Private Credit Insights with Nelson Chu, CEO of Percent
Nelson Chu of Percent explaining Private Credit strategies to investors.

Bringing Efficiency and Access to Private Credit with Nelson Chu of Percent

Episode Overview

Episode Topic:

Welcome to an insightful episode of PayPod. We invent the dynamic landscape of the world of Private credit with Nelson Chu, founder and CEO of Percent. Over six years ago, Percent was founded with a revolutionary idea to transform the Private credit market, and today, it stands as a testament to innovation and access in the alternative investment space. This episode explores the origins of Percent, the essence of Private credit, and the significant changes the company has undergone to redefine how Private credit functions in today’s changing financial world.

Lessons You’ll Learn:

This segment uncovers key insights into the complex world of Private Credit, including its definition, the appeal to investors, and the unique challenges and opportunities it presents. This episode sheds light on the intricacies of building a marketplace platform in the alternative asset investment sector, highlighting the unforeseen obstacles Percent encountered and overcame. Discover the importance of differentiation in a competitive market and learn how Private Credit can be a lucrative opportunity for both investors and borrowers.

About Our Guest:

Nelson Chu is the visionary founder and CEO of Percent, a company that has significantly impacted the Private Credit sector by providing more efficient and accessible investment tools. With a background deeply rooted in finance and technology, Nelson brings a wealth of knowledge to the table. His expertise in the Private Credit market and his innovative approach to financial technology have positioned Percent as a leader in alternative asset investments. Nelson’s thoughts on the future of Private Credit, and navigating the challenges of expanding a fintech company in a rapidly changing landscape, showcasing the impact of transparency in business development.

Topics Covered:

This comprehensive discussion covers a range of pertinent topics within the Private Credit and alternative investment sphere, including the foundational story of Percent and the evolution of Private Credit. The conversation also addresses the challenges of building a marketplace for alternative assets, the differentiation strategies that set Percent apart, and the platform’s accessibility for investors and borrowers. Additionally, the episode delves into recent trends in the fintech industry, including the effects of the SVB collapse on the financial landscape, the rising prominence of “unsexy” industries, and the momentum behind alternative investments. Nelson’s initiative to build in public and share internal operations insights for the benefit of the fintech community is also explored.

Our Guest: Nelson Chu- From Bank of America to Private Credit Pioneer

Nelson Chu stands as a distinguished figure in the world of finance and technology, known for his innovative contributions as the founder and CEO of Percent. With a vision to revolutionize the financial infrastructure landscape, Nelson founded Percent in 2018, aiming to enhance transparency and efficiency in credit transactions and lending practices globally. The company distinguishes itself through its proprietary technologies, data analytics, and seamless integrations, establishing a new benchmark in the industry. Before embarking on this ambitious journey with Percent, Nelson honed his expertise and entrepreneurial spirit by founding a strategy consulting firm. His leadership and strategic insight were instrumental in building products and raising capital for growth, cumulatively generating over $1 billion in equity value for his clients and ventures.

Nelson Chu’s career foundation was laid in prestigious financial institutions, including Bank of America and BlackRock, where he acquired a deep understanding of the financial services industry. This experience provided him with a unique perspective on the challenges and opportunities within the financial sector, fueling his passion for innovation and change. His transition from a successful career in finance to entrepreneurship was driven by a desire to address the inefficiencies he observed in traditional financial systems, particularly in the realm of Private Credit. Nelson’s ambition was not just to create a company but to pioneer a platform that would democratize access to alternative investment opportunities, making them more accessible to a broader audience.

Beyond his achievements with Percent, Nelson Chu is an active angel investor, demonstrating his commitment to supporting emerging technologies and startups. His investment portfolio includes a diverse range of companies such as Anthropic, BlockFi, and Clover Health, showcasing his ability to identify and back promising ventures with the potential to disrupt their respective industries. Nelson’s investments reflect his belief in the power of technology to transform traditional business models and improve consumer experiences. His involvement in these companies extends beyond financial support, as he often provides strategic guidance to help them navigate the complexities of scaling and achieving sustainable growth. Through his work with Percent, his consulting firm, and his investments, Nelson Chu embodies the qualities of a visionary leader, dedicated to fostering innovation and excellence in the fintech ecosystem.

Episode Transcript

Nelson Chu: We actually had done over a billion, two in transaction volume. Every single transaction we did in that 400 was a little bit better, a little bit smarter, a little bit more robust. And it wasn’t until 2023, the beginning of the year that we said we called it and just said, I think we have enough at this point, but that is a long exercise in just iterations and learnings and failings and where you trip yourself up. So it is just a function of time at the end of the day in markets like this where so opaque and so outdated, nothing happens very quickly, nothing happens very easily. You have to really patient and it’s a 10-year journey ultimately. But if you can get it right, you’ve created something transformational.

Jacob Hollabaugh: Welcome to PayPod, the Payments Industry Podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world, from payment processing to risk management, and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I’m your host, Jacob Hollabaugh. And today on the show, we are going to be diving into the world of private credit, alternative asset investment, and how to build tools that bring more efficiency and access to those markets. As a pretty big fan myself of these types of investment tools and certainly a big fan of bringing access to them to a wider population, I’m quite excited to get to learn some more about this world today. Joining me to navigate us through these industries is Nelson Chu, founder and CEO at Percent, the company who has created the modern credit market. Nelson, welcome to the show. Thank you so much for joining me today.

Nelson Chu: Thanks for having me.

Jacob Hollabaugh: So I always like to kind of start to give everyone listening in, make sure everyone’s on the same page, give a quick little overview. So before diving into some of the more specifics and Percent and everything else, can we start with just the most broad generic question possible for you, which is what is private credit? So everyone’s on the same page. And then traditionally speaking, who were the types of people making up either side of this market in the past?

Nelson Chu: Yeah, absolutely. So private credit has been around for decades at this point. But it is a relatively recent phenomenon in terms of the interest levels, and the attractiveness of what it offers. The best way to think about private credit is effectively non-bank lending. And so this is going to be basically lenders who don’t have a balance sheet. We’re providing capital to small businesses, consumers, and the like. So if we rewind back to the global financial crisis, there was a there was a time when banks did a ton of lending to small businesses and consumers. So it was a little bit on the back burner at that point in time. But then after the financial crisis happened, you had a lot of regulators that came in and said, you know what? You can’t really do this type of stuff anymore. We’re going to make it very expensive for you to do lending. And so they took a step back. But the demand for loans from small businesses and consumers didn’t go away. So someone had to fill that void. And that’s really on private credit stepped up to be able to solve that problem. And it reached a point where there was a lot of venture capital interest as well, in financing or backing lenders who were in this space, essentially. So if you think about, SoFi or Affirm, those are names that people probably recognize on the student loan side and the buy now, pay later side. In the early days, those were private credit firms, effectively. Because they weren’t banks and they had to raise outside capital to finance their loan portfolios. That’s kind of the best way to think about it. Most people don’t think of private credit immediately, but they usually have probably interacted with it in some way, shape, or form without realizing it.

Jacob Hollabaugh: Yeah, that’s a wonderful overview. Thank you for that. And for those, private credit may be newer too, but the main kind of appeal is access to a line of credit, that used to be something the banks provided in a much different way or at different rates. And now would be, if you know, you can’t get it from the traditional banking lines of credit, that you would go there, what beyond that, what is kind of the main appeal to potential investors in this world?

Nelson Chu: For sure, it’s interesting because private credit itself is fairly almost uncorrelated with the market in some respects. This is, at its core, a small business loan portfolio or a consumer loan portfolio. So in that sense, unless you have a severe issue with the economy, if the equity markets go down, if the equity markets go up, private credit just kind of like does its thing. Essentially, as long as the loans perform you’ll get paid. And the beauty of private credit specifically is that the investment durations are a lot shorter than what you get in sort of the public markets. And so you do have like even on our side, things like nine-month products or six-month products or things like that. So when you have a time when the interest rate environment is very, very high and it actually ratchets up very quickly, it wasn’t a situation where, “Oh, you know, I can invest in this now and then I have to wait for another like three, four years before I refinance it. The rate’s going to change by then.” You’ll constantly get the benefit of the rates changing and your actual yield going up as a result. It’s a direct impact of what’s going on in kind of the broader markets from a fed rate perspective. So attractive yields that react in real-time or relatively real time, shorter duration investments, higher intrinsic liquidity, those diversified portfolios, uncorrelated to the market. Those are all things that are kind of pretty good for private credit. That’s what’s made it so appealing, especially in the last couple of years.

Jacob Hollabaugh: Absolutely. So now take me back, and walk me down memory lane a little, I think just over six years ago now, if I’ve got my dates right, what was the original idea behind Percent then that led to its founding? What were you seeing in this world of private credit that could either be done better, or done differently, and how, if at all, has the company changed from that inception point to what it’s doing today?

Nelson Chu: For sure. Back in 2017, when we were thinking about starting this company, we took a look at the fintech landscape, especially around the alternative investment platforms that were out there. And we were thinking, “Hmm, it’s interesting.” There’s not a lot of stuff that’s actually very investor friendly if you will, these durations of investments into these, you know, startups that were offering these products was like four to five years. That’s a lot to ask for, like a retail credit investor, to kind of just stick with it for that long. The actual minimums were super high, so they were like 25, 30, 50 grand. If I don’t even know who you are. It’s going to be a tall order to ask to give you, like 25, 30 grand. And the yields themselves were pretty similar. It was almost always like 9 to 16%. This is the pre-fed rate hike environment. And at that point, we were just thinking, “You know what? We should offer something that’s actually pretty unique. That’s a shorter-duration investment, under nine months. We should offer something that’s a low minimum because why not try before you buy?” So we offer the first $500 minimum product and the yield, as long as we knew we could keep them in that same ballpark, 9 to 16%, we might have something compelling. So private credit was the asset class that was best suited to those types of attributes. And it worked out quite well for us when we launched the first-ever deal in 2019. From there, after having done a lot of the work ourselves to underwrite these products, structure the products, and market it to investors, we were just thinking, goodness gracious, there is no tech to speak of in this space whatsoever. So we were building our own order book management systems. We’re building a lot of our own compliance tools, our own monitoring tools. And we realized that the bigger opportunity here over time is to build the infrastructure for this space, which you just don’t really see. It’s not present. So over the last few years, we’ve been learning by doing and essentially making ourselves more efficient every step of the way. Every new feature that we launch every few weeks is designed to kind of make that much, much easier for us to be able to operate this market and also allow other underwriters like us, whether it’s a credit fund or an investment bank or whatever it may be, to realize those same benefits through technology. So now it is a comprehensive software solution that we have for the borrowers who need that capital, the underwriters who actually create these products. We did, like the banks, like credit funds, and the investors want to invest in these products. That software works together in tandem to be able to make transactions happen. And that is a significant evolution from where we were, when we just said, “Let’s go offer some short-duration, high-yield investment products.”

Jacob Hollabaugh: Yeah. So it doesn’t sound like you necessarily started out to build the entire marketplace apparatus and have step by step along the way, ended up “That’s the best solution. We got to build every part of it.” And that kind of leads to the main question I have around any time I talk to someone who’s running something that becomes or set out to become or just did a marketplace platform. Obviously, the world of fintech and finance at large is super complex, no matter where which part of it you’re working in. It’s a very complex world, but I’ve always felt like building a marketplace specifically within the financial world is like its own crazy, complex challenge above any other that could be out there. There’s just so many moving parts. And as you allude to, there are so many different pieces of the infrastructure to build the entire apparatus. What has been the hardest part of building it? Once you realize we’re building a full marketplace here, what has been the hardest part of that? Or maybe potentially like an unforeseen obstacle you had to overcome in building out this entire platform?

Nelson Chu: For sure. And I think for the founders listening, I would say, you know, oftentimes the idea that you have on the napkin we started the company is usually not where your company ends up and just be willing, open and adaptable to seeing how the winds change and like, you know, finding the right path from there. That’s opportunistic. So in this instance, we set out to build an alternative investment platform knowing there might be something else in the future. Like just let’s see how it all shakes out. Now, the fact of the matter is, in private credit, it is a three-sided market. And any VC will tell you three-sided markets are awful, they’re almost impossible to really kind of start on day one. And that’s true. We knew that going into it. So to make that easier we took down one of the sides ourselves. We were the underwriters. And so all we had to do was find the other two sides, the borrowers who need money and the investors who want to earn a return. And that makes it much more tangible, like where do we get out, go to get borrowers, and where do we go to get investors? I think the most interesting part of all of this is really just the amount of time it takes to actually learn how to do transactions in this space. So in the four years that we were building the software in private, where no one else had access to it, we actually had done over a billion and two in transaction volume, we did 400 plus transactions, literally every single transaction we did in that 400 was a little bit better, a little bit smarter, a little bit more robust things like that. And it wasn’t until 2023, the beginning of the year that we said we called it and just said, “I think we have enough at this point.” But that is a long exercise in just iterations and learnings and failings and where you trip yourself up and things like that. So it is just a function of time at the end of the day. And I think in markets like this where it is so opaque and so outdated, nothing happens very quickly, nothing happens very easily. You just have to be really patient. And it’s like a ten-year journey ultimately. But if you can get it right, you’ve created something transformational.

Jacob Hollabaugh: Absolutely. That patience is definitely probably the hardest part of the game and the patience mixed with still the confidence that what you are doing is you are going to get to the place where you can take it out wide. Patience is still involved, but at least it’s out in the world and you can get a little more real-world data. Coming back to you, let’s talk then a little more specific about the two of those three sides that you leave to the outside forces on the investor side first, who is the platform open to on the investor side, and who is it most used by, and what does kind of the investment process look like from the investor end?

Nelson Chu: For sure. I think we try and make it as easy as possible. I will say, since we talked about the genesis of this journey when we first got started, we were essentially taking investments through our platform, sending “Hello” sign docs, and allocating manual in the back end, that’s how bad it was. And I’m amazed and I have appreciative of all the investors who’ve stuck with us through that time. But now it’s all automated. It’s all in the platform. We have our own order book management system. We have our own allocation tools and things like that. So from an investor standpoint, we are accredited investors and above only. So that’s an SEC regulation, not our rules. I would love to be able to open this up further if it were up to me. So credit investors make up a large portion of the number of investors on our platform. But we do have very unique opportunities and offerings we’ve created for family offices, investment advisors, and credit funds as well. So from an investment product standpoint, we’ve always held the belief that you almost have to meet the clients where they are. So accredited investors like to invest in direct deals. They like to kind of build their own quasi-portfolio, picking and choosing what they like for family offices and investment advisors. They kind of just want to make one investment at the end of the day like this is their lower middle market private credit sleeve. So we’ve created bespoke products because all of our deals are very standardized that they can say, “Hey, I want US-only deals, I want asset-backed deals only, I want senior position deals only, I only want savvy lending. I don’t want consumer loans, things like that.” Whatever attributes you have as an investor, a family office, or an investment advisor, we make that product for you and it’s almost like algorithmic. It allocates based on whatever, whenever it meets that criteria, which is very powerful for them. And then for a credit fund, they don’t do any of those things. So they actually prefer to deploy via a credit facility. So it’s like a captive capital base. And then as long as they meet certain criteria, they will meet, they will deploy into that deal. So we have credit facilities available as well. From a product standpoint, we’re well-diversified to meet clients where they are. From an experience standpoint, it’s really simple. I think if you’ve ever invested via Robinhood or anything like that, go find a deal, find something that you like, and do some diligence on it, we have data rooms, we have comps, we have more information about the deal. If you feel good about it, make the investment and then you’re kind of done. And then after that, you can monitor the performance. You can see how the interest pays out, all those good things. So it’s fairly we’re trying to keep it as simple as possible.

Jacob Hollabaugh: Yeah, absolutely love that. Again as I kind of referenced in the intro, I love any product. And we’ve been fortunate to talk to a lot of people putting on this show, putting out a lot of products like yours that are widening that pool of access to these many different types of financial tools and assets and everything else. And so I always love getting to hear more about that. Let’s go and flip to the borrower side of things. Who is the platform open to on the borrower side and kind of the same question, who’s it most used by right now and what does the process generally look like for the borrower?

Nelson Chu: For sure. The private credit market has super large deals like you, they will be taken out by the likes of Apollo, Blackstone, Ares, and KKR. Maybe those names are familiar. Then you have like a middle-market side. Which are names that people probably are less familiar with. But those are medium-sized deals. And the reality is, as you know, lowly Percent, who’s been around for a few years and doesn’t have a huge balance sheet, I’m not competing against Apollo. There’s no world where that’s the case.  So we firmly have a reputation in our name in the lower middle market segment of the space. These are going to be deals that are under $20 million generally. They’re going to be focused on both asset-backed. So asset-backed deals are like your sofas and your firms. You’re investing in a portfolio of thousands of loans. And so if one defaults, it’s not really an issue. Or corporate debt, corporate debt is simply just you deploying or borrowing a lending money to one company essentially for their financing needs. So the borrowers themselves are firmly in the lower middle market, they’re smaller, and they need sub $20. They’re either a lender which has an asset-backed portfolio or a single company who needs working capital financing. If that’s the case, then they tend to be earlier stage as a result. So we have a lot of fintech companies venture-backed. They’re going to be like seed-stage, series-A, things like that. And the space that we cover is pretty vast. So asset-backed, I talked about SoFi with student loans a firm which is buy now pay later, that’s a consumer loan. We also do small business lending, equipment leasing, factory receivables litigation finance, it’s a very, very broad mix. But the consistent theme throughout all of it is just that we actually provide deal structure standardization on one side. So you can compare two deals against one another side by side. And data standardization around reporting, you can compare the performance of two deals and two borrowers side by side. That’s kind of the persistent theme throughout that we want to make sure we provide for investors when they are diligent.

Jacob Hollabaugh: Yeah, fantastic. I want to kind of turn our attention for the final portion of this to some recent news and trend-related topics, starting with a recent article that you were a part of, and it was related to funding for fintech falling by more than half in 2023, which is a bit alarming for most of the folks listening to this show and working within this world and kind of the overall state of the investment market in general. And there were two questions that came out of some of your responses that were a part of that article. The first one is, that you’d had a LinkedIn post about the article that you mentioned, unsexy industries coming to the forefront. Could you give some insight into what types of companies and products you mean when you say unsexy industries, and how they’re going to be best positioned to deliver on the promise of profitability in the coming years?

Nelson Chu: For sure. It’s interesting that the fintech market and the venture capital market for fintech companies have dried up substantially compared to where it was. But this is very much almost like a reversion to the mean in some respects, like where we are tracking from a deal volume standpoint and where it was in the 2010s, like this is, I think, 2021, late 2020, or early 2022, that was so far out of the norm, that the fact that it’s going back to where it should be. It is not a bad thing, it’s actually healthy for the industry. So I think we all remember those days, and it was just like, “This bubble is about to pop at some point. I just don’t know when.” And you know, fed hikes rates that’ll do that obviously. So for the unsexy industries, it’s interesting. You want to go after things as a company that creates, has a lot of defensibility because it is so hard and so complex. So few incumbents or the incumbents are so outdated that they’re just not going to be able to move faster than you. In those instances, you can create a very transformational company that can change the way fundamentally things are done. And the market share is ripe for the taking because the world and the industry have never seen that before. So you’re seeing things like infrastructure come back into play when it used to be very difficult to want to fund something like that or back something like that because it’s just really hard ultimately to do. But if you can get it right, you own that market and you have exorbitant gross margins, you have fantastic free cash flow. There’s not much that can really compete against you in that regard. So I think the unsexy industries, the ones that people don’t really talk about that often, that are just changing the way something that has zero tech is done, have the best shot of getting where people want to go, which is a profitable company that can survive on its own and thrives on its own. And venture capital money is for acceleration of growth, not contingent for growth.

Jacob Hollabaugh: Yeah, I love that and I’m glad you brought up in the beginning of that answer, the use of the phrase “The reversion to the mean.” I think you would use that in the article as well. And I think that’s super important for people to hear. As always, the headlines and news don’t do us a lot of justice a lot of times. And in a situation like this, the context of, well, it’s dropped by a whole lot. But because the context is maybe it was way beyond what it ever should have been for a brief couple of year period there. And so yeah, the context matters and it’s not the sky is falling in. It’s we’re actually getting back to kind of normal waters, not some super scary choppy waters. So I’m glad you used that time. And I think most folks know that. But those headlines and things, you see things like that and you’re like, “Oh man, is it worse out here than I actually think it is, or no it to be?” So the second thing I wanted to ask you about that came out of that article, is you had referenced in it the kind of unfortunate luck, I believe, as you called it, which is a solid way to put it around the Silicon Valley bank collapse. And that spurs interest in private equity and alternative investment. So does help in an unfortunate way, a company like Percent. Can you kind of expound on that idea and how that major event affected the financial landscape from your point of view and Percent’s point of view?

Nelson Chu: For sure. That was such an interesting weekend, and I was actually on a flight to Singapore at that time. So I like United Wi-Fi drops out between the Pacific Ocean like at some point in the middle, which I learned the hard way. but it was fascinating because we were in a situation where people, companies who had supposedly had cash did not have access to their cash anymore. And the only way, the only type of company or firm that could provide capital that quickly to another company is private credit without a doubt. So even in that weekend, we had hundreds of inbounds from companies saying, “Hey, I need like a few million just to kind of make payroll that week, and then I’ll be fine.”  And then we’ll probably find some way to resolve this or whatever it may be. And we had, I think it was like 25 million ready to go on Monday morning, that Monday, specifically, to be able to help out these companies because that’s how private credit rolls. You have the ability to move extremely quickly, extremely efficiently. And that was almost like the best tailwind we could have ever asked for. We were actually out fundraising for our series B, pre-SVB, and post a little bit post-SVB as well. But once that weekend happened, we had a lot of investors. Venture capitalists start to realize the power of private credit. They can actually help their portfolio companies in their most dire time of need. And that’s when we went from “This round is like going okay” to “We are extremely oversubscribed.” And that’s kind of the beauty of it. So in a startup, in that journey, there’s a ton of luck that goes along the way. and I think anybody who doesn’t attribute their success to some part of luck probably needs a little bit of humility. But in this instance, I attribute so much of that round to luck and sort of what happened with SVP. It’s unfortunate for the bank, although now they’re directionally fine given sort of where they’ve landed and how they’ve kind of broken up the pieces. But either way, the tailwinds that we have now and the tailwinds that we had for the fundraise were literally directly correlated to that weekend.

Jacob Hollabaugh: Yeah, it’s pretty wild. And it does take luck. But it also takes being prepared for that opportunity for that luck to be like “We believe in this product. We know it. It would be great to have an event take place that kind of spurs the others’ belief, an understanding of the value that we’re bringing to the table here.” But you’ve got to be there, ready with the value to provide. So it’s a good mix of it, but it’s definitely worth having that humility, like you said, of knowing that there is an outside part of it. Certainly, it’s not just everything you’re doing inside. And that kind of leads me to between that and a couple of other references we’ve made throughout this conversation, this world has gained a lot of momentum. Private credit as well as just broadly alternative investment field gained a lot of momentum in the last half-decade, certainly pandemic and post-pandemic time here. Where do you see this alternative investment space going in the next half-decade to a decade or so, how much do you see the momentum continuing speeding up, slowing down at all? And what types beyond maybe just private credit or maybe private credit is the dominant one, you see, which would make sense given basing the company around it but what other types of alternative investments do you see having some of that you really having most of that momentum right now heading into the rest of the 2020s?

Nelson Chu: For sure. I think the dramatic rise of alternatives had a lot to do with a low-interest rate environment without a doubt. That period of time post-Covid, when everyone was flush with cash, they just wanted to find things to invest in. And I think many startups are more than happy to step up and offer that opportunity, whether it’s collectibles or artwork or like, there was like a bunch of other ones that came out that I can’t remember off the top of my head, but either way, that’s something that I think was a benefit to the industry basis, probably a good thing. I think giving investors more options is never a bad thing. What investors choose to do with that is a whole separate story. So the thesis still holds like, “Yes, obviously 60 over 40 is dead in terms of constructing your portfolio. That’s been dead for a long time.” But alternatives are alternatives. They should not make up a huge portion of your portfolio. That is a generally fairly illiquid asset, generally, a very volatile asset that’s difficult to price or mark to market on a regular basis. So keeping that in mind, it should be something that you use opportunistically. That’s experimental. It’s part of fun or whatever it may be. And sometimes you’ll get outsized returns, other times, you may get burned. That’s what alternatives are all about. But it gives people the opportunity to invest in things that they may be personally passionate about. For example, if you are big on art, you would never be able to rarely buy a blue chip art piece, unless you’re going to Sotheby’s or something like that and bidding yourself, but to be able to buy a fractional piece of that and just feel like you own that, that’s pretty cool. On a collectibles basis, there are classic cars that you can buy that you would never be able to probably buy on your own, but you can buy a portion of it and feel a sense of ownership. So the alternative space is fascinating because it tugs on the emotional side more than just the financial side. And that makes it okay in many ways for a lot of investors. They’re not almost like necessarily always expecting a return, but they want to feel they got a part of something that matters to them. So I love that right about alternatives. I think when it comes to true alternatives that will stay, that have staying power and that are more institutional aspect and that kind of facilitates or drives staying power because if institutions come in, that means it’s a lot more capital than retail. You’re going to have to stick with the ones that people know well. Right? So that’s going to be private equity, real estate, private credit for structure. Those are the ones that are going to consistently stick around. I think real estate is going to be challenged for a while, just inevitably, given the current environment, commercial real estate is dealing with a whole lot right now. It’s going to continue to be the case. but other stuff like infrastructure and private equity, I think especially when rates come down, it will all kind of move in the right direction. So we like where we’re positioned, totally biased answer. But I do think that there are a lot of tailwinds behind this because of the fact that banks have not stepped up to do a lot of these lending activities. And as a matter of fact, they now are trying to find a way to wiggle themselves back in through other arms of their business to be able to do it legally, if you will. And that’s been fascinating to watch. So there is clearly a great time to be in private credit right now and we’ll see. But hopefully, I see that at least continuing for another couple of years at the very least.

Jacob Hollabaugh: Love it. The final question I’ve got for you then, Nelson, you recently shared on LinkedIn that in the spirit of building in public, you were going to start sharing internal team emails and some other insights into how Percent is operating. And I am a big fan of initiatives like this. I’m always fascinated by kind of what goes into the decision to do something like that. So give me a little insight. What was the thought process? How did you even come up with the idea of maybe I should be doing this, I should be doing this, I want to do this? What was kind of that thought process like, and how do you think that transparency of that kind for an individual leading a company and for a company in general, kind of benefits both the company and the wider fintech community that might take in that content?

Nelson Chu: Sure. I feel like you’ve checked my LinkedIn just as frequently as I do, so I’m very grateful for that. So this was something that I’ve been kicking around for a while because I write emails to the team every week. That’s topical. Something about, the good, the bad, the ugly, whatever it is, we are very open as a team just from what’s going on and what’s expected, what we’re happy about, what we’re not happy about, how things aren’t going according to plan, etc. And as a founder, I personally knew from just experiencing it myself, it’d be nice to relate to something or to someone and what they went through. And that, to be fair, what you see out there and even for Percent as well, our LinkedIn feed, our general social feeds are super curated where it looks like everything’s going fantastic. That’s never the case. It is varying between organized chaos and an absolute dumpster fire they’re trying to put out. That is usually the situation with most startups. So to be able to publish the things that we see and we have and go through on a regular basis, hopefully, can give other founders just some solace in the fact that they’re not alone when they go through this and they’re seeing it happen and play out. And I started it on a two-year retrospective. So whatever happens today, it’s two years ago, effectively. And I chose that time specifically because that was a really interesting time in the market. January 2022, things were still frothy. And then the moment it changed, you can see in my emails change to the team in real-time with all the things that have been going on. So it’s been interesting to see. It’s been actually pretty well taken by people who’ve been checking it out and looking at stuff. I also try and make some other stuff public as well, our investment memo from our series B right from 2022. Because it’s something that hopefully other founders can use as a resource for themselves as they draft it. so none of this stuff is super, I think timely in the sense that “Oh, it’s happening right now.” But I think in some ways what happened historically is almost more important because you can see how it actually shook out, in retrospect. And you have a lot more learnings from that as a result.

Jacob Hollabaugh: Yeah, absolutely. Well, I think it’s super duper cool. And definitely, for any other founders listening, definitely worth checking out. And Nelson, this has been a real pleasure. For those listening who may want to either check some of that stuff out or just learn more about Percent, keep up with everything you and the company have going on, where’s the best place for them to go to find you?

Nelson Chu: For sure. Our company domain is a lot easier than mine, but it’s, for anything that you’re looking for about the company itself, private credit, alternative investments, things like that. Me personally, my website is and you can always reach out to me just Always happy to chat about anything and everything.

Jacob Hollabaugh: That’s amazing. Well, we will link to those and more in the show notes below. Nelson, thank you so much for your time and knowledge today. I’ve greatly enjoyed it, and hope to speak to you again sometime soon.Nelson Chu: Sounds great! Thanks so much for having me.

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