Monday, January 5, 2009

ZimpleMoney launches social financial platform

ZimpleMoney launched a couple weeks ago as a platform which democratizes financial activities by giving people tools to select, buy and provide self-directed financial services. CEO Steven Rabago explains what that means and provides valuable insight into ZimpleMoney through the following interview.

What is your background and what inspired ZimpleMoney?

I worked in the commercial banking industry during and after college then started a consulting company advising CEO and business owners on how to raise debt and equity financing. The consulting practice evolved into doing board and C-level strategic planning, financial consulting and management turn around work. There came a point in time where I was tired of fixing other peoples business issues and wanted to start or buy my own business. So in 2001 I funded a start-up location-services company called Telogis and led it until 2007. I sold a portion of my interest in the first quarter of 2008. Telogis provides web-based fleet management software and a geospatial software map engine for software developers. I am on the board and retain a significant interest.

As I was transitioning out of Telogis I established some criteria for my next venture. I wanted a business...
  • whose customers where ultimately a consumer;
  • that enabled people to do good - not just be more efficient;
  • where the team shared my values about having fun and working smart;
  • with a sustainable business model;
  • with cash flow to self fund the great ideas of its employees and partners and encourage their entrepreneurial spirit;
  • delivered a product to market quickly;
  • designed as a platform that enabled rapid deployment, re-branded and where others saw niche opportunity

What inspired ZimpleMoney?

I had a, “if he can do it, I certainly can” moment. Late in 2007 I read that Richard Branson had just purchased a Waltham MA based company called Circle Lending. If Sir Richard could do it, why I certainly could! With my background in finance and banking, the business model was very attractive to me. It also fit all my business requirements.

What is ZimpleMoney?

ZimpleMoney is a web-based product enabling people and organizations to manage and administer financial agreements. Samples of these agreements include loans, leases, rentals, tithing, trusts and settlements. ZimpleMoney focused on “naturally occurring” social networks like family, friends, churches, schools, organizations, non-profits, charities, trusts and foundations. ZimpleMoney sends bills, receives and distributes payments, post payments to ledgers, sends late notices, sends alert messages throughout the process, provides tax records and storage for file and document management and sharing.



Who is behind ZimpleMoney?

Scott McGarrigle and I are behind ZimpleMoney. We have been funding the business for the past year and will be adding a rounds of Friend & Family, Angel and VC investors in 2009. Scott and I have known each other for the past 8 years through Vistage. He and I began talking about the application in November of 2007, built specifications in early 2008 and started coding in late April.

In many ways, ZimpleMoney seems like a mix of Prosper, Lending Club, Kiva and Virgin Money. What are the similarities and what are the differences?

ZimpleMoney’s main difference is in its design and intention. We designed the software and business model to enhance engagement and communication within social finance communities. A community by our definition is two or more people engaged in a shared financial agreement. We also wanted to build a platform where the consumer could pick and choose services of traditional banks through the ZimpleMoney platform. We wanted the ZimpleMoney platform designed to manage multiple bank services plus your personal social finance activity through a single site.

ZimpleMoney looked at the various places people have formal, informal or tacit financial agreements. The most obvious is a loan – which is where our competitors focused their attention. When we looked around we saw loans, leases, rentals, tithing, trust, settlements and goal based deposits.

ZimpleMoney is offering certain portions of its software for free to registered users. None of competitors are offering free software.

We are similar to VirginMoney in that our direct customers know each other and have already come to an agreement prior to using our services. We are similar to Kiva in that our members can use the ZimpleMoney system to manage a micro-loan program of their own. Kiva seeks donations to fund itself where as ZimpleMoney is a self-sustaining business model.

We are not like Prosper and Lending Club in any way. Prosper and Lending Club established a lending marketplace where people offer their loan to buyers who bid to buy loans.

Where did you get the name for ZimpleMoney?

Do you like corny? We wanted a word to express fast and simple. Fast and Simple = “Fimple,” no that did not work…Zippy and Simple = “Zimple,” that works! Coincidently, it works really well with our product branding strategy as well ZimpleMoney, ZimpleCause, ZimpeTPA, ZimpleRents, ZimpleLease etc.

How does ZimpleMoney make money?

We have several sources of revenue: loan set-up fees, monthly recurring transaction fees, recurring enterprise license fees, advertising and related product sales.

Members have several service level options.
  • FREE – you do all the data entry, manage up to three loans on the network (the free product will be available in a few weeks)
  • Introductory offering - $39.99 per loan set-up and $7.99/loan/mo (regular price is $99.00 plus 9.99)
  • Enterprise/Business user - $100/mo plus $7.99/loan/mo
  • Non-profit users have a special pricing plan as well - $50.00 per month plus $7.99/loan/mo

ZimpleMoney service include: sending bills, sending payment reminders, receiving and distributing payments, posting account ledgers, sending late notices, status message alerts throughout the process, provides tax records and the ability to upload and share digital files, documents, photos, video’s etc. Members who are parties to the agreements have secure access to their account information anytime.

Your site has been live for a little less than a month. What has the reception been like so far and what have you learned from your users?

I am very pleased with the interest we have received so far. In fact it is a little overwhelming. Keep in mind we have not sent any press releases or announcements to the media. And it was not till last week that we saw any search engine indexing on the site.

Maybe the best way for me to answer your question is to tell you who is showing up. As of yesterday, we have had just under 1,000 people from 33 countries visit the site. Most of the “Contact Us” inquiries have expressed interest in using ZimpleMoney to manage a loan servicing or rental back office operation.

We are engaged in discussions in some unique vertical markets:
  • Two micro-lending companies in Southeast Asia
  • One non-profit that wants to manage its micro-lending programs in North and South America
  • A network of 8100 independent auto dealers
  • A company that manages equestrian centers
  • A company that wants a back office for an online student lending business
  • Web-based Real Estate Data Company that wants to co-market to its customers
  • A dental finance company
  • A veterinary group
  • Private real estate lenders
  • A church looking to manage tithing
  • Private real estate brokers managing rent to own properties
  • Private Charitable Trust looking for a product to manage “program related investments”
  • Web-based automobile finance company
  • Investment group who wants a place to share information (financial reports) and collaborate with respect to their common investments

Our users are telling us they want more of everything: advanced loan and rental options, rental application processing, loan documentation, bad debt collection services, loan secondary market options, deposit services, API’s etc. They want one place to manage all their financial services. It is clear we are on the right track yet still quite away from reaching that ultimate objective.

Lending Club has registered with the SEC to provide loan services. Other p2p lending companies have all closed (at least temporarily) in order to meet regulatory requirements. What is the regulatory situation for ZimpleMoney?

Back when I first looked at p-2-p financial services, I was concerned that all our peers, with the exception of VirginMoney, were violating either banking or securities laws. My objective was not to be a regulated enterprise. When we built the business model we looked to VirginMoney (fka CircleLending) as our guide.

ZimpleMoney intention is to provide software to both regulated and non-regulated users. We are not offering a “bid/ask marketplace” solution to our business and enterprise users unless they are prepared to invest in the cost of becoming a regulated business.

I think of ZimpleMoney more as a financial agreement administration service that offers social network tools to enhance engagement and communication between parties with common financial interests.

What are ZimpleMoney's biggest challenges?

Our biggest challenges are the same as most start-ups: hiring great people, staying focused, executing the plan and raising capital to grow our business.

What future plans does ZimpleMoney have?

ZimpleMoney will be releasing it free software within a few weeks. We have an aggressive technology road map that includes:
  • features to support more advanced loan agreements,
  • social network functions like in network messaging and live online voice communication,
  • advanced modules for property management, leasing, tithing, trust and settlement administration,
  • free allowance management product for families
  • dedicated deposit system,
  • API’s for strategic partners and licensees

I am focusing on key strategic relationships with larger commercial users managing existing and new loan portfolios; and raising money for ZimpleMoney.

Is there anything else you would like to add?

One of my personal motivations was to empower non-profits, trusts, and charitable organizations by providing access to a low cost software product enabling them to provide social capital within their communities. There is a huge opportunity for charitable trusts to make “Program Related Investments” (PRI’s) to non-profit organizations. By example, the David and Lucile Packard Foundation are reported to have nearly $160 million dollars invested in PRI’s and have been doing so for many years.

ZimpleMoney system enables charitable foundations to team-up, communicate, engage, “co-lend” and “co-partner” in worthwhile causes. Foundations with smaller amounts of capital can join other foundations to make important investments within their community or where they share common objectives.

Here are some links if people are interested in learning more about PRI’s:

www.primakers.net
www.foundationcenter.org/getstarted/faqs/html/pri.html
www.packard.org/categoryList.aspx?RootCatID=3&CategoryID=216
www.irs.gov/charities/foundations/article/0,,id=137793,00.html

The bottom-line: I think the peer-to-peer social finance movement is a long term trend. The commercial and investment banking industry and the regulatory agencies worldwide have largely failed. High risk and high leverage coupled with the sale of that risk is a living example of the “greater fool theory.”

I still don’t think the banks quite get it, they want to “control” customers; ZimpleMoney is the customer’s partner. ZimpleMoney democratizes financial services by giving people tools to select, buy and provide self-directed financial services. Zimpley said, “ZimpleMoney enables choice.”

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