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Show Summary
In this episode of the Investor Fuel Podcast, host Michelle Kesil interviews Nate Cater, who discusses his innovative platform that serves as an escrow alternative for private money lenders. Nate shares his journey in the finance and lending industry, the challenges he faced in creating his business, and the importance of educating clients about the future of lending, especially in light of emerging technologies like blockchain. He emphasizes the need for transparency and adaptability in the lending space, as well as the significance of building strong relationships with clients. The conversation concludes with insights on user experience and how potential clients can easily onboard to the platform.
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Investor Fuel Show Transcript:
Nate Cater (00:00)
I’m definitely not going to portray myself as a as an expert in the blockchain industry. But what I do know about it and what we see coming in the industry is it’s going to wipe out the smaller baselenders.And once that happens, if these clients aren’t ready to jump into whatever the next step is, whether it’s AI or whether it’s blockchains
They’re going to get wiped out. It’s, it’s, it’s inevitable. So they can either ⁓ comply with what’s happening
or you get run over. Like there’s really not a lot of options.
Michelle Kesil (02:11)
Hey everyone, welcome to the Investor Fuel Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Nate Cater, who’s been making serious moves, creating a platform for escrow alternatives. So, excited to have you here, Nate.Nate Cater (02:29)
Thank you so much for having me. I really appreciate it.Michelle Kesil (02:32)
Of course, think our listeners are going to take something away from how you’re creating a simple platform for lenders to be able to save some money and get rid of some of those fees. let’s dive in. First off, for those that are not familiar with you and your world, can you give the short version of what you’re focusing on?Nate Cater (02:54)
Yeah, we, ⁓ we’re a digital clearing platform is what we’re calling ourselves. We’re an escrow alternative for the private money lending space. When there’s certain loans and certain funds that lenders have to remove from their books and hold on a third party platform. the old antiquated way is working with escrow companies. So what we’ve done is kind of flip that on its head and provide a fintech alternative for our clients to move the same amount of money.without incurring any fees like a traditional escrow company would.
Michelle Kesil (03:31)
Nice. So what got you into creating this?Nate Cater (03:35)
I have a background in finance, in lending ⁓ through residential real estate. then developed a good amount of properties throughout Los Angeles, and then we went into private money lending. And I noticed how difficult it was to move money, how difficult it was to request reimbursements, how difficult it was to have draws, is what we call them, to get ⁓ dispersed.So I noticed that there was a problem and I would say it probably took a couple of years for me to actually implement it. think it wasn’t necessarily the front of my mind at the time, but it slowly came to fruition once the fintech technology was available for somebody like me to be able to essentially create my own bank. Because before it was the regular people couldn’t do that. took a lot of money and backing, but once the technology met, ⁓
The idea, it’s been that ever since.
Michelle Kesil (04:39)
Awesome. So yeah, who exactly is this platform catered for?Nate Cater (04:45)
This platform is catered for private money lenders. Our clients are private money lenders all across America. There’s 13 states that have specific legalities where our clients are required to use a service similar to ours. So we have that going for us where there’s some clients that don’t have a choice.So why wouldn’t you use us? But that’s who we’re catered to. We’re catered to private money lenders or direct lenders who…
raise their own funds, have control of their own funds, place their own funds in their own projects. And luckily there’s a little over 13,000 of them across America. So we have a nice little pool of potential clients that we can reach out to and explain to them the future of finance.
Michelle Kesil (06:20)
So yeah, what’s been like the key to creating this business?Nate Cater (06:27)
chaos. It’s been, it’s, it’s, it’s, it’s all gas all the time. It’s a lot of failure and it’s a, it’s a lot of one step back for two steps forward. It’s a lot of trial and error. Uh, it’s a lot of nos because when you’re brand new, it, it, it almost doesn’t matter what your product is. It more matters what your story is. AndMichelle Kesil (06:29)
youNate Cater (06:57)
If you’re not able to explain to your client extremely quickly how your product is better than somebody else’s, then you lose. So I think education and educating our clients is high up there on the list as well ⁓ of things that we’re working on or working through to make sure that we’re ⁓ more of a brand name within our industry.Michelle Kesil (07:27)
Yeah, what does that education piece look like?Nate Cater (07:33)
Really a lot of this, just me ranting at people, just me just berating our clients, letting them know. I’m joking, of course. It looks like conversation. looks like just what you and I are having. It looks like trying to create a rapport with somebody because at the end of the day, I think the first thing that we do as humans is we work with people that we like. So if you can…If you can create a rapport with somebody, makes it a lot easier for them to digest whatever you’re delivering. So I would say that.
Michelle Kesil (08:14)
Yeah. Is there like, is this for all lenders? Is there anyone that this wouldn’t be for? What are kind of like the obstacles that maybe people see with going for this ⁓ new rebrand for them?Nate Cater (08:29)
Yeah, the lenders that we can’t work with are lenders that don’t have control of their own money. So in the simplest form, we can say brokers, institutional banks, ⁓ banks that are lending on credit lines. If it’s not your money and you don’t have control of it, then somebody else is in charge of where that money goes after a funding. So they’re not a…client that we can work with because they don’t have any control of those funds. So yeah, our clients are direct lenders who, like I said, we call balance sheet lenders or asset based lenders where they raise capital on the backend from investors and promise them seven, eight, 9%, whatever the number is. I’m not being critical. And then they lend that to those same funds out the front door to investors, developers, home buyers, whoever they are. And then, you know, they up at 9, 10, 11 % and then they keep the spread.
So those are our clients. You have to have control of your own funds because otherwise it’s probably not legal for me to hold them.
Michelle Kesil (09:34)
Yeah, awesome. So what are you most focused on solving through this platform?Nate Cater (09:47)
The platform itself is pretty set. ⁓ We’re making small tweaks based on customer suggestions or client suggestions, which I think is probably the most important is just hear what they have to say. ⁓But I would say to answer your question, most important thing is just expansion. Like we really want to onboard as many clients as we can and not so much to take over the industry per se, but at least to get our clients to understand what’s coming and how quickly. Cause I honestly believe within the next two years, if some of these old school type lenders are going to continue the way that they’re lending, it’s not feasible.
So yeah, I would say educating our clients probably is what’s most important, getting them onboarded, having them understand what the future looks like and making sure that they’re at least somewhat ready or at least they understand. yeah, getting punched in the face by blockchain. I’m sure that’s not going to be fun for, you know, your average 60 year old private money lending owner to figure that out the hard way.
Michelle Kesil (11:39)
Yeah, can you expand on that now? Like some of those things that they need to be educated on so people can be more aware.Nate Cater (11:49)
I’m sureI’m definitely not going to portray myself as a as an expert in the blockchain industry. But what I do know about it and what we see coming in the industry is it’s going to wipe out the smaller baselenders. I also see in our industry, it’s called private private money for a reason, like they really don’t disclose what their interest rates are post closing.
I see the industry opening up where those numbers are going to start being disclosed. So you can’t really hide behind ⁓ your websites anymore. And there’s going to be some active competition. And once that happens, if these clients aren’t ready to jump into whatever the next step is, whether it’s AI or whether it’s blockchains or whether it’s partnering up with bigger banks or banks that are a little bit further along technologically.
They’re going to get wiped out. It’s, it’s, it’s inevitable. So they can either ⁓ comply with what’s happening in the sense of opening up their books and being a little bit more transparent. So maybe they have, something that they could sell, meaning like their bank, they could sell it to somebody else and retire, or you have to get along with what is coming and, or you get run over. Like there’s really not a lot of options.
So.
That’s what we’re really educating our clients on is here’s what’s coming and here are your options and decide which one you want.
Michelle Kesil (13:30)
Yeah, absolutely. So what are like some of the main hesitations that your clients have with switching over?Nate Cater (13:38)
just that we’re new, every single one of them. The other thing that I get, because we’re not a very polite community, for whatever reason, this lending community, so the first question is, well, how do you make money? Which I don’t think there’s any other industries where ⁓ that question is so blatantly asked within the first three minutes. ⁓ So again, it’s educating our clients, it’s letting them know, you know, here’s the future and here’s how we make money, and we make money based on…the amount of funds that we have under management and those funds are yours and they’re accessible. But yeah, like I was saying before, it’s all education. It’s just explaining to them what we’re doing. And then also getting them open to like this new change is maybe uncomfortable and a little bit new, but wait until you see what’s coming. And then it seems to make ⁓ our baby step into that technological direction with those clients a little bit more palatable for them.
Michelle Kesil (14:37)
Yeah, absolutely. So what is like the ultimate goal for this project?Nate Cater (14:44)
World domination, definitely. World domination. No, I do, we have some plans to kind of, I don’t want to say wrangle in this market, but definitely lasso in a way. There’s, like I was rambling about earlier,Michelle Kesil (14:46)
hahaNate Cater (15:42)
the loans that are funded within this community are always private. So it’s very difficult for the average consumer to compare apples to apples. I’ll give you a quick example.If you’re buying a residential house, you can go on 50 to 150 different websites or platforms and you can compare a million different bank interest rates. Right? Like we can all do that. In the private money lending community, it doesn’t exist. It’s not there because the data doesn’t exist. They don’t want to give that data out because they really don’t want to be compared to their neighbor. And I understand why, but that’s not really an option anymore. And within the next year or so you’re
the public is going to be able to make a comparison against private money lenders just as they do a paper lenders of Chase or Wells or Citi. So that…
that ripple in the fabric is…
That ripple in the fabric is where, or what we’re pushing our clients towards. ⁓
That’s our selling point. That’s basically what drives 90 % of our company. And then knowing that that’s coming is a way to wrangle in this industry in the sense that the more banks that we have under our belt, the more information we have and the more we’re either able to help our smaller end clients kind of fight the bigger banks that are coming in. Like I was saying earlier, the JP Morgan’s that are coming in with
tens of billions of dollars and giving our guys a shot. So.
I would say that’s the most difficult thing that we’re dealing with on that sense. Also that most difficult thing, if we can figure out how to overcome it, then that’s our ultimate goal of expansion and being able to wrangle in this industry that’s very, it’s like herding cats. They just kind of are everywhere. So if we can figure out how to consolidate this thing, it’s a really big ⁓ chunk of the financial space that hasn’t been.
that hasn’t been fenced in yet. So that’s the ultimate goal. So yeah, world domination in a sense, but not for the sense of power. It’s more the sense of the more lower end banks that we have working with us, the better off those banks are in thriving in the future of what the industry is barreling towards, which is scary.
Michelle Kesil (18:31)
Yeah, absolutely. So when it comes to growing your business, creating new relationships, networking, what has made that big difference for you?Nate Cater (18:46)
Realizing that people, I think I said this earlier, that people just like to do business with people that they like. You know, there’s a point, yeah, there’s a point where I was so desperate for everybody to hear this thing. I would just like fire hose it out. And you’re like, I don’t even work in your industry. I’m like, yeah, yeah, but you’re going to love this. Um, and then, you know, taking a step back and just, Hey, what’s your name? What do you do? Let them ask, you know, let them be interested. And again,just doing business with people that you want to do business with and being selective. And then also being really appreciative of the clients that did come on. Like my first five clients, ⁓ we did something a little bit extra for them. Our first, our next 10 clients, ⁓ we had to change some different programs for them to make sure that they were taken care of. So.
I would say again, it’s just, it’s as simple as it can get. Just make sure that people feel comfortable with who you are and then they’ll probably feel comfortable with where you’re off.
Michelle Kesil (19:55)
Yeah, absolutely. And do you guys like just sign people on to this platform? What does like what does the user interface process look like?Nate Cater (20:08)
It’s so simple. It’s the same as you would signing up for any bank account online. The only difference is the accounts have to be held under an EIN number, so it has to be held under a business. That’s it. There’s no other difference than signing up through any other bank, whether it’s Chase or Wells or us or Focus Tech. It’s all the same process. It takes about 30 seconds. Your first account will be active within 24 hours.Michelle Kesil (20:13)
Okay.Nate Cater (20:35)
And then after that, you’ll add what we call sub accounts. So every time a client would want to place a new set of funds, they would just add a sub account. They would label it, whatever they want their loan number, the property address. ⁓ I don’t care if they’re, they’re their firstborn son’s name and they wire in the funds. it’s as simple as it gets. Literally everything, every operation that we have, every time you have to touch our system, we want to make sure that it will take our clients like 30 seconds or less.Michelle Kesil (21:04)
Amazing. Love that. So yeah, before we wrap up here, if someone wants to learn more about this platform, reach out to you, connect, get started. How can people do that? Where can they find you?Nate Cater (21:18)
You can find me on LinkedIn. It’s Nate Cater, C-A-T-E-R. ⁓ You can go to our website, PhocisTech.com. It’s spelled P-H-O-C-I-S-T-E-C-H. And we have some info there. We have some calculators so our clients can get an idea or an estimated revenue based on what they would be putting in in the future. So we try to make it… ⁓Like I said, as easy and educational as we can, but also something that’s approachable and simple that they, that our clients can understand. again, just feel comfortable with. So check out our website and play with the calculator. And if you’re interested, you hit the registration link and 30 seconds later, ⁓ you’re part of the focus tech family.
Michelle Kesil (22:05)
Awesome. Sounds so cool. Love it. So yeah, thank you so much. I really appreciate your story, your time, your perspective.Nate Cater (22:15)
Thank you, Michelle. I really appreciate you having me. Have a great day.Michelle Kesil (22:18)
of course, and for those listeners tuning in, if you got value, make sure that you’ve subscribed. We’ve got more conversations with operators just like Nate who are building real businesses. We’ll see you all on our next episode.
