A lot of headlines are devoted to stories of heroic startups struggling to get traction before achieving their eureka moment and scaling to huge valuations and exits. But there is a far greater number of small business journeys that quietly create value for their owners, employees and customers - and it’s these 200 million businesses worldwide that make up the bedrock of local communities and of the global economy.
The small businesses is an important topic and continuously appears top of national agendas, especially around election time. For one, they are important job creators. They also hold the key to continued national and global growth even as markets and economies slow. The willingness of small businesses to take risks in the pursuit of growth is a driver for genuine innovation.
Yet, despite their importance, there are still huge systemic problems for small businesses that make the lives of business owners and operators even more challenging. This is especially true in fast-growing emerging markets, but is universally the case.
The greatest circular dilemma that all small business owners face: how to afford to hire the talent or purchase the resources necessary to get to the next stage before you’re at the next stage…
All small business owners know the agonising decisions made whilst staring at a cash flow projection.
For the majority of profitable, stable businesses this typically means borrowing. Banks are well equipped to lend, and they desperately need places to invest at a time when unfathomable amounts of capital is tied up in sovereign debt earning negative yields. Yet there remains a global funding gap of trillions of dollars.
This problem is the most severe in emerging markets - countries that are in desperate need of access to reasonably priced lending, not just for their own sakes but because they hold the key to future growth of a creaking global economy too reliant on the developed world old guard. Some of the world’s greatest entrepreneurial talent is right now being lost to the world’s greatest problem spaces, merely because they can't access credit.
But the problem is not just in Sub Saharan Africa, South East Asia and Latin America. There are problems everywhere - in the US, women-owned and minority-owned businesses regularly experience bias in accessing finance. In Europe, the banks have to be either forced or bribed to lend to small businesses.
We are not the only ones to take note. The World Bank is all over this issue and has made significant investments. Same for politicians, incumbent and aspiring, right across the world and the political spectrum. Yet, the problem persists.
There are endless causes we can point to - institutional bias, availability of bank branches, the split on emerging market sovereign debt rates. But the most crucial issue is lack of good, clean data on small businesses that would allow banks and other lenders to accurately assess credit risk. In lieu of this, lenders have to assume maximum risk, pricing interest rates and fees accordingly. Of course these are passed onto the borrower, if they are offered a loan at all. This is how viable, profitable businesses are overlooked every day.
This is why Bright was born. Bright will fundamentally change the way small businesses access credit and other financial services. Historically, it has been the responsibility of a handful of centralised bodies - the Credit Reporting Agencies - to store, manage and refresh business data. We are turning that paradigm on its head.
By making it the responsibility of the small business to store and refresh their own data, it not only provides them with control over their information, but also over their own outcomes. Through crypto we can reward that activity, and through machine learning, we can make sense of the data.
We are believers in the power of the market to find solutions. An open protocol and a decentralised infrastructure means anyone can join us in our mission. As a lender we will participate in the marketplace not as an arbitrator, but merely as one participant on equal footing with all others.
Our mission is ambitious - to level the playing field by removing all bias from the lending process and as a result eradicate the credit gap for small businesses around the world. By partnering with the banks and other actors in the financial services industry, by working closely with small businesses to get access to crucial data for credit risk assessment, and most importantly through the support of you, our community - we can succeed.
We are Bright and we are building financial services on the blockchain to close the credit gap. We invite you to join us in our mission.