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Canary Wharf: How Lenderwize spotted telecoms’ companies’ need for finance

Level39-based firm verifies digital assets allowing money to be lent to the businesses handling them

Digital assets are increasingly important in a connected world
Digital assets are increasingly important in a connected world

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Lawrence Gilioli’s business, at least at present, is mostly hidden from the minds of the public.

Make a call from the UK to Brazil and the phone rings, someone picks up and the conversation happens.

As far as the user is concerned, they’re paying BT for that call and it’s delivering that connection.

Except, in the world of telecoms, that’s not what goes on.

“BT doesn’t have all the lines in the world, so needs to connect with an intermediary or wholesaler,” said Lawrence.

“They, in turn, don’t have all the lines either, so they need to connect to a terminating operator, which completes that phone call.”

It’s in this middle stage that Lawrence, a seasoned entrepreneur with a background in the telecoms industry, has identified his first market.

“These companies are invoicing each other – the middle man has to pay the terminating operator in Brazil and BT has to pay the middle man.

“However, typically the intermediary has to pay Brazil on seven days, but won’t get paid by BT for 60 days.”

That payment mismatch at worst means the wholesaler can’t do business at all, or limits what they can do, due to cash flow.

To address this problem, Lawrence created Lenderwize.

Based at Canary Wharf’s tech accelerator, Level39 in One Canada Square – but with staff distributed around the world in reflection of the industry it serves – its aim is to provide smart finance solutions for these companies.

“We are essentially talking about digital commodities and services here,” said Lawrence.

“Today’s world is ever more digital – that means traditional banks don’t understand it and they don’t know how to fund it, to validate activity or how to mitigate risk.

“So we’ve invented a fintech platform that uses patent pending technology to capture the digital assets behind phone calls, text messages and data use, for example.

“These things are intangible, but our technology makes them tangible because we are able to capture, validate and certify that these are real assets.

“That means you can lend against something Lenderwize certifies has been delivered.

“We understand this market because me and my partners come from this industry, which is huge – $64billion a year and growing. It includes voice calls, text messages, data use and, now, other e-goods and commodities.

“It is hidden to the general public and it’s even hidden to the financial world, because, being digital, once again, they will shy away from it.

“Typically banks or other investment institutions want to invest in real estate, the motor industry or tangible things like that.

“Consequently, there is this whole digital world that is under-served by banks and under-capitalised, but with a tremendous need because this area is only growing in size and companies need access to funding.”

Digital assets are increasingly important in a connected world
Digital assets are increasingly important in a connected world

Having launched the platform two years ago with the intention of building a business ultimately to sell to a large financial institution once the concept is proven, Lenderwize now has 12 staff split across London, Italy, Australia, Holland and Switzerland.

“We have just passed processing 350million calls in the last year and we expect that to double this year and to triple within two,” said Lawrence. “We expect to surpass a billion calls.

“The way it works is that our clients buy into our system and the data is uploaded automatically onto our platform. 

“That gives us access to their switches anonymously, so we can validate and verify that the information they are giving us on a daily basis is verifiable.

“Right now we’re doing that on a sample basis – looking at calls going to the same destinations from the same number and capturing durations and frequencies.

“We’re checking to see if the numbers are real and, ideally, will ultimately do that on every single asset.

“That’s part of our know-how, but it’s the case that the operators in this market require these services, so clients reach out to us because the need is so great.

“We have a very precise credit vetting procedure and our ability to verify the assets means we’ve only had one default so far, which is exceptional.

“I think the ability to analyse beforehand and then to validate on a daily basis is the key to success. It means that if there is something wrong, we discover it immediately, not at the end of the month.”

In addition to providing credit to these wholesale companies, Lenderwize is also in a position to embed a range of financial services in its operation.

Lawrence said: “We’re looking to exit in three years and we think we’ll be sexy to a bank, a telecoms operator, an insurance company or a big bank.

“That’s because ultimately we are an entire ecosystem that can be used for supply chain financing or supply chain payments, but the direction our fintech platform is going in, which mitigates risk, will be adding on embedded finance, insurance and payment solutions, all in real time.

“As this whole world gets more and more digital, the need to speed things up in real time becomes greater, from risk analysis to the transfer of value.

“Our direction is to continue to develop new technology but we don’t want to re-invent the wheel ourselves, we want to develop partnerships with high quality businesses.

“That’s why we’re so happy to be at Level39, because there’s so much interesting stuff going on here.

“We want to partner with organisations doing specific things to add to our mosaic, creating services for our investors and our clients.”

As if revolutionising the finances of the telecoms industry on the business end wasn’t enough to be getting on with, Lawrence also has ideas about how Lenderwize might branch out into the consumer market.

“Today we’re B-to-B and tomorrow we want to be B-to-C,” he said.

“At the moment you’re probably paying a flat fee for your phone contract, but statistically you’re throwing away about 25% of that money.

“We want to give people the ability to convert what they’re paying for and not using.

“Three years ago, 25% of people surveyed globally said they would be likely or highly likely to change their operator on the spot if they got a phone call offering them a new deal.

“Three years later and that figure is 66% – there is no loyalty in the mobile world.

“This means that Vodaphone or BT, for example, could lose their entire customer base overnight, potentially.

“Mobile operators need to create loyalty programs, to create stickiness.

“So we will be proposing our finance-meets-telecom solution on people’s phones, where customers can place unused airtime that they have already paid for in an interest-generating wallet.

“We want to tackle two great inefficiencies – airtime and bank savings accounts that offer low or no rates of interest. 

“We want to convert these from cost centres into profit-generating centres – a tool for everyone to use in a proactive way. We’ll be talking more about this later in the year.”

Lawrence, who holds dual Italian and American citizenship said he’d based the business in London because of the efficient infrastructure, easy access to clients and investors and tax breaks for startups.

“Level39 is at the heart of fintech in Europe, it’s also the coolest place to be aesthetically and it’s connected to all the banks,” he said.

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- Jon Massey is co-founder and editorial director of Wharf Life and writes about a wide range of subjects in Canary Wharf, Docklands and east London - contact via jon.massey@wharf-life.com
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