The importance of perseverance as an entrepreneur: the CommunityLend story

CommunityLend co-founder Michael Garrity

Most entrepreneurs know that nothing happens in the time frame you set out when you’re developing your business. No one knows this better than Michael Garrity, entrepreneur and co-founder of CommunityLend, a recently-launched peer-to-peer lending service, the first of its kind in Canada (p2p lending companies such as Prosper and Zopa operate in Britain and the U.S.). While the company was founded in early 2007, a series of regulation obstacles and funding hurdles delayed the launch until January 11th, 2010 (see the launch announcement on their blog). Garrity and his team’s passion for the innovative peer-to-peer lending service industry, and their ability to adapt to change (from angel investment to boot-strapping) pulled CommunityLend through difficult times – and now they’re aiming to become a household name in the consumer finance space. See below for out chat with Michael, and more details about this hot new startup.

Sprouter: Can you tell us why you founded CommunityLend?

Michael Garrity: I had been scanning the start-up market internationally for about a year before founding CommunityLend.  I was looking specifically for what I thought would be a “market changing idea”, in a market that I knew, which we could create here in Canada.  When I saw the first peer-to-peer lending services, Zopa and Prosper, launch in the US and UK, I knew it was an innovation which would work in Canada because of the size of, profitability of and “oligopolistic” nature of our domestic banking industry.

S: CommunityLend has had an interesting journey. Can you explain some of the obstacles and successes you’ve experienced in the past years?

MG: Where to start!  Myself and another colleague, Colin Henderson, founded Communitylend in early 2007 and our estimation at that time was that we would be able to get the idea funded quickly and get to market quickly as both the US and UK services had.  We put together our business plan, created a prototype of the service, lined up some service partners and started the work with some very capable lawyers on understanding the likely regulatory landscape.  We then went to work to raise the necessary external capital to get us started.  This process was not easy and took us significantly longer than we had expected.  In the end it took us all the way until late October of 2007 to close our first external round, which we did with a great group of angels.  Our second major obstacle hit us in early 2008 when our consultations with regulators demonstrated that putting this service together in Canada was not going to be easy, inexpensive, or quick.  This process was further compounded by a pretty significant disruption to North American capital markets in 2008 and by the US peer to peer lending services running into their own challenges with domestic regulation.  We were committed though as a team and everyone (now a team of 6 committed professionals and a stable of real partner organizations like our law firm and development partner) strapped in, worked hard and boot-strapped to get us through the process and out the other side.  This took us until September of 2009 to finish.

S: Why is the launch of CommunityLend significant for the small business/finance community in Canada?

MG: Our intent is to create a lending service which gives borrowers better rates through a fairer and more empowering process.  Canada needs more competition in the banking industry in order to get more capital into more people’s hands at better rates.  We hope that by opening the consumer lending process up beyond the handful of existing traditonal financial institutions over the next few years, we can serve that important market need more effectively.

S: What will the team be focusing on for the next year at CommunityLend?

MG: We are in our “beta” roll out now and gaining lots of marketing insight through some early committed users.  We started in Ontario last week and will be adding BC and Quebec in the next couple of weeks.  We intend to add even more provinces before year’s end.  Our goal this year is to attract significant interest from prospective borrowers and lenders in a better borrowing and investing model for Canada and to work with these folks to create a platform which meets their needs.

S: Where do you hope the company will be in 2 years?

MG: We are aiming at being a household name in the consumer finance space in this country in the next two years.  It’s a big goal and we are up against absolute giants but we believe if we stay focused on what’s important, making life better for our customers, I think we have a good shot at it.

S: Do you have any advice for entrepreneurs who are trying to bring their ideas to life?

MG: Be realistic about the power of inertia.  Starting companies is very hard.  Everything will take longer, cost more and be harder than you think.  Being able to muster what it is inside all of us that is required to believe when no one else does and keep driving when everything is going against you, is what I have observed defines great people and great companies.  We aspire to be one of those companies.

—

Read more about CommunityLend in the Financial Post. You can reach Michael on Sprouter here.