With its unique plan and vision to improve the student loan system, and now with new funding amounting to $3.5 million, CommonBond is definitely set for a stellar 2013. They have successfully put up a $2.5 million loan pool from alumni investors, and gained additional $1 million worth of equity round from an angel investor.
The company’s CEO, David Klein, shares more about their recent funding achievements in this e-interview with Lead411:
Who are your competitors and how are you different from them?
The federal government represents 93% of the student loan market. For graduate school students – which is a market we’re currently focusing on – the federal government charges a 6.8% fixed rate for the first $20,5000 borrowed, and for any money borrowered thereafter, the government charges a 7.9% fixed rate. We believe those rates are incredibly high. In fact, we think they’re too high, particularly for students of high credit quality and who have a high likelihood of future repayment. So we set out to do something about it. And we have.
What percentage of your marketing budget are spent on the following?
We pride ourselves on being able to do a lot with a little, especially on the marketing front. We believe that the best marketing is grassroots word-of-mouth. That doesn’t require a marketing budget so much as it requires believers in and advocates of what we’re doing. In short, the currency of our marketing budget is more grit than capital.
What marketing tactic has given you the highest ROI? What percentage ROI do you get back on this?
ROI on many of our marketing campaigns is nearly infinite since in many cases, we conduct our marketing at zero out-of-pocket cost. One example is our MBA Summer-End Gala in New York City this summer. The goal was to build community around, and celebrate, the summer MBA community in New York City. The challenge was to do it all without spending a penny, and further still, raise enough money to materially support our global Social Promise partner the African School for Excellence. People thought we were nuts to think we’d be able to pull it all off at zero out-of-pocket cost. But we did. And the event was a smashing success. See for yourself: http://www.youtube.com/watch?v=gB4p5rLvJxQ. At CommonBond, we never underestimate the power of commitment.
What do you plan to spend your new funding on? Product development? Marketing?
We’re spending most of our funding on Great People, Unparalleled Product, and Flawless Operations.
If this is your first round of financing and you’re the CEO, how many hours did you put into working on getting your financing? Was that taking up the most of your day?
I have three full-time jobs, and they’re all with CommonBond. (My team thinks I don’t sleep.) When we were raising money, one of my full-time jobs was securing capital for the company.
If you are the CEO, what are your biggest challenges?
Questions I constantly ask myself, include:
1. How do we best scale our business at this point in our evolution?
2. How do we attract A+ talent to come work with us?
More generally, I’m constantly asking myself and my team: How can we do better? How can we be more efficient? How can we be more effective? We are on a mission at CommonBond to transform finance forever, and there is very little margin for error.
How many employees do you have?
Our team is 7 strong, and we are currently growing the team. Our open roles are here: http://commonbond.co/careers
When were you founded?
Want to read more about this recent funding? Check out this news release here.