Deal anatomy: asset-backed liquidity
When capital is secured on real-world working capital – invoices, inventory, payables – the most important question is not “what is the headline yield?” but “how quickly and predictably can we turn the asset back into cash if something goes wrong?”
I focus on three things: the true liquidity of the collateral, behavioural performance of the counterparties, and the information/reporting loop. Advance rates, triggers, and covenants should follow from those realities – not from what was achieved in someone else’s market deck.
Good structures align incentives: originators are rewarded for quality and collections, investors have visibility into pools and performance, and borrowers get flexibility that matches their trade cycles rather than a bank’s calendar.
How to underwrite non-bank lenders
Non-bank lenders live or die on three engines: origination, collections, and funding. Product and technology matter, but only insofar as they improve those engines and the risk-adjusted economics of the book.
When I look at a platform, I care about cohort performance, concentration risk, unit economics by product and channel, and the maturity of their risk and collections culture. I want to see evidence that management has lived through at least one real stress and reacted early rather than late.
The best platforms treat funding partners as long-term collaborators, not as one-off tickets. They invest in reporting, transparency, and governance early so that the first $25m facility can grow to $100m+ without reinventing everything.
Operating a PE portfolio company
The first 90–180 days in a portfolio role are about rhythm and focus. You do not need 200 KPIs; you need a small, brutal set of metrics that actually drive cash, margin, and customer outcomes.
I start with cash and working capital, then pricing and terms, then the vendor and people stack. Many issues that show up in the P&L are symptoms of deeper operational design problems – unclear ownership, misaligned incentives, or vendors that are not set up for scale.
A good operator makes themselves progressively less necessary by building cadence, dashboards, and decision rules that the team can run without constant heroics. That is also what makes a business more financeable and more valuable at exit.