Defining core business value


Overview

An early stage financial technology company needed to refine its strategy and understand its core value in order to deploy its resources efficiently.

Our client had started as a full-service online lender to small businesses, but was gradually evolving into a technology provider to incumbent lenders. Our client also needed to validate potential market opportunities before raising and committing new funds to development and marketing.

The most efficient path

We listened carefully to their description of our client’s challenges, and quickly sensed a degree of frustration regarding limited market traction in certain segments and the high cost of marketing to win business. It became clear that our client did not need a generic strategic pitch, but rather an incisive analysis of their own economics and business model.

We focused on three essential elements that would ultimately allow the company to chart the best course: the market opportunity, industry microeconomics, and the company’s cost-structure. We worked efficiently to analyze the market size of two key segments and the value chain of the small business lending process.

We compared and contrasted the costs of incumbent lenders in marketing, loan processing and maintenance, analyzed the company’s cost base, and worked with our client to build a streamlined, accessible, working financial model, isolating key business drivers.

The most enduring value

We left our client with a clear, incisive sense of where they could and could not effectively create significant value in the market.

As a result, our client focused its development resources on developing automated business processes and algorithms for small business lending, rather than marketing directly to small businesses. They invested new marketing resources on partnering with incumbent lenders.

Our crisp methodology and targeted analysis helped our client focus its time and money on developing commercially-valuable technology where it had a significant cost advantage, rather than on marketing intensive areas with substantially lower returns on investment.