Factoring Expert with Eyal Levy: An EOFire Classic from 2021

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. are brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like online marketing made easy. Today, we're pulling a timeless EO Fire episode from the archives, so the giveaway may not be active. And we'll be talking with the factoring experts. To drop these value bombs, I are brought Eyal Levy into EO Fire Studios. Eyal is the founder and CEO of Banana Exchange. Banana Exchange is a factoring company that provides capital to Emergent Cash Advanced Funding Companies.

0:36Currently, he is a mentor in the Harvard Business School Entrepreneurship Program. And today, Fire Nation will talk about being patient. There are so many obstacles in creating something new. Only those who have the stamina to continue will succeed. As entrepreneurs, it's our duty to help other entrepreneurs shine, Fire Nation. Hopefully, I'm doing a little bit of that right now with you. And every child that was born today all over the world has potential of becoming an entrepreneur, but the system we live in prohibits most of them from becoming one. Let's change that, Fire Nation. and so much more.

1:05And a big thank you for sponsoring today's episode goes to Eyal and our sponsors. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business. Join my friend, Donald Miller, each week as he shares value bombs on topics like the secret to making better marketing decisions. Listen to Business Made Simple wherever you get your podcasts. Is now your time? Visit thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability.

1:42It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com. AL, say what's up to Fire Nation and what's something that you believe about becoming successful that most people disagree with? Many people believe that in order to be successful, you need only passion for a good idea. But in reality, you need much more. Passion is one necessary ingredient, but it's not enough. In order to be real successful, I believe you need passion for the idea. That's obvious. Determination, focus, and patience. Most successful business people have them all.

2:31In any business idea, there are many obstacles one has to overcome. It's not easy to create something new, you know, especially if you're the first in that field. Over the course of my life, I've created three companies, all in the factoring business, which is a form of financing. Each company was unique and the first of its kind in the field. The amount of rejection one gets from new ideas is enormous. And if one doesn't believe in his or her idea more than 100%, it simply won't work. In any new ideas, first you have to educate the market, which is very hard, as people are always suspicious of anything new.

3:17Then you have to persuade the investors and the people around you, and the list goes on and on. you'll always feel you're going uphill and most of the times you'll be alone and the loneliness is very hard to accept as time goes on you'll get more experienced and then it becomes easier and you learn to build on and fix your mistakes from the negative remarks along the way you'll be enriched. For Capricorns like me, it is natural because we're used to it. It's always an uphill battle for us. There's a lot that I want to focus on throughout this entire interview, Fire Nation, but the one thing I want to pull out about what Eyal just said is patience.

4:04I mean, all of them were brilliant, but patience. It is something that today I see more than ever people just don't have. And it seems like the younger the generation, the less the patience. I have so many people all the time coming up and saying, Hey, John, like I've been doing this for two months and I'm not seeing any returns. I'm not seeing any success. And I'm like, it's been two months. Where's your patience? Where's your persistence? Where's your tenacity? You've got to keep at that thing, Fire Nation. So in doing some research on you, Al, I saw that you were chosen to be a mentor at the Harvard Business School of Entrepreneurship.

4:41I mean, this is top of the top. Why were you chosen? I was invited to become a mentor at Harvard Business School entrepreneurial program during 2018. I felt honored as a professor. They recognized and identified the entrepreneur in me after doing all my life. On my initial lecture, introduction lecture, I approached the podium. as I was approaching the podium, and right away, after I presented myself, a student raised their hand and asked me, who is an entrepreneur? Although I had my lecture planned, I wanted to follow with the students, I had to improvise, and said without hesitation, every child that was born today, all over the world, has the potential of becoming an entrepreneur.

5:34But the system we live in prohibits most of them to become one. Why? Because of all the barriers that society puts in front of us. When the baby was born, starts to crawl at home, touching, breaking things, the parents say, don't do that. Then these babies go to nursery and school and are approached daily by new regulations of what they could or could not do. Then that continues when they grow and enroll into universities. And then at last, even when they get married, they feel the rules are piled on them. The handcuffs are placed on their hands and brains as additional rules will be imposed. All their lives, they're directed and boxed into what they can't do.

6:31This fact of life interferes and sometimes disables the independence and free thoughts of many of us. So my advice to you all, I said to the group, is right now, get a hold of the keys. And I threw the keys to them. Release the handcuffs. Allow your brain to think without restrictions. feel free to go with any idea or thought you may have, even if it seems ridiculous or unrealistic at the moment. Take your dreams to the limit and the entrepreneur within you will erupt like the genie out of the bottle. 140 students stood up and erupted with laughter and applauded. I knew then that they got the message.

7:21I love that genie in a bottle analogy. I mean, And Fire Nation, can't you just picture that? I mean, it is such a great analogy. It's so true. And it's something that you need to be striving towards and forward to. Now, how did you, Eyal, start your career? I mean, you obviously have had a lot of different areas of successes and failures along that journey. But take us back to that beginning. What did that start look like? I've started my career as an electronic engineer at Ellis Wright, an Israeli defense contractor. and we were marketing electronics, warfare, and counterintelligence systems to the intelligence community in the US, mainly the CIA, FBI, US Air Force, and US Special Forces.

8:08I was stationed in New York and one day I was approached by a CIA agent that I worked with who asked me if I may join him in a new startup company that he's starting to sell sensitive equipment to third world countries. We're talking about 35 years ago. The timing for that in the intelligence community was perfect. But my initial question was, how can we start the company? We're both employees with no extra cash that's needed to start such an enterprise. So he said, you know, the U.S. government owes me$230 ,000 in severance pay. And they will distribute this money within 180 days. $230 ,000 at the time is equivalent to$2 million now, about$2 million now.

9:02He then suggested that maybe we can find somebody that can advance us monies against the government payment until they pay. I called my accountant, as I knew nothing about financing at the time, and I told him what we're trying to do. and he said, what you're trying to do, it's called factoring. I thought he didn't hear me well and I told him that I don't want to manufacture anything. He laughed and said, factoring, not manufacturing and explained to me what factoring is all about. Factoring is a form of financing that allows a company to receive cash now against future payments of the receivables.

9:45I started reading about it and immediately fell in love with the concept. I quickly decided, I'm talking about 35 years ago, to start a factoring company for distressed clients. This was a new niche in the factoring market. Then it was not available. So I started the company and I called the company Platinum Funding Group. My friend from the CIA, and this is funny, started his business and I started factoring business. My friend was my first client. I funded his new company by factoring his future receivables from the U.S. government. So I wrote my first business plan and started my investors round.

10:33I found out that real estate investors were my key targets as they suffered losses that could be offset by the income from my company. So I raised$3 million within 30 days. We're talking about 30 years ago. And over 30 years ago. I raised$3 million within 30 days from several investors. My first investor was the father of Jared Kushner, the son-in-law of President Donald Trump. So Fire Nation, I really hope that you're understanding the process, the journey that AL is talking about right now. I mean, he didn't just start one day and say, hey, this is what I'm going to do. And this is the rest of his life.

11:17He went through a process. He went through talks and struggles and starts and fits and stops and all these different things. And then guess what? An opportunity arose at one point. And when that opportunity arose, he identified and said, hey, let's go all in on this. Let's have patience, focus, all the words that you talked about at the beginning of this episode, and let's really make this happen. in. Now, one thing that you talk about so eloquently that I really want to get into is creating a business from not just what you know, but from what you love. So you can have both the knowledge, the experience, the expertise, the value, but also the passion, the excitement, the enthusiasm.

11:59And Fire Nation, we're going to be diving into this and so much more when we get back from thanking our sponsors. Fire Nation, the holidays are near and I know you're rocking your year-end goals, it's crunch time. And if you're ready to hit your revenue targets and finish the year strong, then I've got the perfect tool to help you fill your pipeline, nurture prospects, and close deals. Meet the new HubSpot Sales Hub. The HubSpot Sales Hub supercharges your sales process so you can find, track, and close deals all in one powerful, easy-to-use platform. What's great about HubSpot Sales Hub is that it gives you all your data, tools, and team in one place.

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14:53Clay Clark himself today at thrivetimeshow.com. Knowledge will not attract money unless it is organized and directed through practical plans of action. Become the next success story. Schedule your free 13-point assessment today at thrivetimeshow.com. Hey, we're back. And before the break, I was talking a little bit about the business that we need to be creating as humans, as entrepreneurs, a business that we both know and love. Talk to us about how you've accomplished this in your life. I was very good in math in high school and then university. And I figured that electronic engineer wasn't what I should be doing.

15:34And when the opportunity occurred, I decided that factoring is the business I would like to be in. And then, so I founded the Platinum Funding Group in 1992, which was focused on core service business of factoring distressed clients receivables. And we provided them with the cash flow that they needed to run and grow their business. Being an electrical engineer, though, I used that also. I developed a software program that allowed me to control and monitor my clients receivables in a way that minimizes the losses to zero. The software is currently used by manufacturing companies all over the U.S.

16:18So during Platinum's 20 years history, we funded over 400 clients, always being profitable with zero losses while financing over$250 million a year. And that is due to the software that I created then. Our headquarters was located in New York City with several offices spread in key locations throughout the country, Chicago, Los Angeles, Florida, and New Jersey. In 2005, I spread my wings and opened platinum in London, United Kingdom. Then, as you heard before, things are not always perfect. Then, in 2008, the world collapses, and the hammer hit my head. I'm in heaven, doing great stuff successfully.

17:12And during the world crisis, banks worldwide determined to cease funding specialty finance companies and other cash flow providers that we were. Platinum Funding Group shut down the operation in the first quarter of 2008 and 2009 because our banks didn't want to continue to fund us. But then again, when you're at the top of the hill and you get banged on the head, it's like starting all over again. So you sit there and you think, but the banks were about to lose a lot of money. So I decided to help the banks retrieve most of their money. So my reputation was kept clean. And this alone helped me in my future endeavors.

18:03As new investors, always look at your historical behavior. This is very important. So I sat there at the top of the hill with a hammer on my head and I said, okay, what can I do now? And then I created the Platinum Art. It's a new endeavor. Fire Nation, I just love the evolution that we're seeing as you go through life as an entrepreneur. And so many people I see that are just starting off, they're just like, wow, this is it, I guess. Like this is the thing I'm going to be doing for now and forever. And sometimes that might be the case, but oftentimes, and as Ayal shared, like the 2008 crazy financial crisis that we dealt with, certain outside external forces cause us to shift, to pivot, to adjust, to come up with new ideas, to maybe try new things.

18:48And it's the journey that we're on. And when we listen and learn from people like Ayal who have been through this, we're becoming a better, stronger, more adaptable entrepreneur. So you were able at one point, Eyal, to take advantage of new market conditions that existed in the world, specifically in the merchant cash advance market. So talk to us about launching Banana Exchange. Before Banana Exchange, I started another niche in 2008. That was exactly after the crazy stuff. Our dealers worldwide were losing opportunities. They couldn't obtain financing like I couldn't. So I created Platinum Art.

19:32It was a natural path for me as well as I am an art collector for many years. Platinum Art was designed and uniquely positioned to take advantage of these new market conditions. I've created Platinum Art to capitalize on my vast experience in factoring coupled with my passion for art. I developed a new product of factoring for art dealers, which was financing of high-end art with just the artist collateral without personal guarantees and fast turnaround. The company is still working today. You can look it up at www.platinumart.com. And then in 2017, I sat down for lunch with a group of colleagues from Goldman Sachs that I knew for many years.

20:21Knowing my history, they asked me, Yael, what are you going to do now? Aren't you bored already? So I told them that I'm thinking of the MCA market. MCA funders are funding small to mid-sized merchants that are strapped for cash. The funding is done using factoring of the future cash flow of the merchants. That's why I felt it's natural for me to go into this, to jump into this area. as it's a risky business the MCAs charge large fees but deliver the cash within 24 hours this market that started over 15 years ago grew to over 30 billion a year in the US alone and my thought was I wanted to develop something that would capture the market but also help most of the small to mid-sized MCA funders that had nowhere else where to go for funding after they exhausted the funds they have raised from family and friends.

21:20I did that because I knew I went through the same process. So I knew it must be devastating for them. And then as the market grew, it drew the attention of large hedge funds. Currently, large hedge funds and Goldman Sachs are funding only about 15 companies out of a total market of over 2 ,000 MCA funders. How do you think you can achieve that? They asked me. Goldman Sachs friends asked me. By using my original software methodology, which I'm about to adapt to the MCA market, was my straight answer. MCA funders are using factoring as a method of funding. And factoring, I know well. So I launched the Banana Exchange in 2017.

22:09It was designed to take advantage of the new market condition in the MCA world. I saw a relative new niche being born and identified several opportunities. I designed a unique software platform that is a base to create a marketplace in the MCA world. The idea was to create a platform that the total MCA community can benefit from, not only the MCA funders. A one-stop shop for the industry, where MCA funders get funding when they need it to grow their businesses, new deals to fund through ISOs, independent sales offices, on the platform, and syndicates when they want to spread out the risk and they need partners on specific deals.

22:53Banana Exchange is financing clients and expanding even during the coronavirus times. our services deeply appreciated but our clients as during their hard times in 2020 we were there and helped them maintain their businesses although they had losses from failed mergers they they were funding so this is based on my history because when the climate was bad in 2008 the the world collapsed and the banks told me we can't fund you anymore so i said i'm not doing it my clients and I didn't and I'm very happy that I didn't because our clients are very thankful for us for not closing and shutting their lines of credit.

23:38And at the beginning of 2021, we intend to add additional artificial intelligence tools to our platform, which will strengthen our clients' underwriting capabilities. These artificial intelligence technologies can't be purchased in the open market. As they were developed by a group of experts that came out of the Israeli intelligence agencies, I told you I had the relationship there, these technologies will allow an MCA funder to identify, through telephone voice recognition and other AI techniques, the ability of the merchants to pay their advances. This low-cost feature will allow them, the MCAs, to significantly reduce their default rate and save them a lot of money.

24:31We're passionate about the MCA successes. We let the MCA feel comfortable that they are in good hands because we treat each client as if he was our own business. We're in the business of creating possibilities. As entrepreneurs, it is our duty, our duty to help other entrepreneurs shine. We're in the business of creating opportunities. I mean, Fire Nation, think about the power of that phrase. And what I love that Eyal's done and how he's done and evolved this over years and over time is he is always saying, hey, how can I create the best solution to a real problem that my audience has, that my clients and customers have?

25:20How can I create not just a solution, not just a good solution, how can I create the best solution for my perfect client, for my perfect customers? Think about that in your world. Now, Eyal, you shared a lot of value throughout this entire interview. What's one thing that you really want to make sure our listeners get from our conversation today? To be patient. There are so many obstacles in creating something new. It is unbelievable. And only those that do it and have the stamina to continue in doing it are the ones who succeed. They're amazing. There are many more smarter people than I in this world.

26:06And there are amazing ideas in the world. Ideas in the world. But the difference between successful people and unsuccessful is that success will have only the idea. And the unsuccessful have only the idea. The success will have the idea and all the rest that I mentioned. Fire Nation, it comes back to patience. This is a full circle moment. Patience. Are you practicing patience in your day-to-day life, in your business? Ask yourself that question. Fire Nation, you are the average of the five people you spend the most time with. And you've been hanging out with EL and JLD today. So keep up that heat.

26:51Eyal, where can we find out more about you? How can we connect with you? Any final call to action you have? And then we'll say goodbye. Email Eyal, E-Y-A-L, at bananaexchange.com. Our website, www.bananaexchange.com. or I'll give you also my direct cell number, 917-916-7788. And that's the key, the difference between us and others. My clients could call me directly on my mobile phone whenever they want. We are servicing our clients. Fire Nation, that is next level service. That is commitment and that is patience to success. So make sure you head over to eofire.com, type A-L, E-Y-A-L in our search bar.

27:41Show notes page will pop up with everything we talked about today, links to all that jazz. I challenge you, Fire Nation, to take A-L up on emailing him directly, on calling him directly. You have an opportunity here to get out there, be bold, and speak with people like this who have had massive success in this world. You need to take these type of steps. Eyal, thank you, brother, for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thank you very much. Hey, Fire Nation. Today's value bomb content was brought to you by Eyal.

28:18And successful entrepreneurs, they accomplish big goals, which is why I created the Freedom Journal to guide you in accomplishing your number one goal in 100 days. And we're talking step-by-step, Fire Nation. So visit thefreedomjournal.com. Use promo code podcast for a$15 discount. And thank you for listening to my podcast. And I'll catch you there or I'll catch you on the flip side. Business Made Simple, hosted by Donald Miller, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Business Made Simple takes the mystery out of growing your business.

28:53Join my friend, Donald Miller, each week as he shares value bombs on topics like the secret to making better marketing decisions. Listen to Business Made Simple wherever you get your podcasts. Is now your time? Visit Thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at Thrivetimeshow.com.