saved ourselves a lot of money and heartache by doing this!
Q: What would you consider your first big success in the business?
A: When we landed our first few large art clients (clients borrowing against art collections), we began to feel we were onto something. These people were proverbial captains of industry with large, valuable art collections. They told us the market had long been in need of a solid, dependable lender in this space. This was very gratifying to hear, because it very much matched our hypothesis in starting the business.
Q: What is the toughest thing about getting to the top / staying on top in your industry specifically?
A: At this stage of our development, I would say it is building rapport with established organizations that we’re looking to collaborate with (e.g. auction houses). As a relative upstart, we’re looking to keep company with venerable institutions, some of them hundreds of years old. We need to demonstrate to them that we’re an important and necessary part of the ecosystem.
The Future
Q: Where do you see your industry heading in the next 5 years?
A: I think technology and regulation will be key factors.
Although, as mentioned earlier, ours is not a technology business, we and our competitors will continue to look for ways to use technology to streamline our operations and improve efficiencies.
In addition, I think that regulation will become more stringent in years to come. This is not of particular concern, as regulation tends to play to the strong, but it is something we’re on the lookout for.
Q: What do you plan on doing / changing in order to keep growing in this time period?
A: We need to continue to work hard to build the networks that will make our business successful. In what we do, the company with the most information will ultimately be the winner. Our mission is to establish ourselves as the ‘go to’ lender in this segment of the market.
Q: What does ultimate success look like to you? How will you know when you’ve achieved it?
A: We have clearly articulated our aims:
- To be the largest Personal Asset Lender across Australia
- To have a dominant market presence in NSW, VIC, QLD, SA, WA
- To develop and maintain industry-leading valuation and logistics expertise nationwide
Q: What do you think will be the biggest challenge facing entrepreneurs in the near future?
A: Funding is always an issue for entrepreneurs. If you are able to, try to commit your own financial resources to your endeavor. This has multiple payoffs: (1) when you succeed, you will own a greater share of the business; (2) it will make you more disciplined in how you allocate financial resources; and (3) when you do come to raise external capital, you will have a much easier sell because you’ve had your own money on the line.
Q: What one piece of advice would you give to someone just starting out in your industry and wanting to make it to the top?
A: Remain flexible and agile but above all, resilient. Persistence and determination will always win the day.