Services/Finance/How To/ Another kind of marketing strategy For Portuguese peer-to-peer lender Raize, its public listing was mainly about the marketing. By Carly Minsky 8 February 2019 \Services ‘Everyone is so scared of downrounds’: A startup banker on the current market By Eleanor Warnock 9 March 2023 Services/Finance/How To/ Another kind of marketing strategy For Portuguese peer-to-peer lender Raize, its public listing was mainly about the marketing. By Carly Minsky 8 February 2019 When José Rego talks about the landmark initial public offering of his peer-to-peer lending fintech Raize last year, he hardly mentions the money. For him, the listing last July in Lisbon was about showing “emotional commitment” to the business, taking “personal responsibility” and developing a “trust relationship” with clients. This might be because the actual numbers are a mixed bag. While the four-year-old company successfully raised €1.5m in the first ever listing of a European peer-to-peer lender, the share price is since down more than 30%. But Rego says that primarily Raize’s public listing was a marketing strategy, more than it was a fundraising strategy — and in this it was successful. The startup competes “on a daily basis” with banks and credit institutions, and wanted to get the message out that Raize is a serious player. “One of the main motivations for the IPO was to raise the profile of our company and give it a more institutional spin, releasing it from the startup image it had so that more people would be comfortable working with us,” Rego explains. “When it comes to investments and credit, people appreciate startup innovation and having new players in the market to drive competition, but they also value reputation, credibility, sustainability and long-term partnerships.” The listing did create a buzz. It was the first public listing in Portugal since 2014, and another peer-to-peer lender Funding Circle followed shortly after. Before the placement went through, Portugal’s market players had been sceptical about Raize’s decision. “We were struggling to find another marketing strategy that would enable us to get so much attention and media awareness with such little investment.” Rego reflects: “When you take risks, you do things out of the box and you’re seen as being unconventional, people talk about it, people want to know more about it.” The urgent need to market a young startup as “serious” is particularly prevalent for retail-focused fintechs compared to other sectors. Rego says that it is much harder for startups dealing directly with consumer money to “de-risk” their business, and so their success is contingent on being perceived as credible and sustainable. “For peer-to-peer lenders, because you are dealing with thousands of clients, and you are dealing with money, the combination of these two factors makes the sector more sensitive to whether or not the company presents itself in a credible and sustainable way.” But the preparation for an IPO can be brutal. According to Dealogic, last year, almost quarter of new listings across Europe were withdrawn. If Raize only wanted to propel itself into the institutional, “serious” financial community, there may have been simpler options. Nonetheless, a “holistic assessment of options” based on marketing needs, but also other secondary objectives like financing and recruitment, proved to Rego and other senior execs that an IPO was the best way forward “If the IPO hadn’t worked, we would have had other alternatives,” says Rego. “But we were struggling to find another marketing strategy that would enable us to get so much attention and media awareness with such little investment.” For the company, one of the biggest marks of success — beyond the 175% increase of investors on the platform, now close to 50,000 — is that it ranked fourth out of Portuguese startups for the most media mentions last year, according to a Cision report. Rego notes that the first two on the list — FarFetch and OutSystems — are both “unicorns” valued at over $1bn. For Rego, the fact that Raize generated almost as much attention despite being significantly smaller proves how effective the IPO was as a marketing ploy. “In essence, there is now something bigger than the company’s management and a few investors.” Still, in the short-term, investors are losing money as the share price continues to drop. It’s not obvious that the media attention generated really is sending the crucial message which Rego summarises as: “we are here for the long-term, we are a sustainable company and we are a good business partner.” But Rego says that the public listing raised Raize’s profile with potential institutional partners, like banks and insurance companies. Now Raize receives interest from bigger companies looking to partner on new services, sharing infrastructure, client acquisition, outsourcing compliance checks on customers, and so on. Rego explains: “We see that bigger more institutional companies want to partner with us. Now they want to discuss growth opportunities with us, which is a direct impact of listing. Until last year we struggled to connect with the larger companies. It is only possible now because they recognise the brand and our long-term commitment.” “Long-term commitment” is the key phrase Rego uses repeatedly to explain what it is about being publicly listed that produces all the benefits for Raize. Deciding to go public, he says, tells the world “we have a strategy to promote the long-term existence of this company”, as opposed to aiming at short-term growth culminating in an acquisition. This perception has built institutional relationships, but also resulted in unexpected benefits. Even before the offering went through, Rego noticed increased enthusiasm from potential job candidates. Candidates are attracted to well-known company names that will enhance their CV, and more importantly, employees see more opportunities for growth and development at a startup with long-term ambitions. “People want to be in companies they perceive will be around in the long term,” Rego says. “They want to be in a company doing innovative things and taking risks and succeeding.” The biggest surprise for Rego has been that this shift in perception has also transformed the culture and attitudes internally, particularly among Raize’s leadership. “After an IPO, your whole attitude changes,” he says. “When management are more committed to the company and the project, it has a positive effect on the business.” “In essence, there is now something bigger than the company’s management and a few investors. Now there are a lot of people investing, and that is an increased responsibility for us to make the best decisions.” Related Articles Inside the next big trend in wealth management Sponsored by Aion Bank Click here to read more Meet the fintech startups born out of a financial crisis By Mimi Billing Click here to read more European startups flex their acquisition muscles with €1bn splurge By Eleanor Warnock Click here to read more Another challenger bank is trying its luck in the UK. This is how it hopes to sweep the market By Isabel Woodford Click here to read more Most Read 1 \Startup Life UK government to reform ‘equity for visas’ residency application system 2 \Fintech Is Revolut really worth $33bn right now? 3 \Startup Life Techstars unexpectedly pulls out of Sweden mid-programme 4 \Deeptech The other funding gap: it’s not just unicorns that are leaving Europe 5 \Deeptech ‘There’s going to be a bloodbath’ — is generative AI a bubble?