The Boston area’s economy has at least two big things going for it: A hot real estate market, and a vibrant fintech industry. Startup New Silver Lending combines those two elements into one brilliant idea: It’s a fintech company that offers real estate investors across the country with fast, accessible capital for projects such as fix-and-flips and new builds, just to name a couple.
Startup Boston caught up with New Silver’s Co-Founder and CEO Kirill Bensonoff for a wide ranging discussion on the Boston startup scene, his experience as a founder, his views on the crypto industry, and his vision for New Silver.
I believe you spent your formative years in Connecticut, but have lived and founded companies in the Boston area for quite some time. What attracted you to the area, and what keeps you here?
My family moved to Connecticut from Belarus, which was part of the Soviet Union at that time. My first serious job after college was working for IBM Global Services in the consulting capacity, which was the main reason I moved to Boston, although I had my eyes on the city for a while.
The Massachusetts area has a lot to offer in terms of education – which I took advantage of a little bit later on – and the job opportunities, as well as the ecosystem for startups. Everything an entrepreneur could want is right here.
You mentioned you worked for IBM, but since then you've founded more than one company, so you’re clearly one of those people who has something entrepreneurial in their DNA. What do you think that is?
It’s hard to say. I started my first business in college, a web hosting company, which probably isn't even on my LinkedIn page. I just always had that entrepreneurial bug, where I saw opportunities and areas where I could add value.
But I never gave much thought to whether I wanted to be an entrepreneur or work for a corporation. It was just always super interesting to me to build something new, to figure out a problem and try to solve it.
And speaking of your LinkedIn page, I did notice you’ve worked in blockchain in the past. So I have to ask: Are you optimistic about the space, or are you a little bit down on it given the rough year that it's had?
I'm still very optimistic. The technology is sound and has a lot of different use cases, when you consider the power of peer-to-peer transactions. And it doesn't necessarily have to entail money. It could be any kind of a security instrument. It could be fractionalization, or it could be tracking products.
So the technology itself is moving forward nicely, and there have been a lot of iterations. There are more layer-one networks out there and more choices to build on than even a couple of years ago. And I think we're going to have even more coming online, with improvements to the current ecosystem happening pretty rapidly.
All that said, I would love to see the government provide more clarity and make it more attractive for entrepreneurs to build. Most people are good actors, but there's a lot of uncertainty about what’s going to happen, and whether their projects will remain compliant and lawful. Those doubts are preventing a lot of people from building in this country, which is unfortunate to me as somebody who’s an immigrant and believes strongly in what the United States can provide for entrepreneurs. So I'm hopeful that we’ll eventually have more certainty.
I wanted to switch gears a little bit to talk about your current company, New Silver. Can you walk me through how you found it, especially the problem you identified that led to its creation?
When we started, we looked at the sector of real estate investing, which is a niche subsector of real estate that is still very large in terms of transactional volume. The technology that plays into the sector was really lagging behind the consumer-facing sector, especially if you think about consumer businesses like Rocket Mortgage. A few years ago we had a lot of innovation happening in that space, and now you can go to a website and provide a few details and quickly receive some kind of conditional approval – not final approval – on a mortgage. That didn’t exist in the real estate investing subsector.
So our main thesis was to go out and build some kind of analytical, data-driven platform that would enable potential borrowers to go to a website, plug in a few things about what they're trying to do, and get a quick conditional approval so that they could quickly make offers and know what kind of financing they would qualify for.
That said, we’re a fintech company. We have some of our own capital, but we're not a balance-sheet lender where we keep loans ourselves, though on occasion, we may. Some of our competitors do balance sheet their own loans. We have a facility that is backed by a blockchain organization called MakerDAO that looks like a traditional securitization facility where accredited investors and institutions can put in money, and where MakerDAO as the stablecoin issuer can put in money and and basically back these loans that we originate. So it's an alternative source of capital for financing these types of loans. We have standard financing facilities from traditional players as well. And we work with a couple of funds that finance and buy these loans. So there are multiple ways that we can hold these loans until maturity, and they typically mature in 12 months. So it's not long term.
MakerDAO is one of the larger stablecoin issuers out there, and is very innovative. They build their protocol to scale, and are working with real-world assets, like our mortgage loans. We were actually the first real world asset that they worked with. Since then, they’ve done a number of larger financings with various other “real world instruments” like Treasuries, and they work with a couple of banks.
And how are you adapting to our new economic environment, given what’s going on in the housing sector?
Obviously there is less activity in real estate, which affects real estate investors. But real estate investing continues to be a super interesting space because it enables people to earn a passive or active income, whether they are interested in doing a fix-and-flip project, or are buying a piece of real estate and renting it out. This really brings a lot of value to neighborhoods, because these folks are buying properties, renovating them, then reselling. So somebody is able to get into a first home that was recently remodeled and improved. And with the housing stock in many areas aging, that's going to continue to be an interesting opportunity for folks. It allows people who have a full time job to do something on the side.
So I'm optimistic that the sector's going to continue to grow. Times are challenging right now everywhere, but I'm optimistic about the longer term future.
About the author: Randall Woods is a former editor at Bloomberg News and currently is a Senior Vice President at SBS Comms, a communications agency for technology companies and startups.