A Baltimore tech start-up aims to become the Match.com of mid-sized firms needing a loan to fund their growth.
Cerebro aims to help companies too big to rely solely on their local bank branch and not yet in the world of large public corporations through the sometimes difficult process of shopping for a loan.
"No company has a sense of how much they can borrow without calling 30 lenders and handing out their information to each of them," said Matt Bjonerud, founder and CEO for Cerebro, Spanish for brain.
Launched in October, Cerebro recently raised $2 million from Tedco, the state-created business development organization, and the private equity firm Sterling Partners, co-founded by the founder and chairman of Laureate Education, Doug Becker, who also sits on Cerebro's board. Five employees work from Cerebro's Mount Vernon offices.
The money is being used to further develop the technology platform that businesses can use to solicit capital from banks and other private debt providers and to manage their loans.
Businesses, typically with at least $15 million in revenue, can see what size loan they qualify for and loan terms. Most loans so far have been $1 million to $50 million.
On Cerebro's platform, companies anonymously list basic information and what kind of loan they're looking for, and lenders peruse that information and make tentative loan offers. Companies can use that information to negotiate with their bank or enter into loan negotiations with the Cerebro lender.
Some firms use the platform to see what's possible before returning to their their traditional lenders, while others haven't gotten what they need from those lenders, Bjonerud said.
The banks and other Cerebro lenders are based locally and nationally and the borrowers so far are largely in Maryland, Northern Virginia and Washington, though Bjonerud plans to expand. He looks to accounting firms, law firms and his investors for introductions to potential borrowers.
Cerebro collects a fee when a loan is made or managed for compliance through its site.
Bjonerud said lenders like that business comes to them; he expects about 200 to sign on by year's end. Businesses like to see what they qualify for and with what terms, or if they are getting a good deal from their bank.
Jim Edrington, chief member engagement officer for the American Bankers Association, sees the appeal for lenders.
"It's a slog to find customers," he said. "You network and cold-call and pour through directories. A lot of time goes into that for banks large and small."
He said "crowdsourcing" new business with platforms like Cerebro could ease the burden. So far, he knows of only a few lending consortiums, but they are typically for more risky loans.
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Edrington sees some downside, though. The platform could make loans something of a commodity, removing the relationship with bankers who could take a more holistic look at companies' needs, and possibly suggest different products or services.
"That discovery process is really critical," he said.
Still, Cerebro does have takers. Since October, the firm has initiated or managed $1.2 billion in loans. Bjonerud won't say exactly when he expects the company to become profitable, though for now he's using revenue to continue developing new services.
"It's all so new," said Bjonerud, who worked in finance and for Becker at Laureate before launching Cerebro. "We aren't totally sure what this can be yet."