Mandeep SodhiIt’s a cruel twist – an entrepreneur leaves a good job to have a go at shaking-up the market for home loans and then finds he now can’t qualify for a loan himself!

We have the honour of being Australia’s first fintech hub, and HashChing was one of our earliest start-ups, so we have a real soft spot for them. But my own involvement with HashChing goes deeper.

Mandeep once challenged me to consider re-financing my own mortgage with HashChing. If I believed in them why wouldn’t I give them a go?

And so I did!

HashChing has saved me thousands of dollars in loan payments, and they even went on to use me in their TV and online marketing campaigns. Remember that old advertising line: “I was so impressed I bought the company”?

Not quite, but same sentiment!

Mandeep, how did you get HashChing off the ground?

We had $50k from H2 Ventures and that helped us to build the platform. We also reached out to friends and family and asked them to test the platform and give us some feedback.

We never had a freemium model because we believed from Day 1 that we were providing a great value to mortgage brokers who were willing to pay for a product that saved them time and money. I don’t believe in having a SAAS platform with no monthly fee because then you’re not showing your customers the value.

So we at least had some revenues, and that was growing, and it demonstrated to investors that people were prepared to pay.

What advice would you give your younger self?

Start early! You can launch a start-up at any age, but don’t delay it. It took me awhile to get into the start-up world, but if I’d done it early I would have had more risk-taking capability – once you’re married and have other responsibilities… .

Also, I did my MBA which helped me to analyse risks in a different way. Generally, MBA graduates become more risk averse due to the curriculum and the way the subjects are taught. I took a different approach and made myself aware of the risks after the course. I became more risk-aware than risk-averse.

So, what helped you overcome that risk-aversion?

At one point I just got sick of my job. I was part of a system that was ripping off customers and I said “enough is enough.” I was dragging myself to work, and that’s not a good situation. You don’t need to get to that point.

What do you say to new founders when they ask for your advice?

Early on you can either spend time impressing investors, or you can spend time impressing your customers – talking to them, getting their feedback so you can drive your product further and generate some revenue. If you do that you’ll find the investors come to you.

Start-ups should spend more time understanding the problem they’re solving, and talking to customers. But they hold themselves back. I think there’s a fear of being rejected by the customer, and a lot of people can’t take rejection. They also worry that they don’t have the perfect product yet. But if you don’t show it to the customer and talk to them about it you won’t come up with the right product for them.

In our first three months we were targeting the wrong audience and were going after the wrong market. We were also building features which no one wanted and we had to take them out quickly and build the right features.

I see a lot of start-ups taking a couple of years building a product, trying to come up with the perfect product amongst themselves, and then they launch it and are shocked that it doesn’t get traction – well it’s because they never spoke to the customers. Just launch it and get feedback.

In our first year, as well as being founder, my role was Customer Service. Three hours each day I’d be taking calls from customers and that helped me understand the problems our customers were facing.

What have you learnt about raising capital?

When we began we were reaching out to every single investor we could find. Then I realised I was spending a lot of time targeting people who had no clue about our industry. Trying to convince them to invest in our company was a waste of their time and my time.  So do some due diligence and try to understand where your potential investors are investing, what industries they look at, and only go for those investors who understand your industry.

One thing we got right was that we had customers and revenue from day one, and that interested a lot of investors.

We’d had no guidance or mentoring on capital raising. We were talking to the wrong people, and we didn’t understand the KPIs or metrics that marketplaces such as ours should be using. I’d advise all founders to get some mentoring before raising capital.

Your first pitch deck is your worst pitch deck, and looking back I wouldn’t have invested in my own company! So, work on the pitch deck.

Know your numbers as well. Investors will want to know how you came up with your projections, so you need to know your numbers inside out.

Did it take you longer than you’d anticipated?

It took us longer than we anticipated, yeah. We were overconfident in certain areas and came to realise that it takes a while to raise capital in Australia. As much as we say we want to be the next Silicon Valley, Australia is lagging behind massively. We don’t have the right VCs here, or support. Or even a good understanding of Fintech.

How long should it take a start-up to raise a seed round?

I’ve spoken to other founders, and I think we have a problem in Australia in that it takes six months or more to raise capital. Investors have a lack of competition here and they know they have the upper hand in negotiations, and so they don’t move fast.

I’ve been to Silicon Valley twice and investors there move incredibly fast. They make good decisions. And they have a fear of missing out which Australian investors just don’t have.

What made you choose Tyro Fintech Hub as your home?

We were looking for a space where we could be really focussed. There’s a lot of distractions in some of the other start-up hubs. The location is great as well.

We also liked that there were other Fintech start-ups in the space rather than start-ups who claimed to be Fintechs but weren’t – it means you have like-minded people around you. In fact our first partnership was with another start-up at Tyro Fintech Hub!

We actually tried a few other co-working spaces and realised that they had a lot of distractions – there were a lot of events going on, drinks and so on. Those things are OK but if you’re serious about building a start-up those things are actually distractions. Tyro is also nice and quiet.

Another thing we liked about Tyro Fintech Hub is that you guys are completely independent – you don’t have any interference from sponsors. With other spaces we were apprehensive that the sponsors would be wanting things from us, and that it would compromise our own independence. If they didn’t want something why would they be sponsors?

Another thing we liked is that you guys were always available to help the start-ups. There were so many times when you gave us help, but you also understand Fintech really well and could make valuable connections for us quickly.

What have you found hardest with HashChing?

Raising capital has been the hardest part.

And finding the right people is a challenge in Australia, people with the start-up mentality – you have to move fast; it’s not a 9-to-5 job; it’s high pressure; there’s no defined roles.

How well is the Fintech sector performing in Australia?

I think Fintechs have a lot more to do. I think the Royal Commission is a massive opportunity for Fintechs to go out and explain their value proposition to customers, the same customers who are feeling ripped-off by the banks. But I don’t see a lot of them taking advantage of that at the moment – they need to step up their game a bit.