Jed Simon is Founder & Partner and Patrick Yee is Partner of Fast Pay Partners.
AdExchanger.com: Please share background on yourselves. And, where did the idea come from for Fast Pay Partners?
Jed: The idea for Fast Pay Partners was based on seeing the need firsthand.
Patrick: Before Fast Pay, I co-founded of Shopflick, a venture-capital backed video-ecommerce marketplace which was sold to Sugar Publishing in 2009. Prior to Shopflick, I co-founded Rocket XL, a full service interactive marketing agency, so the frustrations of financing growth in the digital marketplace is one I know well. However, my career began with stints at Wasserstein Perella & Co. (now Dresdner Kleinwort Wasserstein) and Soros Fund Management, so thinking outside the box to deal with those challenges also comes naturally to me.
Jed: My trajectory was similar. Like Patrick, I started out in the traditional finance world, as an investment banker at Morgan Stanley & Co. I then spent 10 years at DreamWorks SKG, most recently VP International Marketing and Distribution for DreamWorks Pictures, based in London (and oversaw for new media, finance, and marketing for DreamWorks Records in Los Angeles prior to that). Post DreamWorks I started an international content licensing and distribution business, which had exposure into the performance marketing space, and its inherent the float/finance challenges were requisite apparent.
Jed: There are numerous pain points throughout the online advertising ecosystem we hope to address. Payment terms from advertisers have become extended from net 30 to net 90, and even net 120 for many premium networks. Payables departments at ad networks and agencies are being inundated with calls and emails from publishers seeking payment – we’re here to help solve that problem. Also a signed insertion order representing a 6-month premium campaign is an asset in itself – we can monetize it and provide the liquidity to the site owner faster (rather than progress billing or waiting for full delivery of campaign)
Patrick: There are also sites and performance marketers who have great margins and can meaningful scale their business exponentially if they had the ability to shorten their receivables cycle and reinvest media dollars – we’re looking to become their growth partners. Also with the growth of ad exchanges and DSPs, we will begin to offer clearinghouse services and payment expediting so the advertisers and pubs can focus on what they do best rather than get weighed down by these processes.
Would you equate your services to “factoring” where you provide funds in return for accounts receivables? Is there any difference?
Jed: This is a bit different from factoring in the sense that “factors” traditionally buy receivables outright at a steep discount – taking on collection responsibilities and risk of non-payment. We align more closely with ‘asset based lending’ – or providing liquidity solutions for assets (in this case, receivables). Also, Patrick and I both come from the digital media world and understand the uniqueness of these businesses– traditional lenders don’t understand this market and would never deliver the kinds of products we do.
Who are your clients today? What’s your target market in the advertising world? It would appear social gaming is one focus given a recent article.
Jed: We have a very broad mandate to work with all kinds of businesses, including: content publishers, ad networks (display, video, mobile), exchanges, DSPs, agencies, social apps, marketers, and affiliates. Social gaming has been interesting for us as it’s really a DR business — these apps are heavily advertised on Facebook to drive users, which in turn drive sales. However there’s a tremendous pain point in advertising right now – terms are extended, publishers want to keep upgrading the quality and depth of their content, and that’s a problem we’re going to address right away.
Can you provide a use case of how a typical transaction might work for a client?
Patrick: The process is fast and we are working hard to make it even easier, though ultimately it depends on the client and the type of facility they are trying to raise. First we qualify an applicant via a simple application. After a brief diligence on the client and reviewing their specific needs, we execute a formal agreement, verify the payables being advanced and fund the client. In the vast majority of cases, the entire process, from application to client receiving the funds, is completed within a week. Based upon the clients business, we can extend immediate credit from tens of thousands to several million dollars.
What do you expect the long term benefits will be for participating companies?
Jed: In high growth industries, such as these, access to capital is paramount to growth. For any growing business equity is far and away the most expensive form of capital. By monetizing a businesses existing assets (advertiser receivables) and delay a follow-on equity round for 6 months, a year, or even indefinitely, the monetary benefits (not to mention retention of control) are irrefutable. In terms of other financing alternatives: bank loans require a cumbersome application process and are very difficult to get. Financing by credit cards is expensive, has low caps, and carries personal recourse. Receivables are a terrific underutilized asset which we hope to unlock.
What fees are involved for the client? Is there a maximum amount that Fast Pay Partners can handle? Any minimum?
Patrick: There are no fees to apply for the service. Once a client is approved and begins using Fast Pay there is a nominal setup fee deducted from the first advance and we charge nominal discounts against the face value of each invoice based upon a variety of variables (the client, the advertiser, the average payment terms, etc.). We analyze a company’s receivables during the application process, and they need to be generating a minimum of $10,000 a month to qualify. In terms of maximums, no, there is no maximum loan.
Please identify who or what institution backs your fund. How do you insure that clients who use your service will be paid?
Jed: We are backed a combination of hedge fund and private equity capital (all locally based in Los Angeles). In terms of risk to our clients however, remember, we’re paying our clients are paid upfront and we carry the float while waiting for the advertisers to pay. We’re the ones bearing the risk here.
A year from now, what milestones would you like to have seen Fast Pay Partners accomplish?
Patrick: We’d like to continue to grow our business and expand our B-to-B network relationships and product offerings while maintaining our core values of transparency trust.
Jed: I’d like for Fast Pay Partners to become the gold-standard in the industry in terms of recognition, client service, trust and integrity. Our challenge is properly delivering the message to the community, as our product without question delivers value.
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