Honour Capital was launched in October 2020 with a different focus than most equipment financing firms – and most companies in general. The founders describe it as a purpose-driven firm, which aims to be a force for good, rather than totally focused on profit.
Company leaders expect to achieve its first-year goal of $100 million in originations by year’s end. The path leading into 2022 has it expecting to double its first-year originations.
To learn about the company’s first year and its focus, Equipment Finance Advisor interviewed Shea Huston and Brian Slipka, Co-Founders and Partners.
Equipment Finance Advisor:You announced the launch of Honour Capital in October 2020. How has the first year compared with your expectations?
Shea Huston: Overall, I’m super pleased and happy with where we are. We have high expectations for ourselves. I’m not going to say we hit every goal, but that means we set our goals appropriately. The company is doing well and I’m pleased with our team. We’ve worked hard on culture. Brian and I are big proponents of culture, and it is a big reason why we started Honour Capital. We will likely achieve our goal of originating $100 million by the end of the year.
Brian Slipka: We continue to strive to deliver on the promise of what Honour’s all about, why it was created and what it promises to do within the marketplace, within our customer base and with our clients. Being a startup, it’s been hard to do at times because we had to get our foundational elements established. As I look to 2022, I think we are going to be much more effective at delivering on those promises than we were in 2021.
Huston: One thing that is going to really help us in 2022 is we’ll have that foundation mostly established when it comes to systems and processes. The partners, access to capital and some of the key elements needed to grow this business are going to be in place. In 2022, it’s going to be about execution, taking care of the clients that we have, growing those relationships, finding new markets and new ways to add value to the market.
Equipment Finance Advisor:Did you have to make any major adjustments to your plans?
Slipka: What has been a surprise is the level of variation within the financial instruments on the deals we’ve originated. We thought we were going to be primarily leasing and equipment financing. We’ve done other forms of financing, including input financing, as well as a form of factoring and acquisition financing.
Huston: We are about relationships first. You have to have success in the marketplace, and those relationships present new opportunities. Those new opportunities have led to what Brian’s referring to: new markets and new capital solution products. We want to be opportunistic. The hard part is you need to be discerning, too. When does it become a distraction if it’s not a fit? We know who we are, and we want to stick to our knitting, but we also want to leverage the relationships that we’ve developed and the successes that we’ve had, and grow from there.
We want the client’s experience to be great, and we want the experience of our partners to be great. We also want the experience of our team members to be great and be able to scale. You do that through technology. Since launching, we’ve had to pivot operationally. We hoped all the manual processes, would be automated by now, but this is being addressed. We’re making huge investments in technology. We’re investing in AI technology that’s going to help us on the front end with some auto decisioning. We have also put some platforms in place that are going to drive efficiency with our sales force and back office. Those will be up and running as we head into 2022.
Equipment Finance Advisor: Have you set your goals for 2022?
Slipka: From an originations and target volume number, it’s going to be more than the $100 million we originated in 2021. A lot of it has to do with our bandwidth to onboard additional origination expertise and talent, and onboard vendor programs and programming. Those can cause huge swings in our productivity. We certainly don’t want to limit our success, but I would expect us to be at or near double what we did this year. We believe we have all the elements to do that. The foundational platform is effectively built with our talent. Now, we need to execute in the marketplace.
Equipment Finance Advisor: Can you provide some insights into where the company is focusing in terms of credits, geographies, industries?
Huston: A strength of Honour is we have folks with experience in lots of different industries. Brian and I come from the tech space. There are several others here that come from tech and healthcare. We also have several sales folks that come from fleet and transportation. We are getting into agriculture as well with a recent client win. Additionally, we have some folks that come from more of the traditional C&I and consumer products side. We’ve hired a young man recently that comes from the golf industry. We’re really looking at where we have strong relationships and where we can add value and grow. Our belief is that success begets success. If you put the client first – you put others first – it’s going to lead to new opportunities.
Our core business is to provide various capital solutions and growth capital around equipment or strategic investments that growing businesses are making. They don’t want to give up equity and control and are looking for a complementary source of capital that isn’t as rigid or restricted as bank financing or SBA loans. That’s still our core, but I think we’re going to see new opportunities as we develop some of our client relationships and some of our partner relationships.
Equipment Finance Advisor: Please explain how you view Honour as being different than many companies in the equipment financing industry.
Huston: Brian and I have had the pleasure of working together for a long time prior to starting Honour. We always had a passion for using our time, talent and treasure in ways that are meaningful. Making a sale or getting a commission check feels good, and a large part of the early stages of people’s careers are focused on getting the financial foundation established for your family.
Eventually you get to a place in your life where you wonder, “How else can I be serving?” Our belief is business is the greatest platform to create change and social good. If you can create a company and culture where people are empowered, and you’re helping them develop and flourish and become the best they can be. At the same time, building a successful business that generates cashflow and financial resources and other sorts of opportunities and influence in the market, with a heart towards giving and serving, that’s pretty special. It’s hard to do that when you’re working for a large company, or for a publicly traded business on 90-day business plans and it’s all about earnings per share. We have the benefit of playing the long-term game, and really focus on servant leadership. That’s why the company is called Honour. It’s a reminder that we’re servant leaders in the market. I think that combined with our business model and the people that we hire makes us, not only formidable, but different. We lead with that. It’s not a sales pitch. It’s not a recruiting tool. This is who we are. To some people it’ll be really attractive, and to other people it’ll be pie in the sky, or not as appealing. We’re okay with either.
Slipka: One thing folks need to understand is our mantra is to Encourage, Equip, Collaborate and Uplift. Those four words really drive the way we conduct the business and lead the business. If we live by those words, success will follow. We want to be a force for good, and we’ll continue to press that home. It isn’t only going to be about driving huge profitable gains every year. It may mean that we are extremely generous for something that is a cause for good, like nonprofits, mission work and charities. That’s deeply real for us and a deep priority for Honour Capital.
Equipment Finance Advisor: What are you hearing about the economy overall and the business climate specifically in equipment financing.
Slipka: I am bullish for 2022. I think there’s a ton of opportunity, and there’s certainly a ton of liquidity. I think a need and a thirst for alternative forms of finance other than just your traditional bank instruments will start to emerge. Bank instruments have been so liquid and plentiful, and there’s been so many programs from the government, etc., to help subsidize banks’ efforts. But, I think as those start to wane, some alternative structures are going to start to become more prominent.
Certainly, leasing will continue to play an incredibly important role, and I think you’ll see a ton of lease growth into 2022. But I also think leasing, and other instruments similar to it, will be used more and more often as a form of alternative finance.
Huston: I agree; overall I’m bullish. There are lots of tailwinds right now, but there also are headwinds. The two biggies that you hear across every industry are supply chain and labor. Everybody is struggling to find good talent, and they’re struggling on the supply chain front. They can’t control either of these things.