2454 - Modern Invoice Financing Designed for Emerging Markets with Jia's Zach Marks

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0:46Visit podverified.com if you'd like to be featured as a future guest. I'm Josh Elledge. Let's get into it. With us right now, it is the co-founder and CEO at GIA, found on the web at GIA.xyz. It's Zach Marks. Zach, it's great to have you. Great to be here, Josh. Lovely to meet you. Excited to talk about GIA. Before we do, congratulations. You are a new papa. You've got a, I think, a seven-month-old? Yep, seven-month-old. He's at home. Right now he's cheering on, I think, Ronaldo scoring some goals for Portugal. So he's really big into the World Cup for a seven-month-old. And so it begins. There's your future pro soccer, pro football player.

1:32Oh, I hope so. And I know you guys have been watching the World Cup together. And then you have, like, I think you were saying that you've got some traditions that you're doing already. Well, definitely. I mean, we love, we're a big family of learning languages. My wife is, we're all from, we got a bunch of different countries' heritages. So we speak many languages at home. And of course, watching the World Cup, you got many languages represented. So we're teaching him, even though he doesn't really speak any real words yet. He's learning at least a few words in different languages here and there to cheer on the Cape Verdean and Portuguese and the Brazilians and Portuguese and the French and French and all that.

2:13Zach, I had no idea. You truly are a polyglot. You, you, Amaric, Hindi, Kanata. I'm like, I'm going through all of your languages. Yeah, we can try to help you in pronouncing some of those languages. Yeah. That's sort of been how I'm, you know, I've always loved learning languages. It's what led me to working in emerging markets in the first place. The way I got interested in microfinance, which of course is the field that I've been in my career, was really because I just loved eating street food and hanging out with these street food vendors in India. My first job after college, I was teaching English there.

2:45So I was teaching English, learning Hindi, hanging out with street food vendors, saw these guys running a business, saw that they couldn't get access to any finance. And that's what initially introduced me to this challenge of expanding financial access. As someone who speaks 1, 2, 3, 4, 5, 6, 7, 8, 9 different languages, that is just crazy um what what for someone who's like oh you know like listen i'm 50 years old i should probably like i've all i've got a bunch of spanish people spanish-speaking neighbors and stuff like that like i want to pick up spanish like what um i did like a year of um i committed to a year of duolingo it was fine it became a grind i felt like you know it was okay i know that immersion is like a thousand times better.

3:32Do you have any opinions on someone who wants to learn a new language, like how you recommend it? If you have neighbors, I can't think of a better thing than just going over and having a conversation. Really the challenge most people have in learning languages is they're afraid to embarrass themselves. They're afraid to put themselves out there. My experience, maybe with the exception of being in France, is that if you try to speak someone's local language, they're going to be very receptive and have a lot of patience with you. That's how I've learned pretty much every language I know. I know.

4:02I think about it like if someone was like really struggling with English, but I could tell like they really wanted like, you know, and like, I would be honored, you know, to like, you know, I'd be so patient with them. You know, like, man, thank you for putting in the effort. I mean, that, you know, that shows a lot. When you learn a new language, you really I mean, it's so cliche, day, but you really do like you gain a new soul. You gain a new perspective. You know, you think about things a little bit differently. You can understand people in their, their words, even if your understanding is kind of broken, it makes a huge difference.

4:38Man, Zach, I would love to talk more about this. We got to get going. We got to talk about the work that you do because it's an important topic. It's one that I'm actually quite passionate about. and that's business financing. Do you mind just giving an overview of GIA? Yeah, sure. At GIA, we're expanding financial access for businesses across emerging markets. Obviously, businesses here in the US where we're talking need a lot of support too. But I think if you go to countries across Africa, Asia and Latin America, you have businesses who are even more underserved by banks. Banks basically look at them and if they're not a big corporate, they are for the most part neglecting them.

5:19The only way they'll really serve them is if, you know, the small businesses put up a bunch of collateral, which they often don't have. And so what we've been working on at GIA is figuring out ways that we can serve these businesses with great financial products. The main one we do is receivables-based financing or invoice financing, where we work with businesses who supply larger companies. Think of someone who's wholesaling vegetables to a big grocery chain or someone who's making signs for a big mall or something like that, they often get paid at these delayed terms, think 60, 90, 120 days.

5:54And those cash flow gaps, they can really kill a small business. Oh, they suck. Yeah, it's awful. Exactly. And for the big company that's not paying them, it's nothing for them. but that 120-day delay, that can really kill a supplier. And so we step in and we advance that capital for these businesses. But it's not just financing we provide. On top of that, we provide financial tools. So when businesses onboard with us, they use us to manage all of their customer relationships. They send their invoices, they track their payments, and they collect their payments into a GIA bank account. And from there, we can really offer something really far superior to what's in the market.

6:33For the most part, if you go to emerging markets like the Philippines is our first market, the banking products really feel like you're in 1995. I mean, it's just really old user interfaces, really poor digital experiences. Even we were just joking yesterday, we needed to track down our transactions from our Filipino bank account from three months ago. And we would have had to go in person to the bank to access that. Oh, my goodness. Compare that to the kind of fintech products in the U.S. that would be unheard of. So we're really delivering those modern 21st century, amazing fintech business banking products to the Philippines and emerging markets beyond.

7:13What other, you know, again, I know that there's things I'm so grateful, you know, again, in the United States, I think we have, you know, generally pretty great access to capital if you want to start a business. And there's just so many options. I feel like, yeah, I mean, there's some there's there's definitely some options that are way worse than others. Do you mind maybe just talking a little bit about the risks that that small business owners can encounter when they're dealing with? And I think anyone listening to our conversation right now, listen, if you're a business founder, you probably get maybe nearly amount as much spam as I do from, you know, hey, we just got Piggly Wiggly, you know,$1.8 million.

8:02How much do you want? I don't know why I get that one frequently. But the business financing, and again, I know that there are friends that are listening to our conversation right now that are nodding their head. it is only because of the business financing spammers that I have literally locked my phone down. I mean, everything goes to voicemail, everything. If I don't know who you are, it all goes into a little holding bit pin and I might look at it at some point, you know, and it's mostly because of the aggressive. And again, a lot of those deals are not very good, but they prey on, you know, business owners that have no other options.

8:40For sure. I mean, the challenge in the United States, that's the United States. I think about what it's like in emerging markets. The reality is if you're running a business and you don't have many options, you often end up going with one that might actually be that healthy for you. I think that some of the worst things that happen is people signing up for financing options where they haven't, you know, there's there's fine print that they're not aware of. They're signing up for fees that they're not aware of. I mean, we see this in the Philippines with some of our competitors. They advertise a rate, they say 1 % per month.

9:13And then, of course, every time you want to draw down, it's 5 % processing fee and then a 5 % origination fee and sort of all these fees that end up eating into the cost. So one thing that is really unfortunate is in this industry, there's often not very transparent pricing. um i think beyond that there's obviously the challenge of of just uh folks ending up pledging collateral that they really can't afford to lose um in the worst cases of course we've heard stories of folks who you know they lose their house or they lose their property because oh yeah they took a loan that they really shouldn't have oh i i had one guest on this podcast a number of years ago and um i mean talk about i mean it was again it was a kind of very emerging market and uh yeah They were kind of sending the angle breakers after him.

10:00It was pretty scary. So, well, what a huge opportunity, Zach, in terms of like the market potential, I would imagine. Definitely. I mean, the World Bank estimates that there's something like a$6 trillion financing gap for small businesses in emerging markets. I mean, that's just the gap. There's obviously some amount that's being financed today. So this is a huge, huge opportunity. but forget about the opportunity to make money. I mean, this is really the opportunity to grow economies and communities. If you think about what powers most of the economic growth, most of the employment across most of the world, it really is these small businesses.

10:42It's someone who's running a small factory where maybe they employ 20 people. And if you can grow that business to go from employing 20 people to employing 100 people, that's such an impact you've had on that community. All of a sudden, you have people who have jobs. They're able to buy their kids Christmas presents. I mean, it just has ripple effects. Wow. Okay. So how does, so Gia, how does, so if I go to Gia.xyz, your website, and I know there's Gia.ph specifically for the Philippines as well, but how does the process typically work? Yeah, so as a business, if you're interested in accessing financing, You'll fill out a short form and we end up being we have we have a customer representative who's in touch with you in the Philippines.

11:31It's still a very relational economy. So folks like some interpersonal some some personal interaction as opposed to just having a purely digital experience. But the technology that we've built, which I think really sets us apart from other financial institutions, is we've built some AI document intelligence and credit underwriting technology, which lets us take a business's information. Think of it can be very messy, unstructured data like invoices and tax receipts and customer emails and maybe thousands of pages of old bank statements. We are able to digest that and in about 30 minutes are able to turn around a credit memo and offer you a financing offer.

12:17You then onboard with us in the next day or two and you get to get to work with us. What's really interesting is I think maybe the biggest value prop in the beginning is is just the speed. We even have some businesses who were accessing bank supply chain finance. So, for example, one of our borrowers, they're big suppliers to Procter & Gamble. And because Procter & Gamble is such a big company, their suppliers can access financing through their bank partner. But every time this business would want to access that bank financing line, it would take the bank 15 days to approve their invoice. And the whole purpose of this product is you're really trying to advance cash from waiting for 90 days to waiting to get it in the same day.

13:02So if you have to end up waiting another 15 days, you really lost the... Defeats the purpose in some situations. Yep. And then once these businesses are on board with us, then it's a very seamless process. Then they basically just click a button whenever they need to access their cash, which they can do on any of their outstanding invoices. How do the rates end up looking? They typically range between 1 % and 3 % per month. So people, these are all, for the most part, short-term financing products. They're usually advancing capital for one month, two months, or three months. And for them, you know, having that up front for a couple percentage points per month is definitely worth it.

13:44I can turn that 30 days advance or 60 days, whatever. Like, I can take that 1%, 2 % that I pay on that, and I can make more profit if I have access to that money. I can fulfill these orders better, you know. It's like, you know, that's frustrating, you know, if you're on a, you know, 30, 60, 90 day net and, you know, you're expected to produce everything so that you can have it, you know, produced by the time you collect the money. But yet, yeah. That's exactly right. I mean, a lot of our borrowers are, you'd be impressed. They have these incredible networks and they have great products. We've got this one guy who makes these delicious.

14:21So in the Philippines, Kang Kong is a, it's like a Filipino water spinach and he makes these Kang Kong chips. So think like fried, it's like the Filipino kale chip or something. Anyway, so these guys makes a great product, can't keep them stocked, right? Supermarkets all want to keep stocking their shelves with it. And because the supermarkets pay on these delayed terms, if he has a new supermarket that says, hey, we want to stock you on our shelves, he's got to say no to that, right? He's got to turn down business. And that's really just hampering Filipino business growth. So that's how we serve.

14:51Zach, so which markets are you in there? Or how many countries are you in? Today, we're in the Philippines. We obviously have ambitions to be in every market around the globe. We're sort of earlier on our journey. So we're serving just the Philippines today. Our team is quite global. So, I mean, I started my career, as I mentioned, in India. And I've worked in microfinance across maybe 15 different countries in Africa and Asia and Latin America. So I'm very excited to get back to some of these other markets. I hope to have chances to go back to Kenya and Mexico and India and Bangladesh and launch all these markets.

15:31So hopefully. Wow. You know, think about the impact of what you get to help create because you're working with those, you know, those employers who are then improving the quality of life and life's living standards for others because there's, you know, great jobs that they can choose into. So, Zach, your website, again, GIA.xyz, it's J-I-A.xyz and GIA.ph as well. What would you recommend folks do when they go to your website? Yeah, if you're, you know, in the U.S. where I imagine a lot of the listeners are, right now the best way that we can work with you is actually as one of the really interesting things we've been doing is using blockchain technology.

16:18to connect global capital with these small business lending opportunities. This is, I guess, if what we're trying to do is democratize access to finance for small businesses in emerging markets, we're also in some ways democratizing access to investor returns for global investors. So traditionally, the way a lot of this private credit sector gets funded is very high net worth individuals have access to private placements and private credit funds where then they can get some market-beating risk-adjusted returns. What we're able to do is let investors anywhere deposit their capital on these on-chain liquidity pools, which is basically just a fancy name for an account where you can park some dollars.

17:04And we use those dollars to power our lending and then provide market-beating returns. So this isn't like an investor solicitation, but if folks are interested, you can always email us at invest at gia.xyz. That's probably like from the U.S., the most obvious call to action. And frankly, if you're just interested in this challenge, if you're interested in expanding access to finance, if you work at a financial institution or a bank in the U.S. and you're interested in how you can underwrite this segment that maybe you haven't been able to serve, please reach out to me. You know, we are actually one really interesting thing that's happened with our business is when we launched, the focus was all building our own loan book and serving these small businesses ourselves.

17:49A lot of banks and financial institutions across Southeast Asia have now heard about what we're doing, and they've been reaching out to license our technology, which we're really happy to do because we think, hey, the more the merrier. You also want to serve small businesses that you haven't been able to serve. We're happy to license the technology to you and let you do that as well. So we're only now beginning to talk to some U.S. financial institutions because, of course, this is a global challenge. So I'm always happy to happy to chat and share a demo of what we do. All right. Building a fairer financial world.

18:18Zach Marks, you're a co-founder and CEO at GIA, found on the web at GIA, J-I-A dot X-Y-Z. Zach, thank you so much for joining us. Thanks so much for having me, Josh.

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