The following interview is a conversation we had with Matt Bivons, CEO & Founder of Canopy, on our podcast Category Visionaries. You can view the full episode here: $30M Raised to Build a Modern Servicing Platform for Scaling FinTechs
Brett
Hey, everyone. And welcome back to Category Visionaries. Today we’re speaking with Matt Bivons, CEO and Founder of Canopy, a loan management and servicing platform that’s raised over 30 million in funding. Matt, what’s up, man?
Matt Bivons
How are you? Brett? Great to be here, thank you.
Brett
Yeah, no problem. Super excited. Let’s go ahead and jump right in. What are you building there at Canopy?
Matt Bivons
Well, Canopy just turned 5 years old and it is an API first loan management lending core and operating system for small businesses and embedded lenders.
Brett
Take us back to 2019, the founding of the company. What was going on in your world that you observed this was a problem worth solving and technology worth building?
Matt Bivons
Yeah, so I’m actually going to go on a little bit journey before that. I’ve been in financial technology for a little over 10 years now. I was out in the Bay Area at a company called Earnest. And Earnest did student loan lending. And I think that Earnest was really, I’d call it FinTech 2.0. And so it competed directly with SoFi. And we built a lot of really amazing front end systems. And we also tried to recreate the wheel with a lot of infrastructure and build it internally. And we saw just how challenging that was. And so fast forward, I was recruited to a company called Greensky based in Atlanta. And Greensky was really the OG in the buy now, pay later lending space. And Greensky also built a lot of infrastructure in house.
Matt Bivons
And I saw a very similar pain point at Earnest and Green sky when it came to servicing. And so when I say servicing, I’m really referring to any company that has to account for its customers making repayments, needs to service them. So DoorDash services you, Uber services you. But when you’re dealing with financial products, you need a system of record that governs all of the rules and policies of that loan. And so at Earnest and at Greensky, they built it off of very rigid tables and databases and it caused a ton of different problems. It caused problems in terms of new product creation. So if a customer wanted a different loan Type the ledger couldn’t support it.
Matt Bivons
And on a customer service standpoint, if a borrower called in, agents would spend minutes and minutes trying to answer very basic questions because the systems were old and rigid. And so seeing that servicing was a really big pain point, but also critical to every lending program, I set out to create a modern lending core for servicing. And so five years ago, I took the leap of faith and started Canopy.
Brett
Matt, you know, a lot of the founders that I bring on there are software engineers who, you know, go on to build companies. I know your path has been a little bit different. You started off as a designer, then you became a marketer. Now obviously you’re a Founder. What was it like making that transition from designer to marketer to Founder? Sure.
Matt Bivons
So I started off my career as a product designer and front end developer. And as a designer, I very much believe that great design helps facilitate better life experiences. And so as a designer, as an engineer, as a marketer, as a Founder, you need to have a lot of empathy for the people using your product. And so it started out as a Designer back in 2006 designing websites and apps. And then it evolved into how can I actually influence the distribution of these apps, the discoverability. And that got me into SEO, SEM, digital marketing. And then when I moved to the Bay Area to get into startups, that’s where I really discovered growth. And at the time growth was a combination of product data and design and obviously marketing as well.
Matt Bivons
And so it was really a catch all for how can you get distribution and get people using your product. And so I think there is obviously a spectrum of marketing. Brand marketing is not my specialty. That’s something that very large organizations do to increase awareness. My specialty was around using the product, which is now called product led growth, to actually distribute and get people to use it. And so I think it comes down to from a first principles perspective, understanding the pain point, understanding the journey of your customer, and understanding if you’re really solving something they care about. And that means you need to have a lot of research and ability to put yourself in the shoes of the people that will ultimately become your customers.
Matt Bivons
And so that’s really important as a Founder as you look to discover these problems, is it a nice to have problem that people can continue to live without or are you solving something so critical that people. It’s a painkiller, right? It’s the painkiller versus vitamin example. And so my past experience has been a windy road to here, but it has certainly taught me A lot of lessons to really understand your user and your customer and that helps you design and build great product.
Brett
So it sounds like you were doing PLG before it became cool. You know, just I’ve been doing this podcast for about three years. I’ve spoken with probably 700, I think 800 founders now. What I’ve seen is, you know, probably 2022, everyone was talking about PLG. Every Founder that I was talking to, when we talked about prior, a lot of them were trying plg. Now lately, when I’m doing my interviews and I ask, you know, painful lessons, things like that, a lot of them say, we tried plg, it didn’t work and we had to go, you know, go back. Why do you think some companies struggle with plg?
Matt Bivons
Well, I don’t know that every company is ripe for plg. Canopy is an enterprise software business and so our sales cycles are really long. It’s not self serve. We’re not really a traditional SaaS company. And so I don’t think that product led growth is right for every company, every product. I do think though that as you design the product, you have to think about your distribution and your market and customer in mind. So you can’t disconnect what you’re building from who you’re selling it to and how you sell it and how you go to market will change based on the industry you’re in and the customers that you sell to. And so for financial services, for fintech, I think that product led growth is a challenge. Right? Certainly there are products that are seat based.
Matt Bivons
So once you get it into a company, you charge per seat. Maybe you charge, you know, a software licensing fee to have organizations kind of land and expand to different departments. That can definitely happen. But there isn’t necessarily the virality or referral engine that happens from traditional SaaS PLG when you’re talking about fintech. So I think that the go to market and distribution depends on the industry and the product that you have makes.
Brett
A lot of sense. I feel like that’s with all advice, right? It can’t be. Everyone should be doing xyz. I feel like that’s when people run into trouble. And that’s probably why a lot of these companies didn’t have success with PLG is they probably shouldn’t have been doing it in the first place.
Matt Bivons
Yeah, I think that’s exactly right. I mean, certainly I think you can think about product led growth in a few different dimensions. So product led growth could be. Is your product so amazing that other people want to Talk about it and there’s just high word of mouth. That’s an aspect of product led growth. Another aspect of it is being able to have the product itself generate its own distribution. And so again, you have to understand the market TAM and your icp. But I do think that in some ways PLG can be slightly easier because you don’t need to think about the customization or really the implementation per customer. Because In a traditional SaaS model you sign up and it goes right, like notion, like slack, like some of other best in class PLG businesses.
Matt Bivons
But I think most products start off in a place where you need to iterate on both the product and the go to market. And for Canopy, you know, our go to market has definitely evolved over time as we’ve learned who is the bullseye of our ICP and then who we are not targeting.
Brett
I see that makes a lot of sense. Now talk to us about the early go to market strategy. What did that go to market strategy look like at the start? And then how did you see it evolve to what it is today?
Matt Bivons
Yeah, the early go to market was just me hustling and flying around the country trying to get in front of companies that did lending or were getting into lending. I think that there are only a handful of ways that you can grow a business. Obviously paid marketing is one of them. That doesn’t work. In B2B enterprise companies like Canopy, there is organic SEO, which obviously a former life of mine was doing SEO, but that also doesn’t really exist. There aren’t that many people searching for loan management systems. There is the ability to have word of mouth and referral, not so much on a viral standpoint, but certainly people recommending you and trusting you in the B2B space matters a lot. So some of that is key to Canopy. And then there’s the, you know, outbound sales or inside sales, just direct marketing itself.
Matt Bivons
And direct marketing obviously can fall under direct mail, it can fall under email, or it could fall into actually, just as me as an individual, cold Calling or emailing founders of other companies. And so that’s really how our go to market started at Canopy. And then we’ve gone through quite a journey that I’m happy to share the evolution of that over time.
Brett
What have been those biggest evolutions?
Matt Bivons
So when we first started Canopy, we tried to do loans for all types of lenders. So whether you were a B2C buy now, pay later company or you were a B2B revolving charge card company like Brex or Ram. And what we realized over time is that actually spread us really thin from a resource standpoint, it was not focused enough from a product standpoint and from a go to market standpoint. All of these companies, depending on the TAM that you were in, wanted different aspects of from a regulatory and compliance standpoint. And so we refined that product roadmap to be strictly B2B which then narrowed our ICP of who was using our product. So that was one big evolution which was again saying no and cutting out what were not doing.
Matt Bivons
The other piece that I spectacularly failed at was trying to do a self serve lending as a service. So having people come to our site, sign up, try it out, somewhat freemium, and then we would charge on a per API basis. That did not work for a few reasons. Number one, it attracted the wrong type of customer. So were getting kids from Stanford in their dorms trying us out. And lending is really hard. Like you have to know what you were doing and that was not our customer. Right. Additionally to that charging per API call, similar to how Twilio does, is very confusing to most people when you’re dealing with lending because the amount of contacts that you get matters based on the lending product you have.
Matt Bivons
So you know, for example, if you have a student loan, you’re never really calling in to your servicer. It just you set up autopay and it deducts every month. Same thing with mortgages. But if you have a revolving card or a debit card and you get declined the point of sale, you’re absolutely jumping on the phone. So the contact rate matters, the product type matters, and self service just didn’t work for us. And so what we found out was that we needed to obviously talk to various stakeholders at these companies, which was all outbound. And so it evolved from just me into now we have chief revenue officer and full sales and marketing team who do this. And then it also mattered around how many touches we actually needed to move people through our funnel.
Matt Bivons
And so there are people who immediately want to have a pain Point of either launching a lending company, we call them greenfield opportunities and therefore they come to us as new lenders. And then there are companies who have a system of record, hair on fire, problem, reconciliation. There was a bunch of stuff in the news around Synapse and fintechs that couldn’t find people’s money. It’s obviously a big problem. And so those companies, we call them brownfield deals, maybe it’s an internal in house system, they come to us immediately, they need to move over. I would say that’s a very small percentage though of companies, the majority of companies, it’s a year long journey and we need to have high trust and build relationships with them across many months.
Matt Bivons
And so that comes in the form of not being, you know, overselling, but really listening and understanding the company, their business model, their future. And it also comes from creating a lot of content to help them understand when is the right time to use us. And so I would say the combination of content marketing and direct sales, which is all about building trust, is where we are right now. And that is what is most high converting and working for us. So I think we found our sweet spot of go to market. But the way that you go to market is going to evolve over time too, right? The fun thing about working at a startup is that it’s very dynamic. Right?
Matt Bivons
I mean when Covid hit right after we got our first round of funding, I couldn’t fly all over the place to meet with people. And being on Zoom is a very different way to build relationships versus now. You know, we obviously are able to go to conferences, we’re able to have a booth, go to trade shows. And so you just have to adapt with the time and the macro environment and not be dogmatic about any one approach. I mean, this sounds kind of cliche, but obviously fail a lot, fail fast, figure it out, run experiments and do what you feel is working and then double down on that.
Brett
And when it comes to experiments, can you tell us about one that you thought was going to be a hit? You ran it and turned out not to be as successful as you were hoping?
Matt Bivons
Sure. So we had a few different experiments where we tried to build just single API integrations into larger incumbents and then those incumbents would then become a channel partner in distribution. And what we realized was it’s important to be niche, it’s important to have a wedge in terms of your distribution. But if it’s too niche and the wedge doesn’t have feature completeness, it actually fails miserably. And so For Canopy, we need the full loan data and lifecycle of the loan. And that can happen as a shadow ledger. It can happen as a layer on top of existing CRMs. It can happen a lot of different ways, but being able to just take a small sliver of the servicing life cycle just doesn’t work. And so I think it’s really important for people to obviously try different things and make sure it’s measurable.
Matt Bivons
But understand when you have a goal and you set that and it’s not working, like move on, right, like the universe is telling you something. And so for us, it actually helped evolve our product roadmap based on that singular experiment by itself.
Brett
What about your market category? How are you thinking about the market category that you’re in today and how do you think that’s going to evolve?
Matt Bivons
Yeah, so we are on the B2B working capital commercial lending side and we see many non bank lenders in vertical software and embedded lending growing at a 30 to 40% CAGR. And so as we look at the market we try to dissect it by vertical. So logistics. As an example, one of our customers, Flexport has been with us for several years now. That is a vertical of their logistics company. Flexport offers loans to suppliers and merchants who typically ship goods across the world. It takes them 90 days to get from China to New York and therefore you need liquidity. In between that time there’s healthcare, e commerce, travel. Each of these are different verticals and then each vertical has a different loan type. And so if the verticals are the business model, the loan type is the horizontal that goes across them.
Matt Bivons
So loan type could be a revolving card, it could be a merchant cash advance. There are a lot of different financial programs that we support, about 25 today. And so each program type has to match the use case for that vertical. I would say that we’re more or less a compound startup in that way because we service so many different verticals and our go to market and value prop is unique to each vertical and product type. That’s number one. Number two, we think about the TAM as any small business or fi that needs liquidity. And so if you think about companies who offer payments today, it’s a very, you know, Direct association from going from payments into lending.
Matt Bivons
And so we see a lot of companies in these spaces who are vertical software offering payments knowing that they have a unique data advantage by understanding their customers better than a bank does to be able to offer lower risk loans to them. So that’s the tam. Then I think about the SAM and the sam so the serviceable addressable market and the serviceable attainable market. So if the TAM is any small business or FI that is offering working capital products, the SAM is companies that are already lending today. So they might have a homegrown system or working with an incumbent and they can’t build flexible product types. They are limited on what they can offer their customers. They are working with rigid systems. Again, in my experience it’s either built in house or one of the incumbent banking technology cores.
Matt Bivons
And they come to Canopy because they can’t do something, they can’t innovate, they can’t offer a second product, they are restricted in some way. And so our value prop to them is we are one of the most fast, flexible systems where we believe in the future of lending being personalized, embedded and multi product, meaning that you should be able to work with us instantly, embed us directly into what you have today. You don’t need to migrate everything over. We connect into your existing systems. You should be able to personalize and customize the product to offer unique individual loans to each borrower. So as an example, a bank would say a three year loan or five year loan. For Canopy we’d say why not a 3.1, 3.2, 5.1 year. You can create any loan type you want.
Matt Bivons
And so that type of innovation allows our customers to differentiate and then multiple products, meaning that you want to be able to have one data model that allows for different financial products. And so that’s the sam, they come to us. The SOM is greenfield new lenders. So these are companies that are not doing lending today that want to get into lending. And so as we think about the verticals and the product types, the tam, SAM and sam, it’s important for us to develop marketing and messaging and our go to market strategy has to be tailored to each of those companies in those categories. It is not a one size fits all.
Brett
As you reflect on this go to market journey so far, what do you think has been the most important decision that you’ve made? And take us behind the scenes on how that decision was made.
Matt Bivons
The most important decision that we made, which was a scary one, was this year we cut out a significant portion of our consumer lending funnel. It represented over 50% of our sales pipeline. And eliminating that is obviously very scary, right, because you have a bird in hand of companies that want to work with us. And going more niche and best in class meant that we had to say no to a lot of things, Particularly in the early days, you want to say yes to a bunch of things, right? And I firmly believe that, you know, one yes, one email, one phone call, one customer can fundamentally change the trajectory of a company. But in this case, you know, I considered it like the peanut butter problem.
Matt Bivons
We were just spread way too thin, and we needed to go a lot deeper in the market that were being pulled into. And so you also have to kind of listen to the external forces, which is, I always say there’s a fine line for founders of being stubborn is one side and resilient is on the other. And so you get rejected a lot as a Founder, but you also have to know when the universe is telling you something. And for us, we had massive market pool into the B2B side. And so eliminating the consumer lending was a very hard thing. But it has paid off tremendously with massive growth for Canopy in 2024.
Brett
It’s always so hard to balance that conflicting advice. On one hand, it’s like, never give up. On the other hand, it’s like you have to know when to pivot. You have to know when to change. I always struggle with that myself. And it’s very hard.
Matt Bivons
It is. And I don’t. I mean, I think it’s unique to each situation. So I wish I had a formula to give advice to. I can talk a little bit about the earliest days of Canopy when it was just me. My original vision of Canopy was to build a safe student credit card. And so outside of student loan debt, which was my former life as well, coming from earnest, outside of student loan debt, credit card debt is the second thing that students graduate with. And so I had this concept for a student credit card and had a bunch of interest from VCs, went out to Sand Hill Road, got rejected from every single one, wound up applying to Y Combinator. I thought were too early because it was really just me. We were pre product.
Matt Bivons
YC tells you at midnight Pacific time, I was in Atlanta. So 3am, got rejected from Y Combinator. I screamed into a pillow that night. And the next morning, a friend of mine gave me some really harsh advice. And he said, you’re an amazing Founder, but this hill that you’re trying to climb is just it’s too much like you really need to take a look and understand what the market is telling you. And so I reevaluated what were trying to build. And at the time building a credit card, we had a partner bank out of Seattle, we had an issuer processor lined up. But when it came to the infrastructure to do the servicing, were building that ourselves. And even with the rejections, you know, I kept moving forward, being able to recruit a few engineers, a few designers.
Matt Bivons
You kind of have to beg and borrow to get those early folks in when there is hardly any funding. I was self funded at the time and I took this advice and I tried to reach out to some very large companies, Chime being one of them, Greenlight being another. Back in 2019 and even still to this day, but definitely in 2019, there were so many debit card companies out there and I asked them if they were ever going to get into lending and credit and if they could use our APIs to help build a co branded credit card. And every single one said yes. And so I realized at that moment that was the market pool, that was the signal that was saying I need to pivot.
Matt Bivons
And so I completely gutted everything related to the student credit card, stripped away everything and went down just to the basics, which was what is the hardest thing about what we are building, that no one else has that everybody else wants. And it was the servicing infrastructure, the ledgering, the lending core. And from that’s how we got our first investment. So I was stubborn up to a point and resilient up to a point. But you needed to take the market feedback and be able to adjust accordingly. And I think that is one of the biggest superpowers of successful companies and founders is being able to adapt and evolve and not being stuck to any one way. And that is true in every functional area of the company, whether it’s marketing, go to market, whether it’s product, whether it’s technology.
Matt Bivons
You need to be able to change with the customers and be able to continue to offer something extraordinary over time. Right now for us now, five years in, our thesis is very much still the same, right? Like we want to. Going back to my earlier comment of being a designer, we want to facilitate best in class lending experiences. And so from a first principal standpoint, I thought that would be for students and credit cards. Now we’re just powering companies that do that. And so it’s very much like a Trojan horse where we go in, we’re the infrastructure and then as Our companies grow, our partners grow, Canopy grows.
Brett
Final question for you. Since we’re almost up on time, let’s zoom out three to five years into the future. What’s the big picture vision look like?
Matt Bivons
So we believe in a concept called intelligence servicing. And so the industry today, both from the products that lenders develop as well as the call centers that support the borrowers, is very reactive. You miss a payment, then you call the customer, your statement comes out, then you make an action. And so for us, we have a very unique vantage point of being the heartbeat of every lending program. And so we believe in AI and ML being able to create recommendations and insights that turn servicing from a cost center into a profit center. 90% of the life cycle of a loan happens in the servicing layer. And so companies that want to have best in class LTV and have best in class engagement want to be a servicer. And our infrastructure helps support that.
Matt Bivons
And if we can make them better lenders, we can create better borrowers. And we’re going to do that through the technology that we build.
Brett
Amazing. Love the vision. I really love this conversation. We’ll have to wrap here. Before we do, if there’s any founders that are listening in that want to follow along with you, where should we send them?
Matt Bivons
canopyservicing.com or you can reach out to me. DM me on LinkedIn. Matt Bivens. Really appreciate it, Brett. This was fun.
Brett
No problem at all. Really enjoyed it. Cheers, man.
Matt Bivons
Cheers.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io Podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.
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