vc trade: Digitalising the Corporate Finance market in just 9 months

Customer:

 

Promissory note lending is a form of syndicated corporate lending that is widely used in Germany and Austria. Until now, the market was stuck in the 20th century: opaque, cumbersome and telephone-based, underpinned by manual processing and with little transparency for market participants.
In just nine months, German startup Value Concepts (VC) has revolutionised this market with the launch of a new digital trading platform, significantly reducing the time take to raise finance, by digitalizing the entire lending process from front to back. Instead of a chain of phone-calls, all market participants can now view and manage the entire value chain of a lending transaction, all in one place.

What are promissory note loans?

The promissory note market in central Europe has seen a significant growth in recent years. Banks act as ‘arrangers’ to enable medium and large companies to borrow funds from a pool of investors. It is a highly attractive means of raising funds, faster and with lower costs than bond issuance, and without the capital constraints that limit classic bank loans. And whilst historically, the market has been based predominantly in Germany, businesses across Europe are starting to recognize the advantages of promissory note loans, and international volumes are growing fast.

The Challenge of launching vc trade

Vc trade´s founders were under considerable competitive pressure to deliver fast. Other market participants had seen the opportunity, and were planning competitive solutions, with far higher budgets. Fortunately several major market players were convinced by vc-trade’s approach. Keen to establish a strong foothold in the new digital market, they signed up as arranger banks on vc trade, providing critical momentum to the project.

The Value Concepts team had clear criteria for their choice of technology. Firstly, they needed to be able to build functionality very fast with a high level of security. This was particularly important in order to differentiate vc-trade from previous attempts to bring the market online; vc trade would not be just a static website, but a fully fledged trading system, fit for the 21th century.

Second, the vc trade team had ambitious plans to expand the capability of the platform, and wanted a technology that was agile, easy to extend, and capable of smoothly integrating new products.
Why Cyoda?

Stefan Fromme, Co-Founder – Value Concepts

‘Partnering with Cyoda enabled us to focus on what we know best: defining the required business logic and building functionalities. By collaborating with Cyoda we developed the solution at a fraction of the time normally associated with such a large scale project. We made this happen by working closely alongside the Cyoda team, and leveraging the array of features within their platform that are designed to accelerate development projects, such as robust security protocols, ‘schema-agnostic’ data modelling (that made it quick & easy to integrate multiple data sources) and a flexible rules-based workflow engine. We also knew and trusted the people behind Cyoda; the team had a long and proven track record for delivering on their promises.’

 

Tobias Zoller, Co-founder – Value Concepts

‘Cyoda offers many advantages which were not essential for the initial implementation of vc trade, such as its performance and scalability, but we know Cyoda’s platform can support us as we grow the volume of data processed and extend the functional capabilities of vc-trade. We look forward to expanding our successful cooperation with Cyoda and believe that this will support us in driving further digital innovation in capital markets.’

 

How the project was run

Cyoda set up a dedicated, developer-led team to support the project, who worked closely with vc trade´s technical resources in Frankfurt and Stuttgart.. The key task was to use Cyoda’s workflow engine to facilitate the intricate business processes and rules needed to digitalize the issuance of promissory note loans. Cyoda’s platform allows data to be managed and processed in a way that is logical from the perspective of a business user, enabling teams of mixed skillsets to collaborate closely and very quickly build new functionality. . In this way, the vc trade team had a direct view of how Cyoda was processing data, allowing vc trade´s business experts to collaborate very efficiently with the Cyoda team, significantly reducing the time to bring vc trade to market.

Outcome

vc trade successfully went live on 16th of March 2018. The first transaction took place over a three-week period in March/April 2018 for the issuance of a 100M EUR promissory note loan. The transaction was completed smoothly, on time and with no technology issues.

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‘‘It is a great experience to work with Cyoda and we are proud of what we’ve achieved so far. Supported by Cyoda we have built an entire corporate finance platform for a highly complex product from scratch to go-live in just 9 months.
Stefan Fromme, Co-Founder, Value Concepts

‘By collaborating with Cyoda, and using their digital platform, we delivered several months more quickly, which gave us a critical competitive advantage. I believe that we will realise further cost savings in the future years using the Cyoda platform. But it’s not just about cost; we need to stay ahead of the curve by continuing to deliver fast. This will involve launching more functionality and products within vc trade and we believe Cyoda will play a key role in helping vc-trade to continue to innovate and to develop this marketplace.
Tobias Zoller, Co-Founder, Value Concepts