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Bridge2Capital: Growing Your Business is Our Business

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Mohammed Riaz, founder, and CEO at Bridge2Capital tells us about small business funding. 

First of all, how are you and your family doing in these COVID-19 times? 

Mohammed Riaz: By God’s grace, all our family members have been fine. We have managed to keep ourselves safe from Covid19 thus so far.

Tell us about you, your career, and how you founded Brideg2Capital.

Mohammed Riaz: Like many Indians, I, too, am continuing with my safe 9-5 job. Life was comfortable. I went to the office, returned home, spent time with family, watched TV, then got ready for the next day.

I was working in the financial services sector at the time. My work took me to small towns and cities across India, where I met countless small business owners and storekeepers. What struck me was that each one of them had a similar story to tell: the one of having to close shops due to a lack of funds—seeing them shut down not just their shops but also their dreams had a huge impact on me. A thought lingered at the back of my mind: how can unorganized small businesses be in tune with organized selling?

On November 8, 2016, the news of demonetization swept through the entire nation. Cashless transactions soon became the norm. At that moment, a hazy goal became clear to me – to help millions of small businesses through the power of digital technology.

The next step was a big one. It required me to leave the security of a stable job. Yet, I was very driven to step into the uncertain world of entrepreneurship with a major aim – to empower small businesses. That’s how my company Xtracap Fintech India was formed, and we soon registered Bridge2Capital – our online financing mobile app. 

We built B2C’s supply chain finance model on the principles of ‘reverse factoring.’ We directly pay the shopkeepers’ suppliers first, and later the shopkeepers repay us. Our experience has taught us the value of trust. Hence, as a team, we ensure our work is strongly rooted in the principles of sincere management, transparent transactions, and safe technology.

How does Bridge2Capital innovate? 

Mohammed Riaz: Innovation, to me, is defined as doing the old ways of business in a new way that generates more efficiency with lesser inputs. In this direction, technology has the power to democratize opportunities. We are building a company that is trying to solve the problem of access to working capital to millions of unorganized merchants at their doorsteps. Since time immemorial, merchants to money lenders seek working capital assistance – Merchant of Venice is a stark example of cost to the business. We decide to challenge this by building an innovative process on a mobile application, which allows a merchant to access on-demand working capital from formal financial institutions within a few minutes, not that just, the merchants are also encouraged to move towards formalization by ensuring that the fund is released to GST registered suppliers registered by the merchants against invoices presented by the merchants. The entire process is delivered through a simple and easy-to-use user interface 100% digitally. We are enabling the merchants to harness the power of their business data which are available through verified sources.  

How the coronavirus pandemic affects your business, and how are you coping?

Mohammed Riaz: Covid19 situation had a huge impact on the merchants that we do business with. The lockdown for three weeks and the subsequent stringent measure put in by the Government to control the spread of Covid19 has devastated the unorganized section of the business. Our business, thus, has not been immune to the economic fallout of Covid19. However, the size of our current business ensures that we do not suffer losses that we couldn’t afford. We changed our focus from growth to cash flow management. This has helped us sustain ourselves as a going concern. We also use the opportunity of a slow down in the new business to build better technology processes and new products, which has enabled us to become a full-stack financial services player by offering not just working capital but insurance, saving & digital ledger. 

We have also ensured that no unnecessary pressure is brought on to the customers whose businesses have been shut down or severely impacted for overdue recoveries. We are aware with time, we will be able to collect, but we should also learn to take losses and built intelligence from the data to be able to identify the right type of customers who are able to sustain themselves in the worst of circumstances. We now intend to build our business with the merchants who have shown resilience during the Covid19.   

Did you have to make difficult choices, and what are the lessons learned?

Mohammed Riaz: People’s character & resilience tested during periods of crisis. As a CEO, I had to make tough calls on people irrespective of the levels. The first instinct was to safeguard the livelihood of the team members; however, gradually, one could make out the difference between a contributor and a non-contributor. We had been lucky with our investors supporting us during the crisis, but we were consciously aware of the cash burn and reduced the same by 40%.  

What specific tools, software, and management skills are you using to navigate this crisis?

Mohammed Riaz: Setting up the team to function remotely in less than a week was a key achievement, and we managed to do the same just a couple of days before the lockdown was announced. Our teams seem less move to work from home; the challenge was to ensure that the quality of the work did not go down, and the motivation was always up. We developed different virtual workspace tools to ensure that the teams do not feel the geographical distances. Our technology team delivered more products and processes in the past nine months than anything done in the past. We developed an agent app to monitor the work of the field team. We developed a communication process with our customers to ensure timely feedback about their status. We launched health insurance to mitigate the risk of a health emergency for our customers.

Who are your competitors? And how do you plan to stay in the game?

Mohammed Riaz: Moneylenders to new-age fintech’s providing business loans are the competition. In the business of finance, ‘Trust” plays a critical role. Small business tends to lean towards a supply of money that is instant and easy. The cost of funds is a secondary concern. At Xtracap Fintech we believe that we should provide on-demand working capital at a cost that is reasonable and which helps small businesses grow. 

Transparency, Speed, and Convenience build trust, and we are doing all three and delivering a product the majority of the merchant’s needs – short-term working capital suited to the business needs of each business owner. Technology is key in our delivery of business – which is primarily easy & simple to use UI design for this class of customers.

Your final thoughts?

Mohammed Riaz: When I look back on these three years and the distance we have come, I am amazed at the progress. Over 30,000 customers are registering on our App, 1200 customers being underwritten for working capital and $ 12.00 million of throughput managed by the platform ( disbursement and collections ). We offer a 100% digital approach to a class of customers who are technology-wise shy. We have been able to attract and retain talent in our company from the premier educational institutions. We just need to keep doing things better every day, and we will find the network affected to grow our business model towards sustainability.  

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