SaaS Interviews with CEOs, Startups, Founders
650: TREX FinTech $15M Raised, Breaks Down Securitized Loans From Renewable Energy Orginators So Investors Can Buy with CEO Benjamin Cohen
05 May 2017
Chapter 1: What is T-REX and how does it enhance capital markets?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka.
When I do webinar interviews or I give big speeches to thousands of people all over the world, I usually will talk about data and sometimes show my dashboards, like my SaaS dashboard as I'm growing my SaaS company to top inbox, or my website dashboard, which shows how I take impressions to convert them into email leads and convert them into customers for NathanLacke.com.
The funny thing is, guys, I build these dashboards with myself, no developer, and it's basically free, and I use one tool to do it. You can see the tool at NathanLacke.com forward slash analytics. I'll tell you more later. in the show. All right, guys, I talked about this earlier, but I schedule like so many meetings that would blow your mind. I mean, all my podcast interviews, right?
Hundreds of entrepreneurs I talk to monthly.
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Chapter 2: How does T-REX's SaaS model work for investors?
I schedule and you know what? I do it so efficiently. I get them all to agree to my calendar. So all the calls are back to back to back. That means I'm not switching in between tasks all day long. I get them to batch so that I can be very efficient. It's so critical. And I use a tool called Acuity Scheduling to do this at NathanLacke.com forward slash schedule.
It eliminates back and forth between me and people I'm trying to meet with. It makes it very simple. And most importantly, they help me keep my no-show rate very low because they send out reminders. Helps you look very professional. So go to NathanLacke.com forward slash schedule.
schedule to sign up and you get a great deal you know you guys know this I hit people hard I make great deals and Gavin the CEO has given us a great deal if you sign up like normal people okay on their website you only get a 14 day free trial if you use my link nathanlaca.com forward slash schedule you get 45 days free okay it's the best it's free go to nathanlaca.com forward slash schedule right now to sign up and I'll see you there Nathan Laca here this is episode 6 of
Coming up tomorrow morning, you'll learn from Garth of a company called Pitbull Indexes, which it indexes 3.5 billion people and helps get you contact data that really works, like email addresses.
Chapter 3: What challenges did Benjamin Cohen face before launching T-REX?
Good morning, everybody. My guest this morning is Benjamin Cohen. He's the CEO and is leading T-Rex with a strong vision for the future of enterprise financial technology and its impact on marketing and making markets more transparent and efficient.
He has built the T-Rex team and the T-Rex software platform by combining the most sustainable elements of finance with modern software as a service technology. Benjamin, are you ready to take us to the top? I'm ready, Ned. All right. Tell us what that means. Elements of finance with modern SaaS technology. What's T-Rex do?
So T-Rex is a fintech company that makes complex capital markets more liquid by making them more transparent and efficient. Go ahead. I was going to say that that means that you sort of take everything that happened during the financial crisis, what happened? There was lack of transparency and a lack of efficiency, especially in markets that were not as well covered.
And that lack of transparency meant that there was lack of price discovery and assets just didn't trade.
Chapter 4: How did T-REX secure its Series A and B funding?
And so capital was constrained and thus you had no liquidity. So getting to that ultimate liquidity is the key for these smaller, more esoteric markets. And I'm seeing kind of in the screenshot and the research I did on the site, you've got like this image where it says Trunch A, 113, Trunch B, $213, Trunch C, and then residual, et cetera, with maps and things potted.
I mean, are you basically taking these things or these very bad things that were all wrapped up together, lipstick on them and made them look very pretty in the form of a AAA rating and breaking them down so they're easier to track down? Exactly.
So we're providing institutional investors or the ultimate holders of these capital or holding all of our money in pension funds, insurance companies, etc. And we are providing them with a familiar framework where they can slice and dice everything in as many ways as possible so they can get complete transparency into the risk. We're not de-risking things.
We're just making that risk more transparent. Got it. And what's your model? How do you make money? So we have an enterprise SaaS model where we have subscribers and those subscribers can be anywhere in the ecosystem of the deal can be from the at our beachhead market, which is renewable energy, FinTech for renewable energy.
You can take somebody who is putting in place a loan for you to put solar on your house, and you then have a 20-year contract to pay that back.
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Chapter 5: What role does the team in Tel Aviv play in T-REX's success?
So you have the originator of those assets, the intermediaries, the lending banks, and the investment banks who are packaging these up, and then ultimately the institutional investors, and they can all interact across our platform together. And what are they, just on average, so we don't have to break down individual customer cohorts, what are they paying you per month, would you say?
They're paying anywhere from $2,000 to $20,000 a month, and that depends on the functionality that they need. Okay, got it. And then take us back to kind of the history here. So what year did you launch this then?
I launched this company almost exactly five years ago, five years ago, two days from now, when I met with a venture capitalist out in San Francisco, saw that there was a big need in the renewable energy market, specifically in connecting it to capital markets because it had been completely fragmented. Exactly, 2012. Yeah.
Was this a case where, you know, we have a lot of VCs on the show, some very successful ones like Elon Musk's first investor. And many of them will tell me the way they do deals is they actually they target a space. Typically, they go research the hell out of the space and then and then try and get in with the leader if they can, if not get in with second place.
Was this a scenario where this VC brought you in because they were interested in this kind of solution and then you went and built it because of them convincing you? It was close to that, though. I actually had the solution in mind.
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Chapter 6: How does T-REX ensure customer retention and satisfaction?
I met with this VC, and it fit their investment pieces perfectly. It was Ecosystem Integrity Fund. Our Series A lead investor participated in our Series B as well. They've been tremendous at incubating the company from basically pre-early stage through to this point in our success. Obviously, you're not bootstrapped. How much total have you raised to date? We've raised about $5 million today.
Sorry, not $5 million. I undersold that. That was in our Series A. We're at $15 million now. $15 million, $1.5 million. I'd be shocked if all those were notes and debt. I'm assuming you've had a priced equity round at this point? We've had two priced equity rounds, an A and a B. Nice. Very good.
Chapter 7: What is the significance of securitized loans in renewable energy?
Tell us more about the team. How many team members? We have 21 people on the team. We're based in New York, where I am at the moment. And we have almost half our team in Tel Aviv, Israel, where we have most of our software engineers. It's an incredible market for software engineering on par with New York City and the Bay. And the talent there is just incredibly deep and very loyal.
And economically, what makes it so comparable and competitive? The cost of living there is lower, but the market for software developers is also incredibly hot. And we have a good niche there in that we're fintech, which is interesting. It's also challenging, which developers like. And we're doing it for our first market, which is renewable. So we're also doing some good for the world.
even though we're entirely focused on risk and return and providing that analysis for our users. Are you from Tel Aviv?
Chapter 8: What are Benjamin Cohen's insights on entrepreneurship and leadership?
I'm not. I was coincidentally born in New York. My parents had just moved from South Africa, and I grew up in North Carolina. Oh, very cool. All right, and what is the – that's really interesting. What is the – how many customers are you serving today, Q1 2017? We have over 225 users, including those that have renewed from the institutional investor and originator of AssetSign.
And when you say these terms get all mixed up all the time, when you say 225 users, are those paying customers? Yes, those are paying customers or paying via transactions.
So we want to get as many institutional investors as we can because that provides the liquidity aggregated on the platform that makes it attractive for the originators to come in and say, look, we want to sell this portfolio of assets. We have nobody to sell it to or it's impossible to sell it using old Microsoft Excel models.
And so part of it is a freemium upsell service on the institutional investor side where they can use this during the transaction process, but then they won't be able to thereafter unless they pay for a subscription.
So just to be clear, the investors are coming in kind of looking for different deals that originators have put together, which include basically different loan portfolios right now, specifically in the renewable energy sector. That's correct. Interesting. So could a common man think of this like when they go to the bank and get a mortgage and it's BB&T?
Basically, BB&T puts all those things together and tries to sell them to Fannie and Freddie. Same kind of model except for renewable energy. That's exactly right. And that market in mortgages has worked incredibly well, which has ultimately brought that common man's mortgage price down because BB&T is accessing a much lower cost of capital because AIG has pretty low return thresholds. And...
And so the same thing is happening here in solar. Instead of having BB&T or your local credit union give you a relatively high rate for your loan to put solar panels on your roof, those ultimately get packaged up. What would be relatively high, by the way? I mean, you can actually track how these rates have come down over time from 8% to 6%.
And now some of these loans for some of our customers, when they're ultimately securitized, are sold for 3.5% for the top tier tranches. Describe to everybody what securitized means. Yes, that's exactly what you just described, Nathan, where you package maybe 10,000 of these loans together and you put them into a security. And so that security is secured by the cash flow.
So you're going to pay back your loan over 20 years. And that is basically the collateral. That's the value that the investor is investing. They want that return. Yeah, I know many of you guys, we've chatted about this one on one, and there's a lot of you, obviously, that listen to every episode. But a good way to think about this, just to make an analogy, is almost like a rubber band ball.
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