The Asset Based Lending Masterclass Part I of III. Raising Debt Capital for your Specialty Finance, Fintech Lending, or Alternative Lending Platform with Special Guest and Asset Backed Podcast Contributor Matt Edgar, Founder & CEO of Edgar Matthews
Welcome everybody to another edition of the Asset Backed podcast. My name is Andrei Sundate. I am your host and the creator of this podcast focus on credit, private credit, structured credit, and everything asset backed finance. My guest today is Matt Edgar, the founder and CEO of Edgar Matthews and Co. I, am excited to have you on the show, Matt.
Andres Sandate:Welcome to the Asset Back podcast.
Matt Edgar:Thanks so much for having me. Excited as well.
Andres Sandate:I am looking forward to diving in to all the things you guys are doing at Edgar Matthews. I know it's been a busy, launch of the firm. And to that point, would you tell us a little bit about your background and, about Edgar Matthews?
Matt Edgar:Yeah. More than happy to. And, again, thanks for thanks for having me on on the show. So Edgar Matthews, we're a full service investment banking firm that's focused on the financial services sector, with particularly deep experience in the specialty finance and asset management sectors. We like to think there are 3 core verticals to our business.
Matt Edgar:The first being strategic advisory, which really focuses on buy side and sell side m and a work and other related strategic work for financial services companies. Bucket number 2 is what we call private capital markets, which focuses primarily on asset backed debt financing for the same types of companies and to a lesser extent structured equity and equity, focused capital raising. And then the 3rd bucket is what we deem insurance solutions, which structurally is quite similar to our private capital markets practice, but this focuses on ABS rather than ABL, and we can talk about the difference that single header makes, in asset based, financing broadly. But that really involves any financing structure with a credit rating attached to it, which we would then distribute to our, insurance based investors. So we like to think there are, you know, significant synergies between these three core lines of business, and we like to think we're well equipped to service companies over their life cycles from their 1st institutional or semi institutional warehouse facility to ultimately financing in the public capital markets and, securitization markets.
Andres Sandate:Yeah. You know, I I I love this world because, you get to meet folks that have, such deep domain expertise across, all these areas. They're growing so rapidly, across the the global capital markets. And in this case, we're gonna talk a lot about asset based financing, asset backed financing. I wish we had met 3 years ago when I was running capital markets at a fintech lending company, and we were going down this path of looking for our first warehouse facility.
Andres Sandate:But here we are a few years later, and, and so what I'd love for, the listeners to understand is a little bit about your professional background and your journey to founding your own investment bank. That's a you know, that's not an easy thing to do, start your own firm. I've been a part of 2 or 3 startups. So regardless of what the service or product is, find, you know, finding a market opportunity, finding a gap in the market, and then making that decision to go set up an organization and build a firm, particularly one in a highly, highly specialized area like this, I would imagine, comes with quite a bit of background and experience. So tell us a little bit about how you got to, the this point in your career before we sort of step into kinda what is going on in the market and some of the things that I think, our issuers and originators will benefit from learning today?
Matt Edgar:Yeah. Sure. And and admittedly, it's a bit of a boring, fairly linear story actually. So I've been doing the same exact thing my entire career. I have been a financial services investment banker, since day 1 of my professional life, and that's been across a couple of different firms.
Matt Edgar:So I began my career doing asset management m and a work, at Sandler O'Neill, which is now part of, Piper Jaffray. So I sort of spent my my analyst years there, focused on the execution side. And at that point in the market, it was very focused on traditional asset managers rather than, you know, alternatives, which is very much the focus today. So, definitely an interesting experience and I think set, a pretty good framework from a technical perspective to build a career as a Fig Focus investment banker. But, from there, I transitioned to Goldman Sachs, obviously, a much larger firm, where I spent a lot of time really working with alternative asset managers and specialty finance companies.
Matt Edgar:And that was primarily focused on the commercial finance side of the equation as well as, the private credit sector broadly. So through that, I was able to, you know, build a fairly strong Rolodex, you know, of of CEOs and CFOs sort of in the space and also build a very deep understanding from a product perspective, whereas my, prior experience was really focused on m and a only. So through that very diversified experience through capital markets, I quickly, you know, began began to work on quite a few, asset based type of financing facilities and other, fund finance solutions, I'd say, broadly. And in identifying, you know, what the next move from a career perspective was, I recognized that, you know, the relationships I was building, had material value to them. And I recognized very quickly, obviously, as a large institution, large institutions aren't always optimally set up to service, smaller, more emerging type of companies, but those emerging and smaller companies, oftentimes do need the services or technology or capabilities of a large financial institution.
Matt Edgar:So there is this really interesting white space where perhaps some companies that, I was speaking to weren't quite ready to, get on the radars of a large institution. But in the meantime, they still needed services, that large institutions typically offered. So that really was the first, you know, I'd say generation or or around or or or thesis of building Edgar Matthews and Co, and, ultimately, decided to, take that thesis and spin it out, last April, really, with just myself and build the business from there. But today, you know, just over a year later, our team is now, 8 people. You know, we're focused, you know, like I said, on the sort of 3 buckets that I mentioned, but, are continuing to do a lot, and I think you're really seeing that thesis play out where out of the companies that we're working with sort of fit right into that white space, I I just described.
Andres Sandate:Yeah. And and we're wanna we're gonna wanna talk about, the the the the 3 areas, and I wanna hone in on probably that second area in particular where you can offer, really that corporate finance, capital advisory. Not that the m and a piece is not important because it does play a role at a certain stage in every company's life cycle, whether they execute a deal or not. If if they're savvy, they're they're sort of aware of what's going on in the market, and they have relationships with folks like yourself, who know how to run that process. But let's talk, high level, though.
Andres Sandate:The the Asset Back podcast, you know, the the audience is everybody from originators, specialty finance companies, Fintech lenders, they're at different stages. But I, like you, I I saw and continue to see a lot of emerging early stage companies who, you know, when they're large enough and the origination volume and the loan tape grows to a certain size, everybody's aware of them. Everybody wants to work with them. They become broadly, you know, bankable, if you will. And, and there's enough data and there's enough, you know, tape to to to attract, if you will, a lot of market participants.
Andres Sandate:But in that earlier stage, it's a different story. So I wanna first allow you to kinda set the table and maybe give you the chance to provide sort of a broad overview, of the capital raising process for, for the issuer. And I know that that's a a big question because it's gonna depend, but maybe you could sort of, provide, and I'll give you the time to do so. But give give a perspective of what does that capital raising process look like, if somebody is introduced to you at Edgar Matthews and they're a spec fan or they're a fintech lender?
Matt Edgar:Yeah. I think it's a great place to start. And to your point, it's it's it is very dependent on the stage of company and also the type of financing product that's actually being pursued. But I think for this, as you kind of mentioned, I'll focus on the, you know, nonrated private asset based finance process for now, and we can, you know, see where that sort of takes us. But, overall, I'd say from a timing perspective, we seek to complete these ABL facilities within 3 to 5 months, though the process can lengthen significantly depending on a number of different factors which we can get into.
Matt Edgar:So from our perspective, I'd say we'd really categorize the process into 4 key, stages, if you will, preparation, marketing, negotiation, and closing. And I think, you know, between those 4 major categories, some run concurrently with one another, but overall, I think that's a good way to sort of categorize it. So taking the first one, preparation, I would argue this is the most important step and includes some really key steps to set expectations for the process. So, first and foremost, the first thing that we do as an investment banker when we're speaking to a potential client, we underwrite the business significantly on our side. So our business model is more than just cap intro.
Matt Edgar:We like to be involved in the entire process and do a pretty deep due diligence, you know, process on our side because I think, a, that prepares the company for market, b, identifies any potential shortcomings or issues of the company, and, c, it make sure ensures that we're bringing a quality company to market. So that is a key part for us, and I think outside of that, once we sort of make the determination that this is a company that we want to be in business with, I think it's really aligning on, you know, some of the key economics and structural features, including advanced rate and pricing grids and also, you know, source and structure of first loss capital and other, you know, preliminary thoughts of what the facility will ultimately look like. I think another key part of this is confirming the audience type of investor that will be approached, and we can kind of talk about the puts and takes of different cohorts of investors because they all operate a bit differently. And I think another big piece is just ensuring that, you know, the data is robust, audited, and organized for investor review.
Matt Edgar:This is an extremely data centric underwrite when Yep. Looking at ABL style financing. So making sure there's efficiencies to be picked up with investor review is something that we spend, really a lot of time on. And, you know, the ease of reviewing data can oftentimes make or break a transaction, quite frankly. So we wanna make sure that, everything is super buttoned up on that side again before formally launching.
Matt Edgar:And I think that sort of gets us into the second stage, marketing process. So, Yeah.
Andres Sandate:Let's let's, let's stop there because I think that's a good I think that's a good amount of, of of meat on the bone, if you will, for us to to try to drill down into this preparation phase. I've seen this, repeatedly with issuers from my standpoint, and we probably were one of those issuers early on, right, in terms of the the fintech lending, where you think you've got a good product or service to originate loans. Okay? And now you need capital, you need loans or a loan or some type of debt facility to go make more loans. Right?
Andres Sandate:So so you've you've identified, and believe you have some initial product market fit. Customers, consumers, whatever they may be, small, medium sized businesses, are starting to, you know, say, hey. I'd like to borrow money. I'd like, you know, I'd they find you, and now you've got an underwriting model. You're underwriting that that borrower, and, and you've got your criteria, but now it's starting to take off, and you're starting to see that that growth and you say, oh, no.
Andres Sandate:We don't have enough capital. Our friends and family or the family office or the the network is starting to be exhausted. I've heard about banks. I've heard about finance companies. I've heard about these private credit firms.
Andres Sandate:What are the preparation steps that you often see with those companies that are a year or 2 into their process? They've got data. They have a loan tape. What are some of the initial things? I know we could spend an hour talking about this, but what are some of the initial things that at Edgar Matthews you like to sort of flush out, that are part of your due diligence process and your underwrite, because you're not a broker.
Andres Sandate:You're not just taking company to a bunch of lenders and running, you know, running a beauty contest, if you will. This is much more about identifying really good companies that have, sound underwriting, it sounds like, etcetera. So I'd love to dive into what the preparation diligence process really looks like.
Matt Edgar:Yeah. I I think you you phrase that, perfectly, actually. But but from our perspective, mechanically, how it works is probably a a handful of discussions or even on-site due diligence meetings that will hold with potential clients. And you're gonna hear me go back to this several times over this conversation, but the biggest thing that we're auditing in that process is, data efficacy and, the, I guess, robustness of reporting systems in place. As I mentioned, in underwriting an ABL facility, you're looking at the assets versus corporate credit risk.
Matt Edgar:Corporate credit risk, of course, is sort of a overarching concept that is related, but at the end of the day, you're facing assets in an SPV, and they tend to be very diversified pools of assets. So data is the key input into that underwrite. So we wanna get really smart on, you know, the track record, how previously previous vintages of, loans have performed, what loss data and delinquency trends have looked like, what recovery trends related to that also look like. Things like, you know, are your borrowers paying? What sort of the cadence of those payments?
Matt Edgar:Do you have systems in place to administer all of those cash flows actually coming in the door, which for a scaled more mature lender, these are more simplified, streamlined type of questions. But for the earlier stage, more emerging guys that are getting ready to raise their 1st institutional facility, you know, I think sometimes not all of that is buttoned up. So I think identifying that and having a very honest conversation at the outset, is super important, and you kind of alluded to this. Oftentimes, when we're brought in, we're not in the business of, you know, finding high net worth capital or, you know, non institutional, facilities. A lot of specialty finance companies, which there's nothing wrong with it, but I think do start with more high net worth friends and family, perhaps some, you know, quasi institutional family office type of capital, but raising from that audience is extremely different from raising with a private credit fund or a bank audience who does this for a living, knows how to structure these types of facilities, and has looked at you know, if you're an equipment finance platform, it's probably looked at 100, if not thousands, of other equipment finance platforms to know exactly the targeted questions, to focus on.
Matt Edgar:So we help navigate all of that, but I think 1st and foremost is making sure that we're comfortable with the story before we try to, you know, sell it or market it to one of our investor relationships.
Andres Sandate:Yeah. So and that that's a good way for us to leg into part 2. But, one one or two final questions on the on the preparation phase.
Matt Edgar:So
Andres Sandate:when you're working with the the the client, who are you typically working with? Do they have the internal finance, FP and A staff, or do they have a a VP of finance or a capital markets, maybe a CFO at this stage typically? And if they don't are are you able to bring somebody in from outside? How do you bridge that is one question.
Matt Edgar:The less mature, the more involved the CEO is. That's how we sort of think about it. So oftentimes, first institutional facility, the CEO or founder, president, what have you, tends to be quite involved, but with him would be a CFO or head of finance type of person. And then as you migrate up the spectrum, treasurers, for organizations. Or, you know, for for more mature companies, they tend to have, more fully baked capital markets departments who, would generally run most of this process.
Matt Edgar:So I'd say most commonly for the stage of companies that we deal with, it's kind of the CEO is fairly involved with the CFO and or head of capital markets, sort of working in the in the trenches, if you will, with with us.
Andres Sandate:Yeah. So he he or she probably has, you know, they've got an awareness of of maybe they're a technical founder. He or she is a technical founder and they they have somebody doing, books and records, finance and accounting. Maybe that's a full time person, maybe it's a fractional, or maybe they realize pretty quickly, like, if we're gonna be successful scaling this business, which really they're lending businesses, not just technology businesses. They're gonna probably be looking for that staff pretty quickly.
Andres Sandate:2nd and final question on the preparation. What does the end product look like, if you will, when when you all are typically finished? Is it a really polished data room? Is it a set of financial models and and projections and proformas? Is it that plus a deck?
Andres Sandate:Like, what are the kinds of things that kinda come out of that preparation phase?
Matt Edgar:Yeah. I'd say it's more more the former, which sounds quite boring when you, talk about it, but, a a a fairly robust data room. We like to share, more than less starting. And, again, depending on the asset class, of the company that we're working with, we've done enough transactions either, you know, past and present, and, we we have a very good sense of the specific, you know, KPIs, if you will, that investors will be most focused on. So we try to, make those available in a very digestible organized way, through a data room and, you know, to your point of company, that will be, you know, loan tapes and, you know, historical performance data, presentation, and any other relevant sort of, you know, files for investors to to make an educated decision fairly quickly.
Andres Sandate:Yeah. So that preparation piece then, I would imagine, gives you also, Matt, an opportunity to really burrow into the company and understand what is a potential structure. We we've kind of talked more about the you know, an ABL facility or a warehouse facility. There's a lot of different financing tools for earlier stage companies. We can't talk about all of them today, but a lot of these companies are not going directly to the securitization the of the the the whether it's a warehouse or an ABL facility, how does that start to take shape before we get into who you're actually gonna go out to from an investor perspective?
Andres Sandate:Because that raises a whole bunch of other questions, but I wanna talk a little bit about structure. How how do you get to, kind of a structure beyond you just having a lot of experience and your team having a lot of experience?
Matt Edgar:Yeah. It's a good question, and we we truly do try to approach every situation with what we call a a blank canvas. And, really, in typically the first or second conversation, the focus with the client is, you know, before the numbers and before our diligence is, you know, simply what are your goals. And we like to understand that upfront because that informs everything else that we're going to run. So we'll typically, after initial conversations, drop a couple of different paths and structures that we think, can make sense, and then ultimately sort of align, on something.
Matt Edgar:But that being said, I think, procedurally, you can also dual track things where if folks wanna look at an ABL facility and a forward flow facility, for instance, we can certainly do that. But I think it's really aligning on structure, and I think when, you know, looking at debt financing options specifically for earlier stage companies, it really is kind of those 2 buckets, ABL or forward flow, and you're typically looking at, more often than not, a a non bank Yeah. Lender as sort of your first institutional capital provider. So I think, you know, the key questions there are, you know, one of your business model, do you want to originate and retain the assets on your balance
Andres Sandate:sheet Yeah.
Matt Edgar:ABL facility, or do you want to run a more, origination fee driven, business line and not actually hold the assets on balance sheet and maybe retain the servicing through a forward flow. So I think those are some of the considerations we like to, you know, dive into upfront that sort of informs, I guess, at least for the, the more emergent platforms.
Andres Sandate:And you and you raise a really, really important point because what in in my experience, sometimes that answer of, do I wanna hold some of these assets on balance sheet? Do I wanna be more of an originator and have a really, really killer process to acquire customers and then not have to really worry about capital market risk, if you will, and managing assets on balance sheet. Those are different businesses. I'd love to dive in for a second, in when you run into that company that is maybe they've said, hey. We wanna focus on the technology, the customer experience, but we really don't wanna get into that building a balance sheet, and we really don't wanna worry about having to manage capital, etcetera.
Andres Sandate:When you run into that company that's said that, but then maybe they realize, well, there's actually maybe some profit in holding some of these loans on balance sheet and servicing them. What is your counsel, if you will, to those, executives as they think about those two paths? Can they do both? Are you seeing a trend? I'd love to get, into your sort of, into your mind a little bit about what what you're seeing out there.
Matt Edgar:Yeah. It's it's it's a really great question.
Andres Sandate:But the valuations are gonna be different on those
Matt Edgar:Extremely different. Yeah. They're they're they're fundamentally different business models. 1 being a net interest margin game, the other being a a volume and and fee game. Right?
Matt Edgar:And as you think about creating enterprise value in these organizations, they're gonna be assessed on on very different metrics and very different multiples for those reasons. So, it it is a significant decision. To answer your question, we have seen many companies do both successfully, and I think it's also a diversification play. As you grow up and mature over time, you don't wanna be beholden to 1 facility or one single lender. Having multiple sources of capital is something that we're always focused on providing counsel to our clients on.
Matt Edgar:But to your point, I think in the early stage, there's sort of 2 2 schools of thought, 1, Lending First and the second being Tech First. So I think for the Tech First type of players, those tend to be more origination, forward flow utilizers out of the gates because they're very focused on, reducing or or optimizing their their, cost of acquisition or their or their CAC for their customer Yeah.
Andres Sandate:Their CAC. Yeah.
Matt Edgar:Versus actually building out, a super robust balance sheet and capacity to originate loans. On the other side, the, Lending First school of thought, they they do just that. So we find that folks that approach the market that way, maybe they previously ran a lending business and want to start another one in a peripheral asset class, they would typically favor, I'd say, more committed style financing where the intention would be to, hold those assets on balance sheet and, you know, leverage their expertise from a servicing and administration perspective to do just that.
Andres Sandate:Every every time I think I'm gonna take this second step into part 2 of your process, I come back with another question. I'm not gonna do it. But but what I do think it does is I think it gives us maybe a chance to preview maybe a future conversation because that gets back to, to put a button on what you just said, or a bow on it more appropriately, is what kind of equity do you have? Like, because your equity, you know, the who whoever's backed the company is probably gonna have a say in helping answer that question or guide you in what business you should be in. And we saw a lot of fintechs just picking one of the verticals.
Andres Sandate:We saw a lot of fintechs take equity when there was a lot of VC available several years ago. And I think some of those VCs might be looking at these businesses now and saying, this is a different business. Right? There's not as many customers. The loans maybe didn't all work out.
Andres Sandate:And so it's it's kind of an interesting conversation, I'm sure, now with equity providers around those founders that are coming forward and saying, what business are you really in? You know? Is it a tech forward business? Is it a a loan, you know, asset kind of on balance sheet business? The founder messages, you better know, and you better be thinking about that kind of early on.
Matt Edgar:Yeah. Yeah. And I think and I think just about it. Yeah. Yeah.
Matt Edgar:And I think just one point on that. The use of the equity is very different in those two business models. Right? In the Lending First model, that equity is is first lost capital effectively.
Andres Sandate:That's right. Maybe there's some sort of.
Matt Edgar:Right, that's the primary use of it in the TechFirst model that has a higher probability of coming from a VC source ultimately, and that I think of very different as corporate growth capital, where you use that to hire the team and actually build the tech versus providing haircut capital, in ABL facilities because I think that also makes the forward flow a little bit more achievable because first loss capital can be engineered in forward flow by buying assets at a discount or other interesting things that we've seen. So I think it's it's less of a focus. And, also, as part of that, I think Fintechs can also use the venture debt market, which I kind of think of as a corporate level style financing versus we're kinda focusing asset based as another source to actually grow the business. So I think the, you know, development is just very different. And like I said, the the use case of that equity is also, quite different depending on which, which which path you choose.
Andres Sandate:Lot of really important things to to be thinking about as as a founder. And, certainly, as as you mentioned, I think the goal is driving down the cost of capital, diversifying the sources of capital, and really being in a position where if you unlock a a source of origination or new partnerships, etcetera, like, you always have the capital lever to pull to go and grow, right, and and scale quickly. And that requires having relationships, having the right advisors, having the right resources, having the data in order, etcetera, so that the machine can turn and pivot, right, when rates change or or what happens, in the market, which is sometimes unexpected. Okay. Let's go to step 2 here of the process.
Andres Sandate:You talked about getting out to investors. I don't wanna oversimplify it, but you're you're you're talking to investors. Who are these investors that, that you're talking to? Obviously, they're all gonna have different objectives, mandates, needs. But let's say we've got our data room, we're we're we're ready to go out and start having those conversations.
Andres Sandate:What does that process then start to look like, with y'all?
Matt Edgar:Yeah. So, again, I think I think in the prep phase, making a a determination on the type of investor that we're going to go out to is a super important step, and we can really break that down into banks and nonbanks, I'd say Yeah. At at the phase of company that we're sort of talking about. So, we're biased, of course, but we do think working with an investment banker adviser with deep expertise in the space will Mhmm. Help you facilitate better execution on on pricing and terms.
Matt Edgar:And I think folks like ourselves really pride ourselves on knowing the market participants well and how to position different stories and asset classes, to different investors and understand the preferences of any single investors in a, you know, changing and dynamic way because we're in the market speaking to these folks, you know, on a weekly, if not daily, basis. So I think there's a real conversation to be had in determining also how wide you want to go out on these processes. Common thought would think the more investors that I reach out to, the more competitive process, and ultimately better pricing that we can get. But, admittedly, that's not always the case. I think in certain instances, doing a more curated outreach of maybe, you know, 4 to 6 investors, in our experience, has actually yielded much better result than, we call, you know, the spray and pray approach going out to everybody you know.
Matt Edgar:I think that just, really does everybody a a a disservice. So, functionally, what it looks like, I mean, we'll we'll typically you know, once we have the data room ready to go, we'll begin making calls to our, you know, investor relationships that we're, quite close with and give them, you know, sort of a download of the story. Here are you know, if we were in your shoes, probably the 5 things that, I would be thinking about or what's unique about this company, and here's some of the, you know, data to support some of our, responses to that. And, typically, you know, they need, you know, a couple of days to a couple of weeks to really get through the data room depending on how much information is in there to, come back with some, you know, informed questions, requests, and also, typically, times you meet with the management team. We always find that's an effective tool, which some folks, I think, sort of withhold this until later in the process.
Matt Edgar:Most of our clients we find are excited to speak to investors. So I think the sooner you can get the management team in front of a potential investor, the better because that's the most efficient way you're gonna hear the story from folks running the business on a daily basis. So, we we we think that's a, you know, key sort of part of of all of this. And, you know, after some time, we try to maintain, you know, an understanding for when, you know, initial term sheets will sort of be due. And this part of the process, the key focus is making sure that the investor or potential investor has what they need to get through their investment committee and ultimately make an informed decision with the term sheet, within a reasonable amount of time.
Andres Sandate:Yeah. And I would imagine there's gonna be some back and forth. Clearly, that's a role that you're you're serving on behalf of voice company, the originator. You're giving them feedback. You're soliciting feedback.
Andres Sandate:But those considerations that you talked about within these specific cohorts are different. And I'd love to talk about how the market clearly has changed over the last, call it, 18 months. And it's changed more in favor of the lender as opposed to the originator. Maybe 3 or 4 years ago, it was a different conversation. How before we jump into talking about different structural features of, say, an ABL facility or a warehouse facility and the considerations as you start getting those term sheets back and the things that, you know, really do matter, as you negotiate a term sheet.
Andres Sandate:Before we do that, how are you allocating time to keep up with both sides? Because you've got to originate new, if you will, business and deal flow at your mouth, but you also have to spend time with relationships to keep up with what are they looking for, what kinds of deals are they wanting to finance, how how do you allocate time at your firm? Because you're growing and expanding and executing deals. How do you how do you strike that balance?
Matt Edgar:Well, it's a lot easier with a team of 8 than a team of 4. So since founding, it's become easier and easier. But, yeah, it's funny. We always find ourselves you know, sometimes we'll be in execution mode and focused on, you know, getting the deals that we have on our on our plate, done and, you know, through the term sheet phase into into closing versus business development. So we'll sort of crank the volume, if you will, on on either side depending on, how our pipeline sort of shapes up.
Matt Edgar:But, again, it's becoming a lot easier with with a larger team. And to and to answer your question in terms of, you know, how the investor ecosystem has changed for these facilities. So I think the the diversity of of players and types of players has expanded materially over the past 5 years, but even more pronounced, I'd say, in the past 2 to 3 where you have a very, vibrant group of credit funds that have dedicated ABL strategies. But even a layer deeper, ABL strategies focused on specialty finance platforms. So that's been a space that has been growing significantly, and there is so much, nuances, I'd say, even in that space specifically, ignoring the banks for a second where, most of these guys are running private fund structures.
Matt Edgar:Some have permanent capital structures, but most sort of, you know, private drawdown style funds where they're answering for LPs. So that results in a certain cost of capital required by an LP allocating to an an alternative credit manager. But like I said, within that, there are some platforms that may have a differentiated or unique investor base, as their LPs, and they're ultimately then able to offer lower cost of capital to our types of clients. So picking up on those nuances, I think, is pretty key. And then, in terms of traversing, between banks and nonbanks and determining where we're going, you can certainly go out to both, but we are seeing, in most cases, pretty significant differences in pricing between the bank market and the nonbank market.
Matt Edgar:So I really think it comes down to the question, can this platform raise a bank facility, or is it a bankable asset class? Some, you know, areas in the esoteric space, most banks just won't often look at from a mandate perspective, but I think more common is what the track record looks like because banks are increasingly looking for minimum track record, minimum size, and want to make sure, you know, that their balance sheets that, they're providing, is a good sort of return on time, which is a focus of the nonbanks as well. But I think banks, in particular post sort of some of the volatility in the depository sector last year are even more focused on that. So I'd say the bar is a little bit higher for bank products typically. Yeah.
Matt Edgar:And or even if it's a scaled platform, you know, certain esoteric areas, like I said, just might not fit into a bank's, you know, risk box.
Andres Sandate:Right. Right. There's a there's a big need for deposits. There's a lot more regulation.
Matt Edgar:Ancillary business.
Andres Sandate:All the extra business. Yeah. Yeah. A former banker, I remember that. You had the relationship management side, and you had the coverage side as they called it.
Andres Sandate:And then you had the capital markets transaction side. And not that there was tension or friction, but the capital markets folks are doing deals and they're executing and trying to get best pricing in terms. Relationship person is, you know, looking for ancillary business, other areas that they can add value, and and grow the overall fee relationship with the client. Before we jump into, more specifics of term sheets, the various things like advance rates and and and and covenants and other things that the company needs to be, aware of going into this process that they're gonna be asked about. I wanna ask one other question about origination, and the specific question is tied to the ability for this specialty finance company or originator to scale up.
Andres Sandate:I feel like in the conversations that I've had with some of these, platforms, call it, that are looking to deploy capital, they've they've raised a fund, so they've got committed LP Capital for 8, 10, 12 years, and they wanna deploy it into growing platforms. They know that they've gotta deliver x return, so they've gotta they've gotta build in enough margin. There's gotta be attractive spread in the business. I feel like one of the key questions, particularly for these earlier growing platforms is, can this team scale up its originations? If they're doing 10,000,000 a month, can they get to 50,000,000 a month?
Andres Sandate:And then can they get to a 100,000,000 a month? Can they do other products? How do you underwrite that, Matt, in your experience? Because it it just seems to be such a critical question for a lot of these, lenders and credit providers, the nonbank ones in particular, is they're seeing so much deal flow, and they really wanna deploy capital to relationships where it just seems like there's no cap on the amount of originations this team can do. But how do you underwrite that when maybe the loan tape isn't a 100,000,000 a month yet?
Andres Sandate:But it's going in the right direction.
Matt Edgar:Yeah. Yeah. And and and to that point, I think that that ties into that concept of return on time, which we hear over and over and over again. So that's why and we can talk about this separately, but, often, raising a, 50 or $60,000,000 ABL facility from a non bank is easier than raising a 10 to $15,000,000 facility, say, because folks, if they're the the amount of work is the same, if not more work for a smaller.
Andres Sandate:Yeah.
Matt Edgar:A smaller platform. So they wanna make sure that that time is well spent, and it'll be a growing relationship where they can get all this capital that they raised out the door, into, you know, good risk adjusted returns from from their view. So, it it's something that we deal with, we deal with constantly. But in terms of diligencing the ramp up, fortunately, if it's in a developed asset class, I think there's some good historical data, comparable platforms that perhaps you can look through to to see, hey. This is how they did it.
Matt Edgar:These guys perhaps are doing it a little bit different. We think this is better or worse for x y z reasons, and you can sort of take an informed view on what the expectation looks like. I think in some cases, very nascent asset classes where perhaps those comps are not available, I do think it's a little bit more difficult. So, hopefully, in those cases, you can kind of look through to, you know, perhaps previous platforms that the founder or founders have, built over time and, you know, other indications like that. But I think in the, second example, it's it's more it's more art than science.
Matt Edgar:I'd say you're leaning on a lot of qualitative factors versus the historical, you know, sort of data that you can look at.
Andres Sandate:Yeah. Because if you talk to experienced VCs who who fund on the equity side a lot of these lending businesses and platforms, you know, they're they're they're pretty much like the most credit like VCs that you can come across, right, if if that's the right way to describe them. And they're sort of I don't wanna say jaded, but they're they're, like, they're lending businesses at the end of the day. It comes down to do they have a unique way to originate, and do they have a unique way and better way to service and provide a customer experience? And, you know, that that's like and then do they understand, you know, the cost of acquisition of a customer and cost of loans, cost of funds, all this type of stuff, and they really get to the crux of that business, like, really, really quickly.
Andres Sandate:And so the founding team and CEO really need to understand and have stuff buttoned down before they start that conversation. All the more reason why, you know, I wanted to have you on so you could start to illustrate what this playing field looks like for founders, and and and help equip them with resources. So let's get into the term sheet. So you've prepared. You've worked to, get the data room ready.
Andres Sandate:You now have a a sort of an engagement. You're gonna go out and and, and get that feedback, start to allow people to do the underwriting. 4, 6 weeks later, you come back and say, okay. We've got 3 term sheets. Let's talk about term sheets like a phantom company.
Andres Sandate:They're originating consumer loans. Yep. What are gonna be, you know, some of the and this is gonna vary by company, but what are some of the 3 or 4 more important things that are gonna are gonna be important in that in that, you know, draft term sheet that that comes back?
Matt Edgar:Yep. Yeah. And we and we've seen many flavors of draft term sheets. Some lenders that we know for better or for worse will send, you know, very simple, you know, 1 to 2 page documents, and some lenders that are a little bit further up the diligence curve, I'd say, may send, you know, 7, 10, 15 page type of term sheets at the initial phase. I'd say we actually prefer the the latter if we can because Yeah.
Matt Edgar:I think that tells us they're further up the diligence curve, closing They're pretty
Andres Sandate:serious too. Efficiencies
Matt Edgar:and a level of severity that Yeah. You know, is is, you know, less apparent, I guess, from from the former. But I think, you know, the the key things that we look at perhaps obviously are, or when when when you speak to platforms, their eyes immediately go to pricing and advance rate, which is gonna be sort of a a key focus of of ours. And, you know, the key thing to consider on pricing, and we can talk about, you know, the market and what pricing looks like by different investor, But not all rates are the same. I think the key thing to understand is the decomposition of the true cost of capital because oftentimes there's origination fees and administration fees layered in on top of that.
Matt Edgar:There is, you know, OID and other, you know, in kind, if you will, sort of discounts, in addition to a cash interest rate. So being able to assess and model that with the help of an of an adviser, I'd say is is critical in understanding, where you can sort of push and pull Sure. To drive down and optimize that cost of capital for your asset base. I think, you know, relatedly to that, advanced rates will, you know, typically be the second area that folks go, and this is generally dictated by the asset class. There's been enough activity where, you know, you have an idea, a installment lending business, advance rates will, you know, be in this sort of 10% range.
Matt Edgar:And, you know, in commercial finance, ABL or equipment platforms will be in this, you know, 10% give or take type of range. Right? So I think that's generally dictated by the market, but should fit into, you know, how the assets perform, but more importantly, how much first loss capital, you you have available, and, will you actually be able to to use this facility?
Andres Sandate:And I wanna I wanna sorry to have to cut you off, Mitch. No. No. We But I but I but I know we're we're gonna have listeners and do that. They hear the term advance rate, and and they're gonna wonder, what does that mean?
Andres Sandate:So we're talking about how much capital will a lender advance to you on a dollar of, let's say, eligible assets, which is another term we can talk about. It's gotta be an eligible asset. Right?
Matt Edgar:Exactly.
Andres Sandate:So let let's let's, let's unpack those concepts real quickly
Matt Edgar:for Yeah.
Andres Sandate:For really early stage listeners who say, I've got great technology, but I really need to understand these loan concepts in capital markets. Let's talk about advance rates and and eligibility, because they kinda work hand in hand.
Matt Edgar:Yeah. Yeah. Happy to. So advance rate, I'll use a numerical example. You have $100 of assets.
Matt Edgar:A lender slaps a 75% LTV on a term sheet. Your facility or your borrowing capacity is $75. And the expectation would be going from 75 to a 100 in your full asset value, That $25 is subordinated to the, 75 of senior facilities sitting in front of you, and that's what's known as equity or first loss capital. So Yep. The lender is protected in that example until you have more than $25,000,000 of losses on your portfolio.
Matt Edgar:So that's really to build in, protection for the lender so that even if you lose, $20, there's still $80 of asset value in that pool. So their $75 in my example is still safe. So Right. That's sort of the concept of,
Andres Sandate:The advance rate.
Matt Edgar:Of of advance rate and and first loss capital. And I'd say on the eligibility point, that was actually, the what I was gonna segment into anyway on the
Andres Sandate:top Perfect. Perfect.
Matt Edgar:And and oftentimes, I will caveat. Oftentimes, the eligibility criteria is not completely buttoned up at the initial phase.
Andres Sandate:That's right.
Matt Edgar:But that being said, that answers the question, what can I actually put into this pool? You're a consumer lender, and you target companies that have FICO scores of 600 to 650, let's say. Given that's your core business model, lenders are gonna want to focus on the pool of loans primarily consisting of loans, just focusing on FICO score, for instance, for, simplicity, that are generally in line with that expectation. So that means you, generally, you know, can originate some loans, in my example, with lower FICO scores than that band, but that will sort of be capped, at a certain level. And if you go past or breach that level, I guess, through eligibility criteria and also what is called excess concentration criteria, then that loan would not be eligible to go into your borrowing pool.
Andres Sandate:Yeah. Into the borrowing
Matt Edgar:pool. A very simplified example.
Andres Sandate:Sure.
Matt Edgar:But, but, yeah, answers the question what is actually available to go into that pool.
Andres Sandate:Right. So so I cut you off because you were talking the the a lot of the the the customers or borrowers, originators will go to pricing, but there's other very important factors that go into the term sheet. So we have pricing. We have advance rate, but that's not it. There's a lot more, important critical details.
Andres Sandate:You you brought up the concept of a borrowing base and calculating a borrowing base eligibility criteria. What other things does that CEO need to be thinking about Yep. When sort of comparing term sheets?
Matt Edgar:Yeah. I think, financial covenants is sometimes less of a focus but is is very important. And oftentimes, those sit at the corporate level to ensure that the corporate who is servicing the new SPV that is set up, which, by the way, I don't think we touched on that. But, typically, ABL facilities are structured in what we call bankruptcy remote SPVs, which are newly formed entities where the lender has a perfected first lien on the assets that are contributed to that SPV, which is distinctly separate or bankruptcy remote from the corporate. That being said, oftentimes, we will see financial covenants that tie in the corporate because they wanna make sure the corporate, as the servicer of that pool, is solvent.
Matt Edgar:So putting in protections, there are important. I'd say the last, big bucket of focus is performance triggers and other protections that are put into place. Typically, we'll see, you know, protections around again, I'm just, you know, picking on consumer lenders, but they are, you know, tied to delinquency trends and default trends that on a vintage basis or rolling monthly basis, if they breach certain levels, then the facility will react in a certain way with, you know, a just as an example, stepping down advance rate or a requirement to tighten up the, concentration limits or eligibility criteria even further once you breach a default or delinquency, trigger. And you can carve that up, a bunch of ways, which is probably a good time just to, disclaim everything I'm saying that there is significant customization in all of these facilities. So a lot of the examples I'm giving can be translated to other parts of the facility.
Matt Edgar:But, again, just for for simplicity, I think that's, you know, a good example and something that we spend a lot of time focusing on. And I'd say the the last comment I'll make, by the way, just on this term sheet phase is there's a fine balance between not overengineering every single term upfront versus, you know, progressing into closing a more serious due diligence. I think aligning on the economics of the deal is is paramount at this phase, and there really shouldn't be much retrading as you go into the closing period. But I think you need to go in eyes wide open and have understanding with the lender or the investor that eligibility criteria is subject to change. Some of these triggers I'm mentioning are, you know, to be determined, what the right levels are for those.
Matt Edgar:So I think as long as there's an understanding, it it it's key, like I said, not to overengineer because I think that could significantly hold up the process from from our experience.
Andres Sandate:Yeah. No. And from from firsthand experience, it I can I can speak to the fact that as an originator, when you get out into the market and start talking to customers, you're learning daily what do customers need, what do they want? So that whole customer discovery process, particularly if you go into new segments, new new channels, new partnerships, that may be different than when you originally set up, you know, that that that warehouse facility. And so you need to have enough flexibility, and I think it also comes back to this ongoing communication, reporting, and picking up the phone and calling, you know, the lender or the adviser and saying, you know, this is what we're seeing.
Andres Sandate:Because in a in a great relationship, they're they're wants there there's a win win. Right? The lender wants to see you
Matt Edgar:That's right.
Andres Sandate:Originating more assets, but they also are different than an equity investor. They're capped on how much they can make, if you will. Like, the most they can make is you paying them back. You know, there's there's not additional upside, and I think that folks need to understand that about credit investors. So let's get to maybe piece 4 here, in the minutes we have remaining and talk about moving from term sheet to negotiation and closing, and how do we successfully get through that that process?
Andres Sandate:You talked about not over engineering, not ideally wanting, to have that conversation about retrading. How do we move into that successful negotiation to a deal that is something all parties, feel can support the business, support originations, but also these are credit investors. So it it's gotta check a lot of boxes.
Matt Edgar:Yep. Yeah. And and as a credit investor, you're always underwriting to the downside, whereas your equity investors are obviously Yeah. Underwriting to to an upside. So so so, I mean, I I'd I'd start by saying, the closing process can kind of be the biggest wild card in in timing of a deal.
Matt Edgar:But, you know, in theory, I think there's a couple of key events that you need to you need to focus on, which we can get into. But I'd say from transitioning from the term sheet to closing, you know, not not to be repetitive, but I really do think it is aligning on the spirit of a transaction, at the term sheet phase. Again, this plays into my prior comment that the more detail that you can hash out at the term sheet phase, the better, which is why we prefer seeing these more robust, you know, indications from investors. So I think aligning on that and also aligning on a level of diligence where everyone's comfortable to start the meter as we say. Because as we go from the term sheet phase to the closing phase, typically, lenders will request a deposit from the borrower or potential borrower to cover their execution costs.
Andres Sandate:There's legal work involved.
Matt Edgar:Correct. And then you'll typically onboard counsel, which, ideally, is very experienced in putting these asset based structures together. So I think that that that's actually a point worth mentioning as well.
Andres Sandate:I was gonna say, do you advise on council, like, who because if you've never done one of these facilities, how how much input do you have, and which counsel should they be they being the originator, how much counsel? Because seemingly the lender is gonna have counsel that they're comfortable with.
Matt Edgar:Yep. That's right. And I think we're we're we're we're typically quite involved in that. Again, from doing this enough, we know the firms in the space that, you know, know know these structures very well. And, you know, depending on the asset class, you know, may have a specialization in, that asset class, which again can drive a lot of, efficiency.
Matt Edgar:So I I won't mention any firms by, by name because I don't wanna hurt feelings, but we have a stable, say, you know, 3 to 4 firms we like to work with and and rotate on these types of transactions. So I think that's, you know, super important then. Even being able to bring them in, you know, perhaps before the meter starts at the term sheet phase to kind of review some things, on a preliminary basis. Again, I think that just sets up for a cleaner closing process.
Andres Sandate:Overall, and Yeah. There's a comfort level. Yeah.
Matt Edgar:Exactly. And and the last comment I'll make on that is oftentimes, companies will, you know, have their corporate counsel, but more often than not, that corporate counsel is not equipped to, you know, streamline this type of process. So I think that's just a very honest conversation that you need to have at the space to make sure you're getting the experts in the room and not trying to, you know, have your corporate counsel do their 1st asset backed facility because that can meaningfully draw the process and end up costing the company a lot more because it's more inefficient.
Andres Sandate:Yeah. So so you just previewed what is now gonna have to be part 2 of our conversation because I have to respect we've talked about the we've talked about the 4 step process, and it's it's, you know, not to sound overly elementary. It may end up having more steps. This is raising capital is never a to z in a very super linear fashion. This is a dynamic process, but you've done a great job of illustrating, I think for a certain cohort of companies at a specific stage, what they could expect.
Andres Sandate:It's gonna be very different if they're raising securitization capital, and they're going out to get a a private rating
Matt Edgar:That's right.
Andres Sandate:Or a public rating, for example. Those are bigger bigger, originators larger originators. But I I do before we, before we finish, I would love if you could come back and we could spend maybe another hour talking about some of the challenges. You mentioned, spinning your wheels, spending a lot of money on legal. I think a great part 2 of this conversation could be to continue on closing the transaction, some of the challenges, some of the bumps in the road you've seen, things to avoid.
Andres Sandate:But then there's also everything that happens once closing takes place. Like, now you've got capital. Now you wanna start to deploy the capital. What happens if you run into an issue there? I'd love to have you back on to talk about some of that stuff.
Andres Sandate:What are your thoughts?
Matt Edgar:100%. Would be happy to.
Andres Sandate:And and then it it's it's it leads into a preview of what then, what after this, initial warehouse facility or initial ABL facility. Maybe you could talk for a second about options that the the company has beyond, this market because, obviously, if you wanna drive down the cost of capital, there's other sources of capital out there that the company could potentially pursue depending on how successful it is.
Matt Edgar:Yeah. That that's right. And I think the the more you grow, the more options you have available. I mean, that's I think, you know, what you're gonna find in any industry, not just ours that we're speaking about here. But I I think there's a pretty interesting playbook that you can follow where once you have your first institutional facility or warehouse facility, that's really a license for you to build a significant track record, which as long as that track record performs, is gonna open up a lot of doors outside the way.
Matt Edgar:So I'd say one misconception from a lot of, you know, platforms out there are, you know, there there's kind of the the private ABL market. You can maybe, you know, migrate up to a cheaper cost of capital through a bank ABL market, and then there's a securitization market, which, that that's all factual. But between those three areas, there is different, almost gray areas between that. So for instance, almost a hybrid solution between the private ABL and the bank market is what we call an AB structure, where you start with a credit fund nonbank investor providing your first facility. That's going well.
Matt Edgar:Maybe 3 years after that relationship starts, we wanna blend down the cost of capital. We have a good relationship with the credit fund now. We ask them to slip behind a bank into a mezz position, so the bank takes the first, I don't know, call it 0 to 60% advance rate, type of risk. And then the credit fund is still a borrower to the platform, but they're going from 60% to 85 or 90% through a, mezz or a b position in the credit. And the reason for doing that is rather than paying a non bank cost of capital on the full stack of 85 or 90% in my example, you're now paying a bank cost of capital on 60, and the mezz is, you know, will be renegotiated, but typically blends down to a much cheaper cost of capital.
Matt Edgar:So that's kind of a hybrid solution where thereafter, the next step arguably could be, let's just do the entire thing with a bank now that we're more scaled. And then similarly, going from, you know, say, a bank facility to the securitization market, there's also a huge development, and we're extremely busy in this part of the market, particularly in the private securitization market where maybe you work more strategically, more bilaterally with a single insurance company or other institutional investor. They have their hand into the structuring and the rating process, and you do your 1st securitization with a single investor or, a very small handful of investors. And I think setting up that technology, is is very helpful for the company versus trying to go from the bank market and then launching a broadly syndicated public securitization, which is gonna be overwhelming, frankly, for the platform if it's their first time doing it. So I think there's a strategic way to migrate up the, let's call it, diversity curve.
Matt Edgar:And, you know, the, events that can occur between the 3 major buckets of financing, I think, are often overlooked by, by issuers, but we're seeing a ton of activity in those, let's call them, in between steps.
Andres Sandate:You you you gave us some bonus content, which I appreciate, but I do for the one. But I think you also previewed, what's gonna be an awesome second second episode, part 2, if you will, because I I think you raise, a really strategic point, which is this is a this is a, an ongoing process. If you are growing and successful like any company, you're going to be looking at new markets, new channels, new products. And if you're in the business of deploying capital, you're constantly gonna be talking to the market. It's not a one time and done thing.
Andres Sandate:All the more reason why having a good adviser, a good partner, a good, you know, a playbook that's probably gonna change is super, super critical, right, from from the outset, but it's also even, you know, more arguably important as you get, to that, you know, to that next stage, and certainly when you start to scale up, and and the universe of options open up. So it's, it's gonna be a really fun second conversation. And and one thing I also wanna throw out there that we didn't talk about is is trying to drive the cost of things like legal down because, all my lawyer friends, right, I I think, you know, many of them bill on an hourly basis. So as a start up company, as an early stage company, how can we close transactions maybe on short form docs, for that SPV and then set up docs that we can then turn into full blown credit agreements when that bank partner comes in? I'd love to talk about about some of those areas as well, because I think there's a lot of tools and tricks of the trade, that that we can share, you know, we can share with listeners.
Andres Sandate:Before we wrap up, you know, you're you're in, you know, Manhattan. You you are closing more and more transactions. I'm sitting here in Atlanta, hearing about a lot of transactions and seeing stuff get done. Overall, you're, you know, a year plus into the the journey of of building Edgar Matthews, so I wanna give you the opportunity to maybe reflect back on what that 1st year has been like. The team's grown to 8.
Andres Sandate:We'll maybe talk more about that process of building your organization, a professional services firm, in part 2. But, maybe you could finish by just giving us a a sense for what that journey has been like over the last, you know, 15 months.
Matt Edgar:Yeah. Appreciate it. And I probably don't take the time that's warranted to reflect on it as, as often as I should. But, listen. As every entrepreneur will tell you, it's it's been a ride.
Matt Edgar:Yeah. But I'd say it's been very rewarding seeing go or going from thesis to, you know, the equivalent of product market fit. That's kind of a a tech company Yeah. Concept, But I think it it it's apparent here that being able to, like I said, identify that white space and tell our message to the market, to see that really resonate, I think, you know, is is is great and just builds further conviction, I'd say, in the business. But also being able to provide a big bank, capability to businesses that are off the radar, I think, is is just a a message that resonates with the market so well from our finding.
Matt Edgar:So that's been extremely energizing. I'd say we're, you know, slightly above budget where we we thought we'd be, at this stage in the in in the game. So we're excited, and I think, staying specialized is something that we're keenly focused on as well. You know, I came to the determination that the world does not need another sector agnostic sell side boutique investment bank. There's 100 of those in the US.
Matt Edgar:So I think being able to establish ourselves as a real player in this specialty finance, private credit, asset backed universe, you know, I think there's value in that and, you know, drives value quite frankly for our clients ultimately, which is what, what is most important. So Yeah.
Andres Sandate:And that's how you integrate your money and
Matt Edgar:Yeah.
Andres Sandate:That's awesome. I I didn't mean to interrupt, but everything you said is why I wanted to start this platform, this show and Yeah. Give, you know, give practitioners, experts, folks that are out there creating value, helping founders close transactions, find their way. It creates more jobs, it creates more wealth, it creates more opportunity, it hopefully creates more lending products that are good for consumers, good for small and medium sized businesses. Like, the whole thing, right, is is very, very, like, circular.
Andres Sandate:So Correct. Yep. A lot of times it starts with, you know, just helping that that company figure out how do we get not maybe the day $1 one, like you said, your organization's set up to to help them really get that that institutional facility. But, there's a lot of big organizations and banks that just aren't gonna give them, time and attention right now just simply based on, like you said, return on time, return on, capabilities.
Matt Edgar:So That's right.
Andres Sandate:Super super excited about what what you had to, say today, and, I'm excited for part 2. Likewise. I'm obligating you to to to join me, here on part 2, of of what what I think will be a really great conversation in the in the middle of the summer. With that, I wanna thank you, Matt Edgar, founder of Edgar Matthews and Co, for joining me on the asset backed podcast. I look forward to, having you back for part 2.
Andres Sandate:And who knows? Maybe part 3 as we, continue to educate the market on, on everything asset backed and and landing that first facility and starting to get into the institutional credit market.
Matt Edgar:Yeah. That'd be great. And like I said, thanks so much for for having us. I think, you know, this is a very well well curated podcast, so we're we're more than happy to to contribute and glad we can share some of our views. So thanks again.
Andres Sandate:Awesome. We'll look forward to doing part 2. Be well in the meantime.
Matt Edgar:Likewise.
Andres Sandate:Take care.
Matt Edgar:Talk soon.
Andres Sandate:Bye.
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