Beyond The Hype: AI For SMB FintechPrashant Fuloria, FundboxApril 11, 2018

Hello! ● COO, Fundbox● SVP Advertising Products, Yahoo!● CPO, Flurry● EIR, Mayfield● PM Director, Facebook● PM Director, Google

● Lecturer, Stanford, Berkeley & Cornell● MS / MA / PhD, Stanford

The Story Of Tina Paclebar And Jane Nacelli

● Co-owners of RevEx Logistics ● Annual revenues > $1 million● Customers of *** bank for 17 years● Denied $75K loan due to single late

payment, many years prior● Unfortunately, common SMB

experience

SMBs Are The Backbone Of The US Economy

● 30M SMB’s in US● 98% US businesses are SMB’s● Employ 57.9 million people, or

49% of private sector workforce● Generate 1.4 million new jobs

annually

Reference: SBA - https://www.sba.gov/sites/default/files/advocacy/All_States_0.pdfReference: Fundbox - https://fundbox.com/blog/unpaid-invoices/

And Yet...SMB’s Struggle Financially

● 82% small businesses fail due to lack of cash flow

● Most SMB’s wait at least 21 days to get paid

● 81% of SMB’s have $84K in unpaid invoices over 30 days

● Aggregate of unpaid invoices is $825 billion (5% of US GDP)

Reference: Business Insider - http://www.businessinsider.com/why-small-businesses-fail-infographic-2017-8Reference: Fundbox data - http://35.226.251.24/the-unpaid-invoice-economy/

The SMB Credit Conundrum Is Real

● Heterogeneity in business data; traditional underwriting approaches manually intensive

● Smaller loan sizes discourage commercial lenders; cost of underwriting often exceeds revenue

● Lack of innovation; continued use of FICO and personal credit scores

How Can AI Help Solve This Issue?

AI is 1% inspiration, 99% perspiration

1. Leverage secular data trends2. Combine data in new ways3. Resist the temptation to “rule”4. Invest in first-party observations5. Design product for virtuous data loops

1. Leverage Secular Data Trends

2. Combine Data In New Ways

3. Resist The Temptation To “Rule”

4. Invest In First-Party Observations

5. Design Product For Virtuous Data Loops

OK...So What?

● Simplest SMB credit

application process

● Only “FICO optional” 3rd

party SMB credit provider

● Fastest credit decisioning

time, median <1 minute

Let’s Revisit Tina And Jane

What Does The Future Look Like?

● Optimizing SMB2B commerce through combined credit and payment solution, aka Fundbox Pay

● “Virtual CFO” recommendations to help SMBs optimize financial performance

● ...and many other products!

AI is 1% inspiration, 99% perspiration