LoanPro CEO Rhett Roberts on Bootstrapping, Brainstorming and Building a Better Mousetrap
Americans hold tens of trillions of dollars in outstanding debt, from mortgages and credit cards, to student, auto, and small business loans. For mortgages alone, U.S. consumers collectively owe more than $18 trillion, and another $1 trillion more in credit card debt. Few people think about the backend servicing – sending statements, collecting and remitting payments, chasing delinquencies – required to collect on all these loans, but it’s a massive business worth more than $6.7 billion annually. And, now, fintech apps are enabling entirely new types of lending, including point-of-sale finance and buy-now-pay-later (BNPL), creating a surge in the number of loans needing servicing. Yet legacy servicing platforms have not kept pace with this new digital-first world.
That’s why LoanPro, an API-based loan management platform hosted entirely in the cloud, is growing so fast. Founded in 2014 by brothers Rhett, Ben and Lloyd Roberts, LoanPro’s platform manages billions of dollars, millions of loans, and hundreds of lenders including traditional and alternative lenders and servicers, covering almost every type of loan – from prime and sub-prime, to BNPL, personal and auto.
FTV led LoanPro’s $100 million Series A in July 2021, as the company’s first institutional investor, and has since helped the company source new customers, hire top talent and expand into new segments. We recently sat down with Rhett, CEO and co-founder of LoanPro, to discuss bootstrapping, brainstorming and building a better mousetrap.
You’ve been in the loan business for a long time, having previously co-founded an automotive dealership – for which you built your own loan software – and then two different automotive finance companies. What drove you to start LoanPro?
About 20 years ago, as lenders ourselves, we couldn’t find a loan-servicing platform that provided everything we needed. We had software for loan applications and underwriting, but the problem was getting the money back; no software existed to help us keep track of and collect on the loans once they were issued. This led us to build a loan-servicing tool for our auto-lending business, but then lenders in other spaces – construction finance, mortgage lenders, banks and more – kept asking if they could use our software too. Eventually, we realized “there’s a business here.” In a nutshell, we power financial innovation, and we’re very proud of improving the loan repayment process for both lenders and borrowers.
LoanPro has grown incredibly fast, reaching a milestone of processing more than a billion dollars in payments a month, but you bootstrapped the company until FTV provided your first outside financing. Would you recommend this approach to aspiring entrepreneurs?
If you’re patient, flexible and committed for the long term, then bootstrapping is a great approach. But it requires a lot of sweat equity and doesn’t work if you just want to scale quickly and get to an exit. Though it’s now in sight, we didn’t originally set out to build the world’s biggest loan servicing software company. At first we just needed a tool to solve a problem we had ourselves. We pivoted a few times, put some features out there for others to try (several of which didn’t pan out) and over time applied our learnings, failures included, to build and improve a scalable product.
By the time we raised capital, we were already cash flow positive and profitable, so we didn’t exactly need the money to continue growing and being successful. Rather, we took a strategic investment from FTV to help us expand into new markets and bring our product to more financial institutions around the world.
Tons of bootstrapped companies that end up wildly successful are very different from the original vision. We’ve always been in this for the long haul. One of our core values is “The Goldilocks Rule” – the idea of sustained momentum to achieve a goal.
Embedded finance has quickly revolutionized lending with the future of lending moving to digital. How does LoanPro work with fintechs and what is your outlook on the future of lending?
Fintech has already upended the front-end for consumer transactions – payments, money transfer, applying for credit cards, mobile banking, the list goes on. But the backend of the financial services industry is much harder to shift because it’s dominated by legacy platforms created 30, 40, even 50 years ago. When it comes to loans, both lenders and consumers are frustrated. If you’ve taken out a mortgage recently, you know it’s still a very analog experience; you can’t see your money in escrow, can’t make electronic payments, have to wait days for checks to clear and then don’t get online access for weeks or even months after your loan has been finalized.
We believe digitizing the entire back office of loan servicing is the only future that will work for both lenders and borrowers. With digital loan servicing, lenders get lower costs, more efficiency and fewer missed payments. They can also reach new markets through digital outreach, increasing financial inclusion. For their part, consumers get a better, more transparent, self-service loan repayment experience, accessible 24×7 online or mobile.
What is a unique aspect of LoanPro’s culture that you have worked hard to instill and why is it important to you personally and to the company’s long-term growth?
Fundamental to our culture is our belief that you can turn an idea into reality with support and hard work. We encourage all of our employees – in every department and at every level – to come up with ideas and then take action to bring them to life. We have a specific structure in place for employees to officially propose ideas and get the support they need to make them happen. We value constant brainstorming and embrace failure, and for us it’s never about one individual’s ideas but about having a tapestry of ideas. There is nothing that endears employees more to our company than the practice of welcoming their ideas and helping see them to fruition; I’m convinced that’s why we have such low turnover.
- Why We Invested
- Why We Invested