Banking Interviews

Global Fintech Interview with Michael Rangel, Founder and CEO at Novo

Global Fintech Interview with Michael Rangel, Founder and CEO at Novo

Hi Michael, welcome to our Fintech interview Series. Please tell us about your fintech journey so far.

I grew up in Miami and attended the University of Miami Herbert Business School, where I received my B.B.A. in Finance & Entrepreneurship. After graduating, I worked as the lead trade administrator and operations for Fairholme Capital Management.

I moved up to New York City in 2015 and started taking classes at Columbia University, as I thought an MBA program was going to be my next step. Around that same time, I was talking with a longtime friend, Tyler McIntyre, about launching a digital-first checking account for small businesses. We started building Novo in 2016, launched the platform in 2018, and are now working with more than 200,000 small businesses across the US.

Along the way, Novo has received many awards and accolades, including the Forbes Fintech 50, Forbes Next Billion Dollar Companies, Best Digital Banking Platform by the Fintech Breakthrough Awards, and Tearsheet’s Best Banking App.

Novo is a fintech, and not a bank. What is your USP and how does it cater to the needs of your potential clients?

At Novo, we are reshaping the relationship between small business owners and their checking account. 

Today, the vast majority of small business owners see their checking account as a safe holding place for their money — one that often comes with clunky user interfaces and countless fees. Novo isn’t just focused on helping small businesses keep their money safe. We’re creating a customizable financial platform that puts the checking account at the center of small business owners’ financial universe, and allows them to customize this platform through our ecosystem of business apps.

Small business owners who switch to Novo quickly see that we help them save time, streamline their finances, and improve their cash flow. And we do all of this without charging any “maintenance” or other hidden fees.

Also Read: Global Fintech Interview with Timothy Rooney, President at Marygold & Co

Novo and Alignable recently announced a partnership to accelerate small businesses growth. Could you highlight a few strategies behind this idea?

At their core, Novo and Alignable share a mission of helping small businesses succeed. That’s why, strategically, our partnership makes so much sense. Together, Novo and Alignable will help millions of small businesses across the U.S. build community, gain new customers, and improve their financial outlooks.

Alignable will be the supporting platform for the Novo Community Group, a place for Novo’s small business customers to connect, access knowledge, and support each other. Additionally, Novo is bringing the company’s financial literacy knowledge and connections to Alignable’s seven million members through the Business Essential Education Series.

The small business growth we’ve seen in the last few years has been extraordinary, and with big tech companies continuing to layoff thousands of workers, how are you expecting to see small business creation accelerate in 2023 and beyond?

Great question. As big tech companies continue to lay off workers, I expect to see small business creation accelerate in the coming years. Census data indicates that the U.S. saw a record-setting 5 million small businesses created in 2022, and that we’re on track to reach similar levels of small business creation in 2023. 

What are your perceptions in regard to the finance terminology “Financial literacy”? Could you cite an example?

Financial literacy involves understanding concepts such as budgeting, saving, investing, credit management, and financial planning. In the context of small businesses, I see “financial literacy” as a critical aspect of empowering small business owners to make informed financial decisions. 

For example, a small business owner that runs an e-commerce shop should evaluate if there is a seasonality to their business (e.g. if the majority of their revenue could come in in Q4 during the holiday season). This financial literacy will help them plan more effectively for the entire year (e.g. focus their marketing efforts on driving sales in Q4, budgeting more effectively for the entire year, etc.). 

Also Read: Global Fintech Interview with Siddhartha Jha, Founder and CEO at Arbol

What are Novo’s strategies for the next five years? Do you wish to explore any niche area?

Novo will remain focused on creating a best-in-class financial platform for  small businesses — specifically those that are not backed by venture capital financing. One area we’re particularly excited to launch is our working capital product. 

For people who are running businesses that are bringing in less than $500,000 in annual revenue, their options for borrowing money are extremely limited. Small business owners can find themselves either taking on extremely high interest credit card payments when they need to borrow a few thousand dollars, or going through a drawn-out approval process with their bank only to find out that they do not meet the bank’s revenue requirements for a loan. At Novo, we’re building a working capital product that truly serves the needs of small business owners — one that can quickly analyze their revenue streams, and offer them the capital they need and at a rate that is fair.

Novo has recently completed a working capital pilot program that originated more than $20 million in merchant cash advances to small business owners. We look forward to launching this product in the coming year

What is one book that you would like to recommend to our readers?

I can’t just recommend one! A few books I’d advise, in no particular order, are: The Ride of a Lifetime, Built to Last, Stillness is the Key, Measure What Matters, Zero to One, Leaders Eat Last, and Grit.

What are your predictions for the fintech industry for 2023-2024?

Over the next year, I anticipate seeing significant growth in a number of areas of fintech, including digital payments and mobile banking. I also imagine we’ll see a lot of fintech companies look at ways to incorporate generative AI into their platforms. 

Also Read: Global Fintech Interview with Clare Herceg, CEO and Founder at Let’s Get Set

What is one piece of advice that you would like to give to our readers related to financial security?

When it comes to financial security, I’d say this: Think of your working life in terms of compound interest. Different jobs position you to compound that interest in different ways. Particularly for readers who are earlier in their careers, I’d encourage you to optimize for learning and exposure to the world, rather than a paycheck. 

The compound interest you develop when you are young can set you on a wildly different trajectory later in life. So, make sure you can feed yourself and take care of your responsibilities, but don’t be afraid to take risks and swing big.

Thank you, Michael! That was fun and we hope to see you back on globalfintechseries.com soon.

[To share your insights with us, please write to sghosh@martechseries.com]

Michael Rangel is the Founder & CEO of Novo. He previously worked at Fairholme Capital Management as a Lead Trade Administrator and Operations. Michael Rangel attended the University of Miami Herbert Business School.

Novo Logo

Novo Platform, Inc. is the powerfully simple checking account and financial technology platform built for small businesses. Novo is a fintech, and not a bank. Novo acts as a service provider to Middlesex Federal Savings, F.A.; Member FDIC, and the deposit and banking products obtained through the Novo platform are provided by Middlesex Federal Savings, F.A.

Middlesex Federal Savings, F.A. is a federal savings bank and an FDIC-insured depository institution (FDIC Certificate 28368). Deposits made at Middlesex Federal Savings, F.A. through the Novo platform receive FDIC insurance protection on a pass-through basis up to the applicable legal limit.

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