Lauren Gensler recently wrote an article for Forbes titled, “Handyman’s Helper: How GreenSky’s David Zalik Skipped School on his Way to Becoming a Billionaire. In the article, she discusses the CEO of GreenSky Credit, one of the most valuable fintech companies in the United States.
The company has raised more than $50 million in funding and has been valued around $3.6 billion. Zalik co-founded the company in 2006 in Atlanta, Georgia. To this day, he still owns more than half of the company, placing him among the ranks of other billionaires.
The office is still located in Atlanta in low-rise office buildings. Many employees pitch the mobile app of GreenSky Credit to home remodeling companies and contractors. Though it seems like a strange market demographic to target, Zalik discovered that the contractors are a key to the homeowner market in America. The company seeks to make quick loans for healthcare, home improvement and other smaller loans.
Collecting on the loan is not normally a problem since they only approve borrowers with high FICO scores, instead of the more marginal loan seekers. One of the greatest benefits of the company however is that it transfers a majority of the risk and the work to other parties while gaining profits from both sides.
The company has more than 17,000 contractors that will pay 6% of the loan amount on average as well as marketing the loans to homeowners. It also has a variety of trusted bank partners like Fifth Third, SunTrust and Regions who make the actual loans. The banks each pay nearly 1% of the balance each year to GreenSky Credit.
This allows GreenSky Credit to profit but without having to deal with loan defaulters. Instead, it has become the digital middle man of loans. Zalik believes that the company will have profit margins of nearly 25% this year.
GreenSky Credit is a valuable financial technology company, second only to Stripe and SoFi. Though it is less well known than lending financial technology companies like the Lending Club Corp. or Social Finance Inc., it has become a leader in that space. Between 2012 to 2016, the company lent nearly $5 billion in loans.