In Profile: Matt Bird, Co-Founder and CEO at Lemon

Many small to medium-sized businesses (SMBs) rely on software subscriptions to increase efficiencies within their business, through HR, marketing, and accounting programs.

Manchester-based fintech Lemon offers a platform that allows SMBs to discover, finance, and control their SaaS subscription spend.

Fresh from securing £500,000 in pre-seed funding, we chatted to Lemon’s co-founder and CEO Matt Bird, to learn more about the company, inspired by his own experiences as a small business founder.

Tell us more about your company and its purpose?

Lemon is a SaaS management platform with a purpose to help SMBs track and finance their software subscriptions, enabling them to save thousands on expenses with zero additional work on their behalf. As small business founders, we’ve navigated the hurdles of managing software expenses, and know the importance of keeping on top of those costs, so we built Lemon specifically to alleviate the challenges inevitably faced by other small business owners.

The traditional approach of wrestling with spreadsheets and needing to rely on personally guaranteed, high interest credit to fund the most cost efficient SaaS price is outdated and unnecessary. Lemon helps SMBs to access the best price for software (typically the annual price) by paying the vendor up front, whilst allowing the SMB to pay Lemon back at a monthly rate, allowing them to save up to 40 per cent on SaaS expenses. There is a dual benefit of using Lemon, as it also helps SaaS vendors to reduce their reliance on outside capital and improves their cash flow by enabling them to secure upfront revenue through the sale of their annual plans. It’s a win win for both SaaS vendors and SMBs

What are some of your recent achievements you’d like to highlight?

We’ve just announced that we’ve secured a £500,000 pre-seed round from three UK and European VCs, SFC Capital, Pitchdrive and SyndicateRoom, alongside some great angel investors too. Through the raise, we’ve also strengthened our advisory team with the appointment of Nick Dodd, ex partner of debt advisory at KMPG, who will guide and support us through the credit raising process, alongside as adding Kimberley Waldron, co-founder and MD at SkyParlour Started and communications expert in the fintech space.

How did you get into the fintech industry?

I’ve had an interest in fintech for around six years now, as the industry has seemed to boom. My previous business was a platform built for retailers, allowing them to launch their own subscription models, so I’ve been working on the fringes of fintech for some time now. Whilst running this venture, we uncovered the problems for SMBs that Lemon seeks to solve today – so this really does align my interest, passion, and experience of the problem This led to the development of Lemon, a fintech with purpose.

What’s the best thing about working in the fintech industry?

The best thing about working in the fintech industry is that each and every founder or business has a shared goal to solve real world, large scale problems. Many traditional financial systems are outdated and not fit for purpose now, so the level of innovation brought to the market through fintech businesses is great to see. It’s also very rewarding to work amongst the challenges you’re trying to solve every day, as it keeps us driving forward with our mission, allowing us to fully realise the importance of the solution we’re building.

What frustrates you most about the fintech industry?

Whilst the industry is packed with innovation, there are so many hurdles, blockers, and red tape which can catch you out and prevent success. Regulation should definitely play a part where money is concerned, however many of these hurdles have been caused by legacy players and can significantly slow down both success and efficacy of emerging, cutting edge solutions.

How have your previous roles influenced your career?

As a serial entrepreneur and business founder for the last 10 years, I’ve been fortunate enough to experience many learning opportunities which have helped me to shape the business I want to build today. I mentioned in an earlier answer that my previous business directly correlates to the problem we’re solving today with Lemon, so my experience has definitely influenced my career moving forward.

What’s the best mistake you’ve ever made?

My biggest mistake has to be personally guaranteeing a £50,000 loan for one of my previous ventures. The loan was simply for general operating cash flow, but I was personally guaranteed alongside my assets – this included my house and my car.

Unfortunately, my business was a casualty of the Covid-19 pandemic, and once it ceased trading, I was responsible for repaying the full £50,000 with additional high interest rates. This made me realise that the credit system needed significant improvements in order to support people who are operating new businesses designed to move the economy forward. It was a tough lesson to learn, and something I definitely won’t be doing again.

What has the future got in store for your company?

We’ve got lots of plans to improve the SaaS operation for both SMBs and SaaS companies alike. Soon, we’ll be able to offer cost-saving instant credit to the SMBs who need it, which is a very exciting milestone to hit, and will help us to change the way credit is accessed and used by SMBs.

Alongside this, we’re building a plethora of tools which enable more streamlining, efficiency, and management of SaaS products. With SaaS being the third largest cost-line for most businesses, there’s a huge opportunity for Lemon to really reshape this landscape.

What are the next key talking points or challenges for your industry as a whole?

The cost of capital and access to debt capital is a big discussion point right now. Currently, credit originators, like ourselves, have to pay high interest on the debt we use to fund loans, which is issued by lenders who charge a high margin. This reduces the margin for originators, and makes it very hard to make the unit economics work.

It would be great to see the cost of capital come down to a sensible rate so that credit could be offered more sustainably. Unfortunately, most lenders won’t provide debt facilities of less than £25m to an originator, which is too high and simply unachievable for new originators and businesses like ours. Typically, originators and businesses need to have secured at least 15 per cent of the lending facility as equity to cover the first loss requirement – the equivalent of £3.75million on a £25million debt facility. For startup, pre-seed, and often seed businesses, especially in the UK, raising this money from VCs and investors to cover this requirement in the current macroeconomic environment is becoming increasingly difficult.