Steve Burke spent more than three decades making bulk portfolio purchases during his career that includes leadership positions with Center Street Finance, SFG Finance, Regional Acceptance and FSB Financial. Burke highlighted how technology changed the auto finance business with solutions such as sophisticated credit decisioning models, improved collection tools and GPS devices.
“However, one thing that seems stuck in time and never changed was the way dealers and finance companies sold their loans in bulk in the secondary market,” Burke said.
As a result, Burke leveraged that industry experience with a highly successful Silicon Valley private equity and venture capital investment fund to create AGORA; what he describes as “a true marketplace for buyers and sellers of auto loans.”
AGORA officially opened for business back in April. Along with support from the technology sector, the company also landed partnerships with a quartet of industry-leading loan brokers, generated more $300 million of loans listed and collected hundreds of registered users.
“Before AGORA, businesses relied on brokers and internal sales people/advertising to put buyers and sellers together,” said Burke, who is AGORA’s founder and chief executive officer. “Though I ran businesses that were the largest and most active buyers of bulk pools of loans, I felt constrained and frustrated that we were not seeing all that was potentially available in the market.
“In addition, over the years, through the thousands of purchase and sale transactions my businesses executed with a wide range of sellers — from small mom and pop dealers to large, national finance companies and banks. Rarely were any two alike,” he continued. “The biggest friction point (for both the buyer and the seller) was the inability to transmit and receive loan-level data in a consistent, secure and reliable format.
That’s where AGORA steps in with its technological platform that is meant to read the portfolio offering the same way; whether it’s $1 million or $100 million. The platform is designed to allow buyers and sellers to publish and exchange loan data directly in an efficient and secure environment without the need of intermediaries or brokers.
“The single biggest hurdle has been ensuring we develop AGORA in a manner such that it remains agnostic to all the different dealer management systems and loan servicing systems that are currently in use,” Burke said. “It would have been relatively simple to design a system that maps on a one-to-one basis with just a single system — to operate almost as a plug-in to existing system.
“While that would great for those users of that single DMS, it would leave the rest of the industry out in the cold,” he continued. “What’s truly made AGORA transformative is the massive amount IP we have invested in the front end to position AGORA as a common carrier platform for the industry rather than a feature only to be enjoyed by a select few.”
And more than just Burke believes in what AGORA can do. In June partnerships became effective with Domenick Chiappareli of Henderson, Nev., William Campbell of Boynton Beach, Fla., James Coates III of Dallas and Russell Bryant III of Denver.
Chiappareli, Campbell, Coates and Bryant collectively bring several decades of experience in marketing and business development across a wide range of consumer asset classes. Each has deep relationships across the entire country and will be a powerful resource towards driving ever-growing volume to the AGORA platform.
“Once I saw the power of AGORA, I instantly wanted to get in on the action. The platform will transform the way business is conducted and completely disrupt the old-school broker way of doing things,” Chiapparelli said.
AGORA also reached a partnership with Auto Loan Technologies, which does business as AutoZoom, to expand the suite of services available to the buy-here, pay-here dealer community. AutoZoom is a web-based scoring and predictive underwriting SaaS provider designed to meet the underwriting and analysis challenges of the BHPH industry through its unique ability to build custom-fit scoring models for dealerships.
“I have been facilitating the origination efforts of the buy-here, pay-here dealer and finance company communities for decades. Having the ability to partner with AGORA and provide those same clients with exit and liquidity solutions helps complete the value chain we offer the industry,” AutoZoom founder Scott Carlson said. “We could not be happier to have a partner like AGORA.”
With AGORA only a few months into its journey, Burke acknowledged the company is looking to improve.
“We have come a long way but still have a long way to go, and we are constantly upgrading our interfaces and mapping technology to stay one step ahead,” he said. “The challenge of anticipating what lies around curve in the road ahead and ensuring AGORA is positioned to handle that — that remains our biggest hurdle.
“Additionally, as more and more millennials start or take over dealerships and finance companies, those millennials are used to technology and are not familiar with the old way of buying and selling,” Burke went on to say.
All told, AGORA is aiming to smooth out one of the most important segments in auto finance; similar to how individuals can complete investment activities by themselves.
“It’s difficult to ‘rate’ how frustrated sellers (or buyers for that matter) have been with the bulk buying process pre-AGORA. As a buyer, I was frustrated because I knew there was a lot more paper out there that I just wasn’t seeing through the broker community or my internal sales teams,” Burke said. “I know BHPH dealers have had similar frustrations — that they simply are not getting the volume of bids they want or need for their paper. The source for both of those frustrations is that today (pre-AGORA) buyers and sellers rarely interact on a direct basis initially. Instead, there are brokers and other intermediaries who control the information flow, control who sees what paper.
“More important, the brokers have an adverse impact on pricing. By virtue of brokers commanding commissions of 1 percent to 4 percent, buyers are either overpaying, or sellers losing out on incremental economics,” Burke continued. “We have all seen what has happened over the years in the retail equity markets with discount and no commission stock trading. AGORA will bring to the secondary market for consumer loans what we all as individuals have been enjoying for years in our personal investment activities.
“At our one-year anniversary, I hope to be say the word ‘AGORA’ to a room full of BHPH dealers and finance companies and have them all know our business and be active users,” Burke concluded.
For more details, go to AGORAdata.com.