“You’re Not an Entrepreneur Until…”: How IOU Financial Worked its Way Out of ’08

“It makes you feel old, but I don’t feel that old,” is how Robert Gloer, President and COO of IOU Financial, describes what it’s like to have been in finance since the early nineties. With his career predating social media and the explosion of tech in the workplace that has marked the previous two decades, Gloer could be presumed to be behind the times with regards to digital resources, but the practices of IOU indicate otherwise.

Born from a chance meeting between Gloer and his business partner, Philippe Marleau, at Finovate in 2008, the two men combined their businesses to form IOU, Marleau bringing the tech support and Gloer providing the operations team. Beginning this venture together just before the economic collapse of ’08, the early days of IOU were rough, and it took them a year of operating before even making their first loan.

Saying that “you’re not a true entrepreneur until you’ve put payroll on your equity line,” Gloer now laughs about those first few years. And what’s not to laugh at? With offices in Atlanta and their headquarters in Montreal, IOU is operating in two markets with a staff of 50 employees and has funded $700 million since its founding, averaging just over $15 million a month via small business loans. And they’ve even gone public, claiming a place on the Canadian stock exchange – sans a flashy IPO announcement party.

Those initial years of graft seem to have paid off, and Gloer assures me that throughout their time operating, he and Marleau, the CEO and director of IOU, have stuck to those initial visions and core values they set out to practice upon founding the company: to provide secure loans to good quality debtors with the aid of technology.

In fact, it is the last aspect of this goal that Gloer is keen emphasize. The incorporation of technology in their lending process is the reason why the COO believes IOU competes at such a high level in the industry for a company of its size. Their B.E.S.T. system is an example of this, as it offers direct access to the small business loans world for every player in the ecosystem. Banks, business, suppliers, credit card and payment processors, and more can sign up to B.E.S.T. and shop around to see which party they’d like to deal with.

Built with the ethos of quality over quantity, IOU charges a relatively low entry fee for B.E.S.T., as Gloer asserts that he’d “rather make $1 from one million people, than $1 million from one person.”

Comparing his company’s adoption of technology to the infamous story of how Blockbuster CEO John Antioco turned down an offer to buy Netflix in 2000, Gloer claims that the key to long-term success is a company culture that both looks to the future to see incoming trends and incorporates a willingness to change and adapt new developments within the field.

And it is just that which IOU is doing in Canada. Explaining that the alternative finance scene there is still in its “infancy,” Gloer is anticipating what’s to come as an opportunity to implement the lessons learnt in the American market before the mistakes that yielded them are made. Listing COJs specifically as an example of something so muddled that he’d like avoid them north of the border, Gloer believes Canada offers a chance to build an industry cleanly, without as many of the growing pains he’s contended with throughout his decades-long career.

And with business going well, as well as IOU’s recent entry into a $50 million credit facility with Credit Suisse, it looks like Gloer’s, as well as his company’s, time in alternative financing is set to continue.

IOU Financial Reports Q1 Results, Lost $1M

IOU Financial lent (CAD) $22.1 million in the first quarter of this year, down from $25.4 million over the same period last year. This translated into a $995,085 loss on $4.3 million in revenue.

Their quarterly report said that they will continue to focus on achieving profitability in 2017, much like another company in the space. IOU had a net loss of $4.8 million last year.

IOU had previously disclosed that they were in breach with a third party lender, MidCap Financial, over the consolidated tangible net worth covenant of their agreement. IOU has a $50 million credit facility with MidCap, who granted them a waiver on that breach last month in April. Their latest earnings report, however, states that IOU had now also breached the fixed charge coverage ratio covenant, and that MidCap has just granted them another waiver.

MidCap Financial also just recently approved a credit facility for Fundation, an IOU competitor.

Read more of IOU’s Q1 Highlights here