Up until last month, On Deck Capital's New York office didn't have a kitchen. Now, there is a ping pong table and a video game machine close to the sink and fridge.
The New York startup's new space close to Times Square embodies its open culture. There are no offices. The chief executive sits next to the product people. And, along with the free six-packs of beer on Fridays, there's passion surrounding the company's mission of lending to small businesses, says Noah Breslow, the startup's CEO.
On Deck uses a mix of social media, banking and cash flow data to evaluate borrowers, lending out between $5,000 and $150,000 at a time.
"This is going to sound like a cliche," Breslow admits. "But people are usually fired up about what we are doing, the fact that we are helping small businesses. A lot of people here have been small business owners, and that comes out somewhere. There is some element of empathy here for that."
The startup's general counsel ran a landscaping business in high school and college. The family of one of On Deck's product managers runs a ski shop in Colorado. Even Breslow himself waxes philosophic about his days as a golf caddy — a job that usually pays a flat rate plus tips.
On Deck started in 2006 with the idea of getting relatively small loans to mom-and-pop businesses that banks aren't always enthusiastic about making.
Mitch Jacobs, the company's founder, launched On Deck with an initial $2.5 million round of funding led by Matt Harris, then of Village Ventures, on little more than a PowerPoint presentation and reputation.
To get a loan from On Deck, borrowers log onto the company's website and fill out an application. From there On Deck uses electronic data to analyze merchants's creditworthiness.
The model is similar to Atlanta fintech startup Kabbage, which lends to online merchants.
But On Deck is unique, Breslow says. "On Deck serves Main Street businesses — retailers, restaurants, doctors, service businesses. We have very little, if any, competitive overlap with Kabbage. Our businesses also skew towards more established and larger companies than Kabbage's." Other data-driven online small business lenders include Capital Access Network, Amazon Capital Services and Lighter Capital.
Before On Deck, Jacobs started and sold two payment processing startups to public companies, Tranvia and Transaction Service Providers.
Breslow was the first employee Jacobs hired, in June 2007. Harris, now of Bain Capital Ventures, introduced the two.
On Deck made its first loan that August.
Today there are more than 110 employees in New York. There's a recently opened office in Denver with 20 sales people that will eventually hold roughly 200 employees in various jobs. And there is a loan operation center outside of Arlington, Va., with 50 employees. (This past summer, On Deck actually had enough people for two softball teams.) In addition, the company has raised roughly $85 million in investments. It closed its last round of $42 million Series D funding earlier this year.
Harris says he found the company intriguing because of its approach to lending. "The biggest hook, the thing that captured my imagination is we talked a lot to bankers about small business lending, sub-$100,000 loans, they said: 'It's too expensive to underwrite companies by hand,'" he says, adding that bankers were treating the loans more like personal loans than business loans. "They said: 'We look at the house. We look at the payment history. We don't have the resources to look at the business in the sense of that as collateral.'"
Harris thought that just seemed, well, stupid.
"Businesses have a lot of data, even small businesses, restaurants or plumbers, they have credit card data; they have account data; you have all sorts of algorithmically useful data online. Why would you not take advantage of that?"
In the meantime, On Deck has been focused on growth. It's made changes to its recruiting model — hiring two employees solely focused on bringing new talent into the company.
There is also a focus on metrics. There is this daily culture at On Deck, Breslow says, where the company's head of sales sends out a summary of sales numbers in a morning email.
"This company has always been on this rapid rhythm," he says. "I think that's a strength for us."