This week for our profile series we are joined by Sergei Kovalenko of Aprenita. He is a joint founder with Mark Loranger. Aprenita is the only financing company in the world that is exclusively focused on providing growth capital loans for mobile app businesses.
Let’s get on with it and as always are questions are in bold.
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Who are you and what’s your background?
I’m a serial entrepreneur and entrepreneurial executive with 15 years of experience in technology and extensive knowledge in software and product development with a strong operational background.
I’m also a co-founder of iTechArt, a software development company with a great deal of project management expertise based on understanding customers’ business needs, domain knowledge and a history of collaborative development. iTechArt provides software development services, IT consulting and outsourcing, working with emerging and established companies, helping them bring great products to market in less time and at lower cost.
Besides that, I’m involved as an active Angel investor in early stage technology companies and an investor in several seed and early stage funds including ARC Angel Fund, Scout Ventures, Dream It Ventures LP II, JumpStart Angel Network NJ, and TechLaunch (New Jersey’s technology accelerator).
Through various investments (equity and debt) as well as personal engagements with app companies, we’ve developed a unique perspective on the challenges of building Aprenita as well as the risks involved with investing in them. We believe that we understand better than anyone when the right “time” is for debt, and how to position it to the customer.
What is your job title and what are your general responsibilities?
I am a Co-Founder and CTO at Aprenita, but because Aprenita is very much a start up, I am closely involved with day-to-day operations as well. As a CTO with deep technical insight into how things are done at Aprenita, and also due to my entrepreneurial background I lead our tech team and oversee the marketing, building our sales pipeline.
Though my day is sometimes overwhelming, as with most start-ups where you have to wear many hats to succeed, I believe being able to bridge different teams is exactly what brings me the positive outlook on how things work out at Aprenita.
Can you give us an overview of your business?
Aprenita is the only financing company in the world exclusively focused on providing debt capital for mobile app businesses. To do this we have developed an algorithmic rating system that analyzes app store and analytics data in real-time, enabling us to make instant lending decisions based on the information that truly matters. We like to think of ourselves as Capital-as-a-Service for the mobile ecosystem, and we believe that our customers (mobile app developers) will represent the single most valuable SMB vertical over the next 10 years.
In the future, we will become a marketplace for debt – once we can “productize” the loan asset, we will make it available for investors who are looking to gain access to this unique and evolving asset class.
Tell us how you are funded.
As of right now we are a self-funded company. We do have capital partners and private debt organizations that support our lending operations.
Why did you start the company? To solve what problems?
2 years ago I started helping my friends (mobile app developers) to support the growth of their business and saw a pattern – they needed capital to fuel their top line revenue through marketing and user acquisition. Traditional funding methods were not really working for them due to different reasons, the main being the mobile apps development companies emerging as a new class of business, which lenders didn’t know how to deal with. That’s when we sat down with Mark and tried to find the indicators of success for these companies, and tailor a solution focused on helping these specific businesses.
Who are your target customers? What’s your revenue model?
As I said earlier, mobile app developers are a new SMB class, both with start-up attributes and those specific to software development. The current statistics shows there are about 50k active mobile development companies, and not all of them can rely on VC funding. Only 1% – 5% of companies receive funding even if they are willing to give up a portion of their business to VC funds. A mobile app as collateral to traditional bank sources is too complicated for bank risk departments to measure, leaving app developers with no money.
Aprenita in its turn is offering access to future revenues, so if you have shown steady revenue in the past you’ll most likely qualify – and thanks to our algorithm-based platform, the risks are calculated quickly.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
Taking into account the specifics of the loan business that I’m operating, I would definitely work on local regulations and compliance issues for loan platform/lending operators. What we have now lacks uniformity from state to state, and the change to that would definitely make our lives easier.
Compliance is becoming a growing issue as the benefits of lending become more apparent, and more companies are entering this market.
Then again, it would make it easier for competition, while we at Aprenita enjoy the challenge.
What is your message for the larger players in the Finance industry?
Despite the immense popularity of applications for everything from smartphones to TVs, traditional financial institutions are rather slow and reluctant on adopting the new technology. I would love to see the larger players really work on the positive customer/user experience and speed up the operations. I believe many consumers are hold back by the idea of filling out numerous forms and spending weeks to negotiate terms with banks.
The technology available now can also successfully eliminate the need to use checks, and already doing so around the world, with the US being one of the few countries still not ready to abandon them completely.
What phone are you carrying and why?
I have an iPhone 6, mostly because I like Apple products! But as any Apple-lover will tell you – it’s the most functional and well-designed phone in the market. Sorry not sorry J
Where do you get your industry news from?
TechCrunch, Bloomberg Markets Magazine
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Jon Zanoff @jonzanoff – he can be truly called a FinTech guru, always at the cutting-edge of what’s happening and worth noticing.
Finovate @Finovate – I’d call them a useful addition to my news feed.
Brett King, Moven @brettking – see below.
What’s the best FinTech product or service you’ve seen recently?
I’d say I was really impressed with Moven recently. Apart from cool technology they are also a budgeting tool, analyzing the users spending habits. It’s an online model of bank that uses social, mobile and gamification technology and utilizes the NFC (Near-Field Communication) capability of a phone to act as a payment device.
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
I see the future in branchless banking. With all the tech advances we’re facing these days, I believe the need for an actual bank branch will eliminate itself very soon. With most of the banks already providing financial services via online and mobile systems, and the growth of services like Moven, one can manage finances whenever, wherever.
The rise of mobile is knitted tightly with seamless payments – a growing trend we’ve been seeing for a while now. I think the development of new methods of payment is due to consumer desire to have options when it comes to payments. Seamlessness here is not only in the speed of a transaction but in flexibility too. Mobile wallets, peer-to-peer payments, NFC technology and mobile card readers – these are the things we’re going to embrace in full.
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If you’ve any suggestions for other hot FinTech companies (startup, or established ventures) that we should be profiling, I’m all ears. Don’t hesitate to drop me a note at firstname.lastname@example.org. There’s more information on this page.