By the time Rhydian Lewis set out to transform the way people save and borrow money, he’d already been part of a company that was using the internet to upturn an established business model.
After finishing a degree in modern languages at Bristol University in 2003, Lewis, now 36, joined online betting exchange Betfair. Betfair allowed gamblers to deal direct with each other, cutting out the bookmakers.
Lewis began to ponder whether the same thing could be done for financial services, and started to come up with ideas on how to do it. His initial thoughts were “shockingly naive”, as he freely admits – but they would later lead him to form peer-to-peer (P2P) pioneer Ratesetter.
Realising that the betting industry “wasn’t for me”, Lewis joined the graduate trainee scheme at investment bank Lazard. He started out as a general analyst, then found a niche in the Financial Institutions Group, which advised banks on possible mergers and acquisitions.
He paid close attention to the 2005 launch and subsequent rise of Zopa, the first P2P lender in the UK. He kept telling his colleagues about how P2P was going to transform the industry – evangelising to the point where they “must have thought I was quite mad”.
In 2008, the financial crisis persuaded Lewis that it was time to make a move. He met an IT specialist who claimed he could create a workable platform that would put Lewis’s plans for a site that would link lenders and borrowers in motion.
While it eventually proved beyond the specialist’s abilities, by the summer of 2009, Lewis was spending all his free time working on the idea. Faced with a choice between shelving his plans and quitting his job, he chose the latter.
In November 2009, after a few weeks of anxious discussion, Lewis persuaded city lawyer Peter Behrens to come on board. Together they went “up and down the UK talking to potential commercial partners”.
While they didn’t close any deals, the experience of meeting investors came in useful when they approached friends and family for seed capital. After raising £850,000, they launched Ratesetter in October 2010.
Lewis, who thinks there is a “massive issue” with early-stage funding in the UK, jokes that if he was trying to fund Ratesetter now, he would probably do so via a crowdfunding website.
Leaving a well-paying investment banking job to start a company is a risky move by anyone’s standards, but Lewis says that his “gut instinct told me that the business model made compelling sense”. However, he was still worried that Ratesetter might not be able to raise extra funds.
But within a few months it was clear that his gamble would pay off. One hint of early success came when a user sent him an email congratulating him on “being the first P2P website to provide a user-friendly experience”. The company has since completed two additional rounds of fund-raising.
In its first year, £2m was lent through Ratesetter. Since then the amount has risen rapidly – the figure hit £146m for the year ending in March alone.
His advice to budding entrepreneurs? Have humility and learn to take advice. “I’ve seen people with good ideas, but no support… you need good people on board” to make a success of your venture.