April 28, 2020
On a good day, managing liquidity and accessing capital are top three topics for company CEOs and CFOs. In the current environment, it’s either number one or number two.
Cerebro Capital was designed for middle market corporate borrowers and lenders, it addresses two key components of the commercial loan process: sourcing corporate loans and managing loan covenant compliance
At Ulu, we began looking at Cerebro at the end of 2019 and were immediately impressed with founder and CEO Matt Bjonerud’s insights into the market, his experience in the mid-market lending space, and the depth and breadth of the Cerebro platform. He and CTO Kevin Dieter have assembled a truly impressive team. We were thrilled to be selected to lead the latest funding round.
1) Tell us the big idea behind your company and how you came up with it.
After over 10 years of working in corporate finance, I could see clearly that the corporate lending industry was left out of the technological revolutions seen across almost all other industries from real estate to dating. Match.com, rocket mortgage, Airbnb. All these amazing companies have helped consumers connect using data and matching algorithms. We want to help corporate borrowers and lenders do the same.
I knew from my time as a banker that the terms offered by banks, even similar banks, vary widely and there is great benefit to talk to as many banks as possible. Unfortunately, the process of finding and closing loans is manual, extremely time consuming, and success is limited by the size of the CFO’s personal network. Between the $3 trillion of commercial loans and over 5 thousand bank and non-bank lenders, I knew there was a huge market opportunity.
There were some companies offering small loans, usually less than $1 million to small businesses, but there was no one helping companies with the larger loans. So we developed a digital platform for loans over $2 million that uses a data driven algorithm to connect corporate borrowers and lenders. The process results in faster closings, better terms for borrowers, and easy lead generation for lenders.
2) What impact has the pandemic had on your big idea?
COVID-19 has created a tremendous amount of volatility in the lending markets. Loan terms, debt capacities, and even the underwriting requirements are all changing rapidly. Many lenders continue to lend into the downturn, while other lenders have pulled back.
The government is infusing the market with brand new loan programs like the Main Street Lending Program and Paycheck Protection Program, but these programs are limited and companies need to move quickly before funds run out. There has never been a time when using a data driven process to find and close loans has ever been more important for medium and large businesses.
3) Who were some of your important influencers or mentors?
I have the great fortune of having several mentors, but the two that stand out are Jim McGuire and Doug Becker. Both have a depth of business acumen that is extraordinary and comes from decades of experience building large and successful businesses. They both have been tremendously generous with their resources, especially their time. Whether it is help negotiating new contracts, setting business strategy, or dealing with unexpected challenges, they have been alongside me every step of the way and have been great role models to emulate.
4) Why did you want to work with Ulu Ventures?
Ulu’s diligence process was focused on data and analysis, which is very aligned with our brand and our own way of making decisions. I was impressed with Clint, Kevin, and the rest of the Ulu team as they were one of the only VCs who worked with us collaboratively to run an in-depth market mapping analysis on our total addressable market.
We already knew there was a great opportunity in the middle market but the Ulu team helped us identify even more potential service offerings across every stakeholder in the loan industry. They have great experience both in fin-tech and in venture backed companies and I couldn’t be more pleased to partner with them.
5) What are your dreams for your company?
At Cerebro we want to usher in a world where the only things CFOs have to worry about is how large of a loan to take. They shouldn’t have to figure out whether they can get a loan, what loan options are available, which bank and banker is going to provide the best terms, and how will they find the time to complete the underwriting and closing process?
Lenders will get timely access to high quality companies with completed underwriting packages. Instead of worrying about how to find new borrowers, lenders can spend time structuring loans and offering services that surpass the competition.
The banking industry, armed with a better understanding of the market through our system, will be able to innovate and provide more creative loan structures and more efficient processes.