Richard Prime of Sonovate
Another week has gone but it’s time for another profile. This week we have Richard Prime from Sonovate. Our questions are in bold.
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Who are you and what’s your background?
I’m the co-founder of Sonovate, a UK fintech start-up that provides finance for recruitment agencies placing contractors. Before launching my business I worked in recruitment for nearly two decades where I went on to become a board member at one of the largest recruitment companies in the world. I loved it but became frustrated with the traditional finance products on offer from the banks that that were really stifling growth of recruitment businesses. And that’s where the idea for Sonovate was born!
What is your job title and what are your general responsibilities?
As co-founder and co-CEO, I’ve been involved in every stage of the company’s development. I’m based in the London office and my business partner Damon heads up our Cardiff office. My main focus at the moment (other than making sure staff are happy and that we have a healthy pipeline of new business!) is securing our next round of funding. We plan to expand our UK team and we have plans to launch in the U.S. next year, so it’s important we secure funding now to drive this growth.
Tell us how you are funded.
Sonovate’s potential was recognised early on by tech angel investor Paul Birch who invested £4m in the business. We’ve also secured a £10m funding line from American bank, PNC. This enables us to finance up to £250m in the UK contract recruitment market within the next three years.
Why did you start the company? To solve what problems?
Recruitment agencies placing contractors have to pay their contractors before they receive payment from their clients. So let’s say you are paying 10 contractors at £500 a day – that’s £25,000 per week which can cause massive cashflow problems for agencies, the majority of which are SMEs.
Traditionally recruitment agencies have had to rely on banks to secure the necessary finance to overcome this short term cashflow problem. But the products on offer are outdated and inflexible; they’re not tailored to the unique needs of small businesses. Typically banks place limits on the amount of contractors that can be placed with any one client for example, which can be hugely restrictive for smaller agencies who naturally have fewer clients. They’ll also tie you into lengthy contracts that are notoriously difficult to get out of.
Sonovate solves this problem. Designed specifically for the recruitment industry, we provide the kind of flexible finance that agencies have been crying out for, alongside the technology that takes care of all the admin associated with running contractors, including managing timesheets, invoicing clients and chasing late payments! This means recruiters can focus on billable activity safe in the knowledge that their contractors are being paid and their cashflow is secure.
Who are your target customers? What’s your revenue model?
Sonovate is specifically designed for recruitment agencies placing contractors. Our customers are typically (although not always) in their first 36 months of establishment with a turnover between 0-£10 million. These are the agencies for whom securing the necessary bank finance is particularly difficult due to the complex and rigid contracts insisted on by the banks.
The addressable market is growing fast; in 2014, 4083 agencies were launched, representing a 7 percent increase on the number of new businesses launched the previous year and the average number of new agencies launching each is 300. And our pricing model is very simple; we charge recruitment agencies a small percentage of the total contract turnover that requires funding.
If you had a magic wand, what one thing would you change in the banking and/or FinTech sector?
The banks inability to lend to exciting start-ups like mine. UK banks are actually stifling the growth of the UK SMEs – they’re too risk averse which doesn’t sit well with the vibrant tech start-up scene that’s blossoming in the UK. This needs to change!
What is your message for the larger players in the Finance industry?
The banks need to update their products and services or they risk being left behind. The traditional, off-the-shelf products they offer just don’t cut it anymore. Crowdfunding sites, angel investors and smaller finance companies are becoming much more attractive because they are flexible and have relevant sector knowledge and experience. These bespoke products are far more attractive to potential customers than anything the banks offer because they cater to the specific needs of the business. By the time UK banks stop restricting access to funding and regain confidence in the start-up scene, they’ll have lost their place as the go-to provider of finance – if they haven’t already!
What phone are you carrying and why?
I’m never without my iPhone. I’m always out of the office meeting customers, prospects and potential investors or travelling between London and Cardiff so I need to be accessible all the time. Our whole business is cloud-based so I can access everything I need from my phone. I’d be lost without it!
Where do you get your industry news from?
The FT and other nationals – the fintech sector is covered a lot and I like to keep my finger on the pulse. But there are a whole host of really great sector publications including alfi.com, Financial News, Bobsguide and Tech City News that profile some of the fastest growing tech companies out there so I also keep an eye those. Other than that I obviously keep myself updated with what’s going on in the recruitment media too!
Can you list 3 people you rate from the FinTech sector that we should be following on Twitter?
Eddie George (@EddieGeorge) – he’s the founder of New Finance which is a fantastic organisation for innovators in the fintech space. He runs great networking events which are always worth a visit.
James Hurley (@jameshurley), enterprise editor at the Times. He’s really interested in all things fintech and is great to follow for the latest stories and industry trends.
Guys like Nick Hungerford (founder of Nutmeg) and Anil Stocker (founder of Market Invoice) – I have huge respect for other entrepreneurs in the fintech space so always like to keep an eye out on what they’re up to.
What’s the best FinTech product or service you’ve seen recently?
Given that Sonovate operates within the invoice finance space, the likes of Market Invoice and Funding Circle are always of interest to me. It’s an incredibly exciting time for fintech and great to see so many disruptive start-ups launching all the time – and London is leading the way!
Finally, let’s talk predictions. What trends do you think are going to define the next few years in the FinTech sector?
We’ll see a big increase in speed and efficiency of payments. Mobile payments became popular at the end of 2014 and with many outlets now adopting mobile payment technology, it’s a trend that will continue way beyond 2015. And with this, security remains and will become even more of a critical issue for payment companies in particular over the next year.
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Thanks to Richard for his answers today. You can find out more about Sonovate on their website, twitter, facebook, Google+ and LinkedIn.
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 ewan@fintechprofile.com. There’s more information on this page.
