Verdant Commercial Capital has experienced a tremendous first three years, even more so considering year No. 3 included the pandemic. The company has grown to nearly 60 employees and topped $300 million in originations. The vendor finance company’s leaders aim for 30+ percent growth this year and expect to reach “significantly north of $400 million.” Equipment Finance Advisor talked with CEO Mike Rooney and Chief Commercial Officer Brian Lowe to learn about their strategy, their focuses and why they are so bullish on 2021.
Equipment Finance Advisor: Verdant has built its team in several verticals, including specialty vehicle, office products and technology, this year. What is driving the focus on these verticals?
Brian Lowe: We have six verticals and the name of the game for us is to grow originations in all six verticals. We've added seven salespeople this year and the reason for this expansion is we're growing. If you look back to 2020, we were up double digits, while a lot of companies were flat or down. In 2020, we surpassed $300 million in originations and our goal for 2021 is to be significantly north of $400 million.
It’s year four of Verdant's existence. We're proud of that. With an average ticket size of $150,000 to $200,000, we see a lot of app-only transactions. But to fuel that growth across all six verticals, we needed to add high-quality sales folks. We feel like we have a good value proposition as we're bringing on talent. We've been mandated by the rest of the leadership team to continue to grow. We expect all six of our verticals to be north of $100 million and we’re already there on three.
Equipment Finance Advisor: Are some of these verticals growing faster than others?
Lowe: Yes. Of the seven people we hired this year, three are in office products. This is a vertical some of the leadership team at Verdant has a deep background in, so it's a natural fit for us. These three high-quality people with office backgrounds have hit the ground running; they're already producing. I believe that we're going to continue to add strategically across each vertical.
Mike Rooney: I think it's important to keep in mind too, as we just entered our fourth year in business, we've built out some of these verticals faster than others. We've had four that we built out first and we were expecting to build out the technology and office teams in 2020. But with COVID-19 we pulled back on that expansion. We survived COVID very well. Now we're pushing a button to grow those verticals. They're going from near zero, so they're going to be the fastest growing.
Our leadership team has always viewed vendor financing as a balancing act. You want to be in industries that are not exactly in the same cycles because one could go into a tough cycle. If you balanced your business out appropriately, the other ones will pick up when one's faltering. That's what we've been doing with these six verticals.
Equipment Finance Advisor: Was that one way Verdant got through the pandemic?
Rooney: It's one of the ways, but we took a really good approach. We basically said: We need to take care of our employees first. And then, we need to take care of our customers. We immediately got our employees fully outfitted. They had the exact same technology experience at home as they would have in the office. If you had two monitors in the office and robust Wi-Fi, we put two monitors in their homes and we gave them robust Wi-Fi. First and foremost, they didn’t have to come into the office: Stay at home, take care of your families, but you still have a job to do.
When our employees feel we’re taking care of them, it's easier for them to take care of their customers. Instead of viewing deferral requests as a negative, we viewed them as a customer service effort. The result is we had no negative reactions, no negative consequences of COVID. All of our customers came back that were on our balance sheet, and they came back and paid as agreed. And many of them now are adding equipment.
Equipment Finance Advisor: They're all back?
Rooney: Yes. I think we had only $46,000 in losses in 2020. There were some industries that just had a hard time and couldn't recover. Despite the pandemic and learning how to work from home, we grew the business by 12 percent in originations year-over-year. And we're coming out now in 2021 with a growth forecast north of 30+ percent. This is our fourth year, and we're forecasting over $400 million in originations in the vendor space. We're proud of that accomplishment.
Equipment Finance Advisor: Have you kept to your original plan for the company, or have you been forced to adjust?
Rooney: The plan is a weekly plan now. One of the things you have to learn as an entrepreneur is that you need to pivot often. Chris Kelley, John Merritt and I, we were entrepreneurial with an independent company before. We built it up, worked for three big banks… built those businesses up with a great team. What we learned there is still applicable today: It all starts with the quality of people you bring in. What hasn't changed is our desire to bring in the best possible people to support this business.
We have a fundamental belief this business can still be fun. We enjoy what we do. We give people a voice. We let them criticize. We let them come up with their own ideas. We try to come up with the least number of ideas and let it come up from everybody in the field. What changes is the markets. We pivot a lot in that way; we look for opportunities.
Equipment Finance Advisor: What is your outlook for the company and the industry in 2021?
Rooney: We couldn't be more bullish on both. I threw 30+ percent growth out like it was a nickel. It's not a nickel; it's a big number. Just saying that, and, telling our board of directors that we think we can grow 30+ percent tells you how bullish we are about the company. On the economic front – I've been doing this for a long time – I don't think I've ever felt more energy and more positive outlooks than we see right now. Many of the OEM partners that we do business with did not have a great 2020, but now they're being asked to ramp up.
Part of this is in the industries that we're focusing on as many are in a replacement cycle. Forklifts have a life cycle and they need to be replaced. Computers also need to be replaced as does manufacturing equipment. New automation is occurring in manufacturing. All of these things have been held back for the last 15 months. Now all these manufacturers are ramping up. The biggest problem they're going to have is the supply chain. I feel like this is the greatest opportunity starting this year off that I have faced in my career in the equipment finance business. And we intend to get our fair share and more of that economic growth.
Equipment Finance Advisor: How would you summarize your business?
Rooney: We are a vendor finance company. As Brian stated earlier, we help people who want to sell a product. We help them sell it more easily and hopefully at higher margins and help them with their customers. But I think there's a misnomer about what vendor financing is in some quarters. Vendor financing is not small ticket. Vendor financing is not middle ticket or large ticket. It's all of those. Because vendors, OEMs, sell to mom-and-pop shops and they also sell to Fortune 100 companies. We're really proud that we're this independent that's three years old and our transaction range is wide – we’ve done a $20,000 transaction with our customers and we've done a $50 million transaction with our customers.
Equipment Finance Advisor: With all the optimism out there, what keeps you up at night?
Lowe: It's the fear of being wrong. All these OEMs are forecasting growth plans, and we're right along with them, helping them sell products. I wouldn't say it's something that keeps me up at night, but we need to continue to attract high quality, talented people from not only a sales perspective, but other functions who are just as important. That's just something that I'm going to be mindful of for Verdant's growth as well.
Rooney: Screwing up is the right word, right? That's what keeps you up at night. One of the things about an entrepreneur, everybody loves it when they're successful. But what they don't realize is the responsibility that each of us have that run this company as leaders, and our responsibility to the 59 people that we currently have is that if we screw up, it affects their lives.