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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.

Read more: How cryptocurrency exchange Coinjar gives investors options

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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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Canary Wharf: How cryptocurrency exchange CoinJar gives investors choices

Co-founder Asher Tan talks cycles, assets and why dipping a toe into crypto is something to experience

Physical currency is increasingly redundant

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This image is a great big pile of old tech (albeit American in this instance).

While coin has been around for thousands of years, there’s a growing sense that physical money has had its day.

Go to an ATM – machines once used on an almost daily basis. Try and remember your PIN and extract some cash.

See how odd the plastic notes feel, how strange the idea that they might be taken to a shop and broken down into small metal discs representing value. 

Currency was digital before the pandemic but now physical euros, dollars and pounds seem increasingly otherworldly.

That’s one reason, perhaps, why cryptocurrencies seem less and less exotic. 

If wealth is simply represented by numbers on a screen, maybe changing the logo next to them with the hope of making money on the trade is a little less scary than say, walking up to a currency exchange counter and converting a familiar set of notes into something completely alien. 

Maybe it’s why about a fifth of British people have owned cryptocurrency as of March this year – up 103% on 2018.

Statistics like these will doubtless be welcome reading for Asher Tan, co-founder of CoinJar, which operates from bases in Australia, and Level39 in Canary Wharf.

He created the company with business partner Ryan Zhou in 2013 after the pair took part in an incubator scheme in Melbourne as interest around Bitcoin, which emerged in 2009 grew.

“CoinJar is a simple way to buy, hold and sell crypto assets,” said Asher.

“We also have tools, such as a debit Mastercard, so that people can go to any ATM and convert their crypto to any currency they want or spend it where the card is accepted.

“That part of the business has been a long time coming – we’d had previous versions, but we were a small company and nobody wanted to work with us until now when we’ve partnered with Mastercard.

“Most people use CoinJar for some form of asset investment, to just buy and hold crypto.

“The popularity of doing that comes in waves every two or three years.

“You have a huge upswing as crypto rises in value, then cryptomania resumes, but that’s just the nature of the cycles. It’s been easing off in the last three months.”

CoinJar co-founder Asher Tan at Level39 in Canary Wharf

Such fluctuations are not unusual and Asher exudes the air of a business owner content to play the long game.

Bitcoin, the most well-known and first cryptocurrency is famed for its rapid fluctuations in value, having gone from a few pence in value in 2009 to more than £30,000 per coin in 2022. 

It’s still about 50% of the total crypto market but has since been joined by a bewildering array of digital coins – Injective, The Sandbox, Synthetix and Bancor, for example – many of which can be bought on CoinJar for a few pounds.

Ethereum, perhaps the second most well-known, can be bought for about £2,300 at the time of writing.

Doubtless people will continue to buy and sell the stuff in the hope of a big pay day.

But there’s another way to make money from crypto and that was the niche Asher and Ryan spotted.

“Being a startup in 2013 was a good vintage – we travelled quite a bit, saw other companies being built and, in the UK, saw the fintech bubble beginning,” said Asher.

“The message was already being pushed out that London was the fintech capital of the world and Level39 – Canary Wharf’s tech accelerator – was created about that time too.

“That was a bold move by Canary Wharf Group, to combine the existing financial infrastructure with fintech and it’s one that has really paid off.

“Being part of that early group, crypto was a movement – we were all trying to figure out this piece of technology.

“Everyone was trying to push for something but not everyone knew what that was yet.

“Everyone was trying to build services – some people created crypto point of sale businesses, others wallets to keep crypto in and some exchanges so people could buy it.

“Would you use it to pay for coffee? There was even a Bitcoin ATM in Old Street. Back then it was underground, people looking for consumer services.

“Now, in 2022, after the pandemic, crypto is almost accepted as an asset class, not just Bitcoin.

“There’s some debate about how you use it, but no-one argues that this isn’t the status quo.

“The premise has shifted and the imagination continues to grow.

“It might seem crazy to some people, but it’s the job of entrepreneurs to make these things happen. We’re trying to create an alternative financial system for the whole world.”

Bitcoin remains about 50% of the total cryptocurrency market

While the currencies it trades in are very different, CoinJar operates in a similar way to a conventional exchange, charging a fee to change money from one currency to another.

It also levies a 1% fee on in-store and online purchases and cash withdrawals for those using its debit card, available in either physical or digital form.

Having operated consistently in Australia, CoinJar has maintained a presence in Canary Wharf, deciding in 2018 to expand its business in earnest overseas. 

“It’s been nine years since we started the company,” said Asher.

“In that time there have been so many peaks and troughs about Bitcoin – it’s died a thousand times. In the early years, you were wondering if this was a fatal step or whether cryptocurrency even needed to exist.

“At some points the overriding opinion was that crypto was just going to evaporate. So you do need belief and it takes time.

“Like with most good things, you have to wait. When we first came to Level39 we never fully launched and there were questions about whether we should just focus on Australia, but we always kept the membership even when we weren’t operating in the UK.

“So, in 2020 we had a proper launch and now we have six people based at One Canada Square. I think the UK market has always been slightly under-served in terms of crypto services.

“But there are some things it has in common with Australia, such as strong regulation.

“It’s always been a market we wanted to enter because the two countries have a unique friendship. It’s a good place to come for Australian startups.

“In terms of the future for CoinJar, the product is always changing.

“We started this business to provide consumers with an alternative way to use finance, so that means we’ve also got to keep up and change as the industry develops.

“As a business, we’re first generation crypto – we now have staff who are much younger and their views are very different – everything’s going to change, right?

“Now it’s Non-Fungible Tokens and these seemed very strange to me when I heard about them in 2017, but nine years ago crypto was very strange to everyone. It’s important to keep challenging yourself about the reality of the online world.” 

The question all those teetering on the brink of their first investment want answered, is whether it’s worth it?

“Different people have different strategies,” said Asher. “Personally, I’m not a trader day-to-day – I don’t really see crypto as get rich quick.

“With fintech there’s no cap to what it could be, so it captures the imagination and then the sky’s the limit.

“In the early days there were a lot of predictions around crypto – everyone would be using it, the banks would all take it. But, come on, seriously? It might happen.

“The premise of crypto has always been about choice. You can opt for something different – you don’t have to choose one of the big banks – you can use alternative platforms in terms of investment. Right now, that means there are more options.

“Crypto has always been something for people who want to try different things. Right now, I do believe the promise has benefit for everyone in terms of buying and holding cryptocurrency – an experience most people should try. 

“You can get into it for £10, so it’s not a huge financial commitment to try to understand what this movement is about.

“Use it, try to make sense of the technological mystery behind it, and I think that’s the first step to a better understanding of why it even exists.”

  • Cryptocurrency remains a very volatile investment. What you do with your money is your own affair and this article should in no way be seen as recommending the purchase of cryptocurrency.

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