Latest / Leaders In Payments / Investable Embedded Finance with Jane Podbelskaya, Charge Forward & Jake Colognesi, Mamba | Episode 532

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Investable Embedded Finance with Jane Podbelskaya, Charge Forward & Jake Colognesi, Mamba | Episode 532 · Leaders In Payments

• 0:00
  SPEAKER_01: Welcome to the Leaders in Payments Podcast, where we talk to sea-level leaders from across the payments landscape.
• 0:07
  SPEAKER_01: We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments.
• 0:14
  SPEAKER_01: We will also hear stories from our guests about their journeys to the top.
• 0:18
  SPEAKER_03: Hello, everyone, and welcome to the Leaders in Payments Podcast.
• 0:20
  SPEAKER_03: I'm your host, Greg Myers, and today's special guests are Jane Podbelsia, the founder of Charge Forward, an independent vendor agnostic intelligence platform focused on embedded finance for software companies.
• 0:32
  SPEAKER_03: And Jake Colognesi, the founder of Mamba Growth Equity.
• 0:36
  SPEAKER_03: This episode is part of our three-part series we're doing around embedded finance leading up to Embedify 26, our embedded finance summit for vertical SaaS leaders, happening in Salt Lake City, Utah on October the 13th.
• 0:48
  SPEAKER_03: You can learn more about the event at Embedify2026.com.
• 0:52
  SPEAKER_03: The title of today's episode is From Feature to Growth Engine: Building an Investable Embedded Finance Strategy.
• 1:00
  SPEAKER_03: So we're going to be looking at embedded finance through the lens of both an investor and an operator and what turns it from an added feature into a real growth engine, how to measure whether it's working, and what ultimately makes an embedded finance strategy scalable and investable.
• 1:14
  SPEAKER_03: So, Jane, Jake, thank you so much for joining me and welcome to the show.
• 1:18
  SPEAKER_02: Thanks for having us, Greg.
• 1:20
  SPEAKER_00: Thank you, Greg.
• 1:21
  SPEAKER_03: Jane, we're going to start with you.
• 1:22
  SPEAKER_03: So before we jump into the questions, can you give us a brief rundown on your background and maybe walk us through what Charge Forward does?
• 1:29
  SPEAKER_00: Happy to.
• 1:30
  SPEAKER_00: I thought we were going to start with Jake because I partner with Jake so closely, and I'm very excited to have this show done jointly.
• 1:38
  SPEAKER_00: We've done two episodes with you, Greg, previously.
• 1:42
  SPEAKER_00: For those who haven't heard those, let me give my background real quick.
• 1:46
  SPEAKER_00: I run ChargeForward, which is a vendor agnostic advisory firm where I help vertical software companies embed and monetize and grow financial services.
• 1:57
  SPEAKER_00: So I help non-financial software companies to be precise.
• 2:01
  SPEAKER_00: My background is I spent a decade as an VC investing in non-financial B2B software and later on in fintech.
• 2:12
  SPEAKER_00: And then I realized there is a very, very interesting opportunity to join the two.
• 2:17
  SPEAKER_00: And my first experience with that was investing in Shopify at the Series B and watching that transformation where Shopify changed from a pure SaaS company adding payments and basically becoming a fintech.
• 2:32
  SPEAKER_00: Prior to that, I spent a few years as a management consultant with Baylon Company.
• 2:37
  SPEAKER_00: And the first part of my career was actually in software, software design, software architecture, software engineering.
• 2:43
  SPEAKER_00: And I work very closely with Jake, as I mentioned.
• 2:47
  SPEAKER_00: We both look at companies and I work closely with his portfolio companies.
• 2:52
  SPEAKER_00: And I also help even decide whether a pipeline opportunity or target company is a fit for embedded finance.
• 3:00
  SPEAKER_00: That's why I really want to pass on the mic to Jake to give his intro.
• 3:04
  SPEAKER_03: So, Jake, tell us about Mambo and how embedded finance fits into your investment thesis for vertical SaaS.
• 3:12
  SPEAKER_02: Yeah, sure.
• 3:13
  SPEAKER_02: I'm mostly just thinking about how I wish I invested in Shopify's Series B, like Jane did.
• 3:19
  SPEAKER_02: So congratulations on that.
• 3:21
  SPEAKER_02: Yeah, so a bit about Mamba.
• 3:22
  SPEAKER_02: So I just from a background perspective have been an investor for 20 years and prior to that was an investment bank for a couple of years.
• 3:31
  SPEAKER_02: So mostly a financial background.
• 3:33
  SPEAKER_02: In 2024, I founded Mamba with the explicit focus to invest in companies where embedded finance is a marquee part of their growth strategy.
• 3:43
  SPEAKER_02: We have a$104 million fund.
• 3:46
  SPEAKER_02: We make minority investments into companies, into what I believe are very special businesses.
• 3:52
  SPEAKER_02: They're system of record, vertical software companies.
• 3:56
  SPEAKER_02: And I'm going to shamelessly borrow from a mutual friend of ours, Justin Koffenberg, but where these companies have the God-given right to insert themselves also into the flow of funds of their end customers.
• 4:09
  SPEAKER_02: These companies are extra special, I believe, because they're bootstrapped founder-owned companies, typically operating profitably or roughly around break-even, while growing quickly, while maintaining strong retention metrics, and with a lot of promise on the embedded finance side.
• 4:27
  SPEAKER_02: And so that's really where we spend our time.
• 4:30
  SPEAKER_02: I mean, these are typically, from a size perspective, two to$15 million ARR businesses.
• 4:36
  SPEAKER_02: And usually not everything's figured out, but there's usually a founding team that is intelligent, aware about what they could gain by embedding payments or any other product into their financial product, into their platform, but are looking for a partner to help guide them in their journey.
• 4:55
  SPEAKER_02: Jane mentioned that we work together.
• 4:56
  SPEAKER_02: I mean, I'm incredibly appreciative of our partnership.
• 4:59
  SPEAKER_02: She's been very helpful to multiple companies that we've worked with.
• 5:03
  SPEAKER_02: And then hopefully we'll continue to be going forward.
• 5:06
  SPEAKER_02: But that's ultimately what we do.
• 5:08
  SPEAKER_02: And teams in New York City, we're just south of Grand Central.
• 5:11
  SPEAKER_02: So if you're nearby this small hamlet, please come visit us and say hello.
• 5:16
  SPEAKER_03: Well, Jake, I'm gonna address the following few questions to you.
• 5:20
  SPEAKER_03: But Jane, by all means, jump in when you need to or want to.
• 5:24
  SPEAKER_03: So, Jake, from an investor's perspective, what makes embedded finance a true growth engine rather than simply just an additional product feature?
• 5:34
  SPEAKER_02: Well, I mean, embedded finance is fairly magical.
• 5:37
  SPEAKER_02: I mean, if you think about primary software products that are being sold on a subscription basis, you're often capped by the number of seats, the number of products that you can sell.
• 5:49
  SPEAKER_02: Very mature companies will occasionally like run out of interesting ideas.
• 5:54
  SPEAKER_02: Hey, we've run out of stuff to sell to our existing customers.
• 5:57
  SPEAKER_02: The reason that embedding financial products into your software, if you can, is so interesting from a growth perspective is you oftentimes get to grow with the end customers that the software company itself is serving.
• 6:12
  SPEAKER_02: If you're embedding payments into a youth sports management software platform, as those leagues grow, as those youth sports clubs grow, you grow.
• 6:23
  SPEAKER_02: It's a beautiful thing.
• 6:24
  SPEAKER_02: The other piece of this that I think is unique to embedded finance is one product just very naturally leads to the next.
• 6:32
  SPEAKER_02: So by embedding yourself into payments or embedding in a payment product, you embed yourself into the flow of funds.
• 6:40
  SPEAKER_02: And that almost like opens the door or gives you the right to then offer additional financial products that were more natural to offer than they were before you had the payments product.
• 6:50
  SPEAKER_02: And so you can do this in a way that I think delights end customers.
• 6:55
  SPEAKER_02: And also these products, if you think about them, I mean, these are products that back to the youth sports example, the youth sports club would have, anyways, right?
• 7:04
  SPEAKER_02: And now you're just making it easier.
• 7:05
  SPEAKER_02: You're putting all of these things into one platform.
• 7:08
  SPEAKER_02: It's seamless for the youth sports club, it's seamless for a dad like me who's signing my kid up for soccer or whatever it is.
• 7:16
  SPEAKER_02: And so it sort of affords you a really interesting way to turn on the afterburners as it relates to growth.
• 7:24
  SPEAKER_00: Yeah, if I may jump in here to add something, when we talk about vertical software, quite often this software company's service pretty narrow in very specific niches, whether it's vet clinics or tattoo salons or tree care professionals.
• 7:44
  SPEAKER_00: Some people say these days that, oh, AI has enabled hyper-niche software company creation because it cut down development costs.
• 7:54
  SPEAKER_00: But I would actually argue it's embedded finance that has enabled these niche companies to become so successful and actually grow much bigger than they otherwise could have, because of this, what we like to call a layered cake of revenue streams that financial services allow companies to create.
• 8:13
  SPEAKER_00: So companies quite often start by charging subscription and then they add payments, and next thing they launched is maybe lending, maybe insurance, and they keep on adding these new revenue streams.
• 8:24
  SPEAKER_00: So suddenly the proverbial TAM, total addressable market, that looked so small, is no longer limiting factors.
• 8:32
  SPEAKER_00: So the company actually has quite a bit of runway.
• 8:34
  SPEAKER_00: And this, and I think why, and Jake, of course, you're the investor in the room, but in my opinion, that's what allowed funds like Mamba to specialize on the niche-oriented vertical software.
• 8:49
  SPEAKER_03: Jake, so what role does the end customer experience play in determining whether the embedded finance strategy can really create that lasting value?
• 9:00
  SPEAKER_02: Well, listen, I mean, every exceptional company that I've seen or been a part of, I'm sure there are some that talk this trend, but the ones that I've seen that have been truly exceptional software companies, they solve their end customer problems in the most interesting, the most efficient, and effective ways.
• 9:18
  SPEAKER_02: And that's oftentimes how they get started, right?
• 9:21
  SPEAKER_02: I mean, there's a founding team who experienced some pain and said, gosh, there's got to be a better way to do this.
• 9:28
  SPEAKER_02: They go out, build the thing, it's the best in the market, and they scale.
• 9:31
  SPEAKER_02: So when you think about embedding these financial products, I mean, Jane mentioned a handful of them.
• 9:35
  SPEAKER_02: So it goes beyond payments, insurance, all the interesting things that we like to talk about.
• 9:40
  SPEAKER_02: I think it starts with actually interviewing your customers.
• 9:45
  SPEAKER_02: If you're that tree care software company or landscape software company, interview your end customers and just like understand the biggest pain points that they have in their day.
• 9:57
  SPEAKER_02: And rather than assume it's always best to solve problems that people actually have, not the ones that you're drawing up on your own in a conference room whiteboard.
• 10:08
  SPEAKER_02: And so I think that these companies too are in an interesting position to solve everyday financial problems of most small businesses, small and medium-sized businesses.
• 10:20
  SPEAKER_02: So you think about this example sticks out in my head.
• 10:23
  SPEAKER_02: But a couple of years ago, my wife and I got a mortgage, and I was amazed.
• 10:27
  SPEAKER_02: It was actually during the transition from my prior firm to starting Mamba.
• 10:33
  SPEAKER_02: And I was amazed at just the amount of documentation that I needed to give to a lender, despite having liquidity and hopefully the strong enough financial profile to be a very attractive borrower.
• 10:47
  SPEAKER_02: But it was endless PDFs, and you guys have been through it, your W-2s for many years, tax returns for many years.
• 10:54
  SPEAKER_02: These are lenders, banks mostly, that are interested in getting a look on the inside of what it's like to live in for us, the called NASI household.
• 11:02
  SPEAKER_02: Now, imagine the same process, that lending process, but for a business.
• 11:07
  SPEAKER_02: If you are running a landscaping company, you have to go through the same process if you want to work in capital loan.
• 11:13
  SPEAKER_02: But these software vendors that have access to your payments volume literally up to the minute and understand when invoices are paid, understand the cyclicality or the seasonality of your business, they are in pole position without any of those PDFs really being passed back and forth to offer a lending product, perhaps in the moment that the loan is needed, without humans even communicating with each other.
• 11:38
  SPEAKER_02: And so I want to bring this back around to your question around end customer experience.
• 11:43
  SPEAKER_02: Compare and contrast those two end customer experiences.
• 11:46
  SPEAKER_02: Landscape owner going to the bank with loads of PDFs, trying to figure out whether he or she has everything that they need, or being prompted on a Thursday morning when they get in the office at 7:30 with like, hey, I know payroll's coming up and you're going to be a little bit short this Friday, but I see that you have receivables that are due on X date.
• 12:07
  SPEAKER_02: Click this button and you'll be good to go as it relates to making payroll and then immediately paying that loan back for a small fee.
• 12:14
  SPEAKER_02: That's pretty magical stuff.
• 12:16
  SPEAKER_02: Those are the things like with our portfolio companies, like I'll name a few.
• 12:20
  SPEAKER_02: LUTIS was our first investment.
• 12:21
  SPEAKER_02: They served performing arts institutions.
• 12:24
  SPEAKER_02: What are they doing?
• 12:25
  SPEAKER_02: They're a very smart team.
• 12:26
  SPEAKER_02: They're reaching out to their customers and really trying to understand what the day-to-day pain points of their customer base and then figuring out, hey, are we in a position to offer them a solution to this problem?
• 12:38
  SPEAKER_00: That's actually a very good point, Jake, that starting with a pain point is more important than just picking a random most popular embedded finance product.
• 12:51
  SPEAKER_00: And actually, in my experience, I worked with companies that looked at payments as an option, evaluated, and launched a totally different product.
• 13:00
  SPEAKER_00: To give you an example, a company in a home care space, they evaluated a variety of embedded finance opportunities, but their customers told them loud and clear that early wage access was the highest priority, closely followed by embedded payroll.
• 13:18
  SPEAKER_00: So it was not really payments that we started with.
• 13:21
  SPEAKER_00: So again, talk to your customers, research the market before deciding where to start and what your embedded finance roadmap should be.
• 13:30
  SPEAKER_03: Well, we talk about, but I think everyone realizes embedded finance.
• 13:34
  SPEAKER_03: I mean, it is happening in this space.
• 13:36
  SPEAKER_03: I mean, that's why we're having the event.
• 13:37
  SPEAKER_03: That's why we're having this conversation.
• 13:39
  SPEAKER_03: So then you have to kind of go to the next level.
• 13:41
  SPEAKER_03: So, Jake, what adoption trends and what performance metrics tell you as an investor that this embedded finance strategy is actually working?
• 13:51
  SPEAKER_02: Absolute highest level, we're going to look at when we get a PL, we're going to try to parse out, all right, what percentage of total revenue is payments today?
• 14:01
  SPEAKER_02: Like, is this kind of a software company that already offers payments and is successfully monetizing it or not?
• 14:06
  SPEAKER_02: And there's no right or wrong here, but just getting a flavor of whether or not this is a business that has already convinced a customer, hey, work with us on this payment screen.
• 14:16
  SPEAKER_02: And again, Greg, I know you consult and work with larger companies.
• 14:19
  SPEAKER_02: You got to think about the businesses that we're talking to.
• 14:22
  SPEAKER_02: They're growing like weeds, they're doing exceptionally well, but they're still early, you know, it's fairly nascent companies.
• 14:28
  SPEAKER_02: So that's a starting point.
• 14:30
  SPEAKER_02: I would say one of the bigger variables that if you caught Jane and I talking about a specific business or any of the folks here at Mamba is just attach rate.
• 14:39
  SPEAKER_02: Is it realistic that you can drive attach rate to a level that's interesting?
• 14:47
  SPEAKER_02: Or is the end customer in that kind of B2B to C example one that is just going to write checks, come hella high water, or maybe the transaction size is too high.
• 14:58
  SPEAKER_02: So it's always going to be like a bank transfer ACH type transaction versus someone giving you a credit card.
• 15:05
  SPEAKER_02: So just getting a flavor for what's today's attach rate from a payments perspective, but also like long term, let's just be honest with ourselves.
• 15:12
  SPEAKER_02: What's going to be the steady state attach rate, even with the best team driving adoption here?
• 15:17
  SPEAKER_02: So those two are top of mind.
• 15:19
  SPEAKER_02: I'd say the third that is most common is just net take rate.
• 15:22
  SPEAKER_02: The companies that we are typically having our initial conversations with are either doing nothing, maybe they partner with someone and have a referral model where they're getting just like very, very small margin.
• 15:34
  SPEAKER_02: Maybe they're use Stripe and have a contract that leaves a bit to be desired.
• 15:40
  SPEAKER_02: Understanding the types of transactions that are being processed, their existing agreement.
• 15:45
  SPEAKER_02: And again, like I'll just point to Jane.
• 15:47
  SPEAKER_02: Jane's been incredibly helpful for our companies to make what is we're talking about actually a fairly complicated thing to figure out, meaningfully easier to understand for the entrepreneurs so that they can make informed decisions going forward.
• 16:01
  SPEAKER_02: But really trying to figure out all right, what's the best path for this company and what's the realistic take rate that we can expect, build into our model that, in combination with that attach rate, can really create some magic for us?
• 16:16
  SPEAKER_00: And there's direct and indirect metrics.
• 16:19
  SPEAKER_00: The direct metrics are like take rates and what volume we're processing and what the actual revenue we're making from embedded finance products like payments, et cetera.
• 16:29
  SPEAKER_00: And the indirect ones are our customers using our lending product, for example, getting stickier?
• 16:37
  SPEAKER_00: Maybe they renew.
• 16:38
  SPEAKER_00: Net dollar retention tends to increase for customers with embedded finance, but you need to track that to see if that's true.
• 16:46
  SPEAKER_00: And CAC payback can go down because now you're winning against competitors that don't have that embedded capabilities.
• 16:53
  SPEAKER_00: So evaluating the impact of embedded finance holistically, that's what's important.
• 16:59
  SPEAKER_02: That actually might be the most important.
• 17:01
  SPEAKER_02: Like if you think about the most important variable that's scrutinized by certainly investors, but acquirers of our companies, there's always this conversation that starts with gross retention, then it goes to net retention.
• 17:13
  SPEAKER_02: That might be actually the most powerful externality.
• 17:17
  SPEAKER_00: And there is statistics and benchmarks that tell us that customers that are using embedded finance products tend to be stickier and stay longer.
• 17:27
  SPEAKER_00: But you need to test to see if that's true in your business.
• 17:31
  SPEAKER_03: Well, Jake, we're gonna dig deeper into this.
• 17:33
  SPEAKER_03: So the numbers that you're talking about, what are the assumptions or what are the numbers that tend to raise concerns for you?
• 17:40
  SPEAKER_02: By that do you mean if we see it, we're like, uh, we can do better here or we're not gonna invest at all?
• 17:47
  SPEAKER_02: Yeah, either one.
• 17:48
  SPEAKER_02: Let's start with like the positives.
• 17:50
  SPEAKER_02: A positive embedded finance strategy has such a positive impact on the unit economics of a software company.
• 17:58
  SPEAKER_02: Primarily, as Jane just alluded to, it touches many of the variables that serve as kind of the bedrock for a positive unit economic strategy.
• 18:07
  SPEAKER_02: So you see companies ARPU increase, you see their gross and net retention increase.
• 18:12
  SPEAKER_02: There's actually a lot of studies on that specific variable that I know Charge Forward is published, but BCG, Bain, Rainforest, others.
• 18:21
  SPEAKER_02: Because of that, you see the LTV of your customers increasing materially.
• 18:26
  SPEAKER_02: And Jane alluded to something that I think is probably not talked about enough.
• 18:31
  SPEAKER_02: But again, the beauty of the embedded finance strategy is also on the CAC side, right?
• 18:36
  SPEAKER_02: You're selling a product that the end customer needs, is probably using, anyways.
• 18:41
  SPEAKER_02: It's not like a new software feature that they don't yet have.
• 18:45
  SPEAKER_02: Like they're getting loans, they're processing payments, they do have insurance products, but you're having a conversation with them about those products that they're already familiar with, and you already have the relationship with them.
• 18:56
  SPEAKER_02: And so it's a meaningfully more seamless sales cycle and experience.
• 19:01
  SPEAKER_02: So you see CAC go down oftentimes, even as the numbers get bigger, which is somewhat rare.
• 19:07
  SPEAKER_02: Gross profit, too.
• 19:09
  SPEAKER_02: We talk about net take rate, net revenue, call it whatever you want to call it when we're looking at a company.
• 19:14
  SPEAKER_02: And so you'll see almost instantaneously that if you improve your payments contract or you add payments, I mean, you're gonna see gross profit go up.
• 19:23
  SPEAKER_02: And in many cases, gross margin will increase as well.
• 19:26
  SPEAKER_02: So when I think about like the flip side of that, the negative, like what are the things that kind of scare us off?
• 19:31
  SPEAKER_02: Well, I'd say that if gross retention or logo retention is not that great, but we still believe that a company has a right, if you will, to insert itself into the flow of funds, it's a little bit of a red flag for us, or at least a yellow flag, just because payments is inherently mission critical.
• 19:52
  SPEAKER_02: And if you don't already have a mission critical relationship, or if you're not mission critical to your end customer, the likelihood of them adopting a new mission critical solution and embedding it in their own business is probably less than if you are the provider of the ERP, let's just say, or the practice management system or the scheduling solution.
• 20:14
  SPEAKER_02: So we look closely at retention.
• 20:16
  SPEAKER_02: We want to feel like there already, there is this sticky strong customer relationship there.
• 20:20
  SPEAKER_02: If it's not there, it's like it's a little bit tougher.
• 20:23
  SPEAKER_02: I would say this on the CAC side, we have seen the most success where companies have frequent touch points with their end customers so that they can bring up this idea of embedding payments or lending or whatever the product is just naturally in the course of a business relationship versus sometimes there are some customer relationships where a little bit more set it and forget it.
• 20:49
  SPEAKER_02: You don't talk to customer support, you don't necessarily have that like one-on-one relationship with the end customer, and it makes it hard.
• 20:55
  SPEAKER_02: All of a sudden, if you want to come with an embedded lending product, it's a net new sale.
• 21:00
  SPEAKER_02: There's going to be some inertia as it relates to the adoption of the product.
• 21:03
  SPEAKER_00: Jake, I want to ask you actually, when we talk about metrics that are suboptimal, when you and I looked at a few businesses that have, let's say, pretty substantial GMV, like 200 million, but maybe their payment economics are not optimal.
• 21:23
  SPEAKER_00: I would actually argue that, and correct me if I'm wrong, quite often this is actually a great opportunity for investment because we can tangibly help the company improve the economics and increase the value of the companies.
• 21:36
  SPEAKER_00: And what matters in this case is more how alignment with the leadership, whether the CEO and the management team actually wants to undergo that optimization and transformation.
• 21:48
  SPEAKER_00: I don't know if you have any thoughts on that.
• 21:50
  SPEAKER_02: Yeah, no, I agree.
• 21:51
  SPEAKER_02: I think we can probably think of a few examples that we've worked on together where when you have smart, well intentioned, motivated people that might not know everything.
• 22:00
  SPEAKER_02: About embedded finance, it makes a world of a difference when you're embarking upon the strategy and embedding that first product.
• 22:08
  SPEAKER_02: If you don't have people that are willing to do the research, speak with all the vendors, take some risks, admit maybe, you know what, that contract that we signed up for a couple of years ago, it's not the greatest because maybe it was their purchasing decision.
• 22:22
  SPEAKER_02: But it doesn't matter that you have a billion dollars of GMV flowing through your platform because no one's gonna magically give you that margin.
• 22:30
  SPEAKER_02: You have to kind of fight for yourself.
• 22:31
  SPEAKER_02: So there's a human element here and a talent element that might be most important.
• 22:36
  SPEAKER_02: If it's not there, it's tough.
• 22:38
  SPEAKER_02: If it's there, gosh, it makes a world of a difference.
• 22:41
  SPEAKER_03: I think that's a good segue to the next question.
• 22:43
  SPEAKER_03: And Jane, I'm gonna start with you on this one.
• 22:46
  SPEAKER_03: So from an operator and an advisor perspective, what does a company need to, when I say company, a vertical SaaS company need to build operationally before it can deliver these results that Jake and you were just describing?
• 23:00
  SPEAKER_00: The first thing is what I just alluded to, right?
• 23:03
  SPEAKER_00: Is the leadership alignment.
• 23:05
  SPEAKER_00: And when I say leadership, it's the CEO, right?
• 23:08
  SPEAKER_00: CEO needs to believe in embedded finance as a growth driver, as a revenue driver, as a differentiator and competitive edge.
• 23:18
  SPEAKER_00: And next, there should be ownership, ownership of PL and ownership of the product, pricing, adoption, roadmap.
• 23:26
  SPEAKER_00: That's another thing that people don't appreciate is that embedded finance is not a feature.
• 23:31
  SPEAKER_00: Oh, hey, we added this click or this button or this check mark here, and maybe some people will use it.
• 23:37
  SPEAKER_00: Great.
• 23:38
  SPEAKER_00: Embedded finance products are products and they should be treated as such.
• 23:42
  SPEAKER_00: So ownership, and if a company is at the earlier stage, that's where I argue that fractional leadership can be quite helpful because you can leverage an expert that has seen it all across many companies.
• 23:55
  SPEAKER_00: And as you continue to grow and scale, I would argue that you should have an internal leader.
• 24:00
  SPEAKER_00: And then I would say the sales motion and adoption motion has to be quite deliberate.
• 24:06
  SPEAKER_00: As I just said, adding a button or check mark is not enough for these kind of products.
• 24:12
  SPEAKER_00: There's also questions about compliance.
• 24:15
  SPEAKER_00: So, for example, when you're marketing lending products, there's certain things you can and cannot say.
• 24:20
  SPEAKER_00: And hopefully the partner you're working with is guiding you along that journey.
• 24:24
  SPEAKER_00: But again, you need to have someone who is thinking about marketing and sales enablements, sales incentives.
• 24:32
  SPEAKER_00: And finally, I would say that you have to have the underlying piping that tracks payment volumes, lending volumes, and translates that into financial metrics so that you can actually assess.
• 24:45
  SPEAKER_00: And then CFO needs to be involved as they budget for embedded finance, both on the cost side and they put forward revenue projections and then they need to track what actually happens.
• 24:57
  SPEAKER_00: And then they also should have, and when I say they CFO primarily, but ideally CEO needs to have a way to track not just across financial metrics, but also on usage and number of customers that have adopted share of wallet.
• 25:13
  SPEAKER_00: Can we estimate what percentage of customers' revenue or customers' payments are going to our system?
• 25:19
  SPEAKER_00: Is it 10% or 90%?
• 25:21
  SPEAKER_00: And can we increase that?
• 25:23
  SPEAKER_00: The list goes on, but again, as long as you have somebody who is passionate and who owns it at the senior and I mean C level, all of this should follow.
• 25:35
  SPEAKER_00: If you have a product owner for embedded finance at the senior level, they will figure out all these pieces as they would for any new product.
• 25:43
  SPEAKER_02: It seems like interestingly enough, if you introduce an embedded finance product, whatever it is, the success of that product is driven by each functional area.
• 25:56
  SPEAKER_02: Every functional area touches within a business is going to have some sort of contribution to whether or not the rollout, the attach rate, is successful or not.
• 26:08
  SPEAKER_02: You need to build it.
• 26:09
  SPEAKER_02: If you're selling to existing customers, you need customer success to leverage their relationships to ensure that customers have an appreciation of what the product does.
• 26:19
  SPEAKER_02: You need sales and marketing to sell it to net new customers.
• 26:21
  SPEAKER_02: It needs to be part of the pitch.
• 26:23
  SPEAKER_02: So you're educating the sales folks on what the heck this does and what meaningfully improves the lives of their customers.
• 26:31
  SPEAKER_02: The CFO's always going to be involved in these types of developments.
• 26:36
  SPEAKER_02: It's very interesting.
• 26:37
  SPEAKER_02: And if you don't have a CEO that's bought in on this as a strategy and clearly communicating, hey, here's what the heck we're doing here as it relates to embedded finance, I think you're setting yourself up for failure.
• 26:48
  SPEAKER_02: Conversely, if you have someone that tells that story well and clearly and unites folks, this can be one of the biggest value drivers for a virtual software company.
• 26:59
  SPEAKER_03: Let's talk about the connection between embedded finance and enterprise value.
• 27:05
  SPEAKER_03: So, Jake, at what point does embedded finance really begin to have a meaningful impact on that enterprise value?
• 27:12
  SPEAKER_02: Honestly, I'd say that it's the second they start talking about it.
• 27:18
  SPEAKER_02: And hear me out.
• 27:19
  SPEAKER_02: But when you're talking to a company that's raising its first institutional route of capital, and they identify in their pitch, we offer a system of record solution to this end customer base.
• 27:34
  SPEAKER_02: And we believe that there is X number of dollars flowing through our customers.
• 27:40
  SPEAKER_02: And we also believe that we have the right and the opportunity to insert ourselves in that conversation and seamlessly, without any friction, process those payments on behalf of our customers.
• 27:54
  SPEAKER_02: Even just saying that, Greg, changes how investors, some investors that have this as that's core of their strategy, view the company, view the valuation of the business.
• 28:05
  SPEAKER_02: There have been countless companies that I've seen that are software companies that everything on their PL, or at least their revenue is driven by the sale of subscriptions exclusively.
• 28:18
  SPEAKER_02: They have literally billions of dollars in some cases of unmonetized payments, traffic that flows through their system but is ultimately monetized by a third party.
• 28:29
  SPEAKER_02: And the multiples that get paid in these situations can seem totally irrational.
• 28:36
  SPEAKER_02: But smart investment firms understand what is possible.
• 28:41
  SPEAKER_02: And if you have a team that Jane described that is eager to address this opportunity, understands the products that it could sell, you can oftentimes double, triple the size of the business, which is fairly magical.
• 28:54
  SPEAKER_00: When you say double-triple, that means revenue, but also multiples.
• 29:00
  SPEAKER_00: And we've seen this in public markets loud and clear.
• 29:04
  SPEAKER_00: There's been a number of research papers that came out that have tangibly proven that companies, software SaaS companies, AI companies that have added embedded finance revenue streams tend to have their revenue valued at higher multiples.
• 29:24
  SPEAKER_00: And I think the stats were something like 23% for single product, up to 50% higher for multi-product companies.
• 29:33
  SPEAKER_00: That should be attractive for any founder of building a vertical software.
• 29:37
  SPEAKER_03: Yeah, I think we could talk for hours about this.
• 29:39
  SPEAKER_03: There's so many more topics we could dive into, but we're going to have to wrap up this show.
• 29:44
  SPEAKER_03: So what I'd want to do to wrap up, and Jake, I'll start with you.
• 29:48
  SPEAKER_03: What is one or a few of the key takeaways that you want the vertical SaaS operators that might be listening to the show to leave with about building an investable embedded finance strategy?
• 29:59
  SPEAKER_02: I'd suggest that people that are interested in this for their business should just start.
• 30:05
  SPEAKER_02: Should start.
• 30:06
  SPEAKER_02: They should believe in themselves.
• 30:07
  SPEAKER_02: They should be comfortable with the fact that they are not experts in any of the products that they're thinking about embedding, but they should feel good that there are people out there with experience, like a Jane, that can help out and make sense of what is otherwise a very complex situation.
• 30:26
  SPEAKER_02: It's like doing anything that's hard in life.
• 30:29
  SPEAKER_02: You just have to start.
• 30:30
  SPEAKER_02: Like there's a first day for everything.
• 30:32
  SPEAKER_02: Doesn't mean hire your embedded finance leader on day one, but it does mean scheduling the first call, you know, with someone who knows more than you and kicking off your journey.
• 30:42
  SPEAKER_02: Jane, same question, thoughts?
• 30:45
  SPEAKER_00: I would say the reason I chose embedded finance as my core focus is because I frankly believe that it's kind of magical.
• 30:54
  SPEAKER_00: Why do I say that?
• 30:56
  SPEAKER_00: Because it benefits so many constituencies all at once.
• 31:00
  SPEAKER_00: So everybody in the embedded finance value chain benefits.
• 31:05
  SPEAKER_00: So financial institutions, they find a new distribution channel through software companies.
• 31:12
  SPEAKER_00: Small businesses that use software with embedded finance capabilities benefit from convenience, benefit from ease of use.
• 31:21
  SPEAKER_00: Jake just gave you this example of applying for a loan, which is so much simpler when you do it through your software as opposed to directly with a bank, no offense to banks.
• 31:32
  SPEAKER_00: It's a difference in data, not so much in lack of trying, right?
• 31:36
  SPEAKER_00: Software companies have data.
• 31:38
  SPEAKER_00: The customers of the businesses that use embedded finance benefit as well because they get this fully integrated one-stop shop for all their needs.
• 31:50
  SPEAKER_00: So if a parent, we were just talking about the beginning of the school year.
• 31:54
  SPEAKER_00: So if a parent is paying tuition for school, and right at the checkout, they find tuition cancellation, tuition protection insurance, and it's really easy to buy, it gives you peace of mind, you just opt in for it.
• 32:07
  SPEAKER_00: It becomes so convenient, again, for the parent and for the school that gets higher acceptance rates into their school.
• 32:16
  SPEAKER_00: And then for software companies, it's all the things that we've just talked about: new revenue streams, it's better stickiness, competitive differentiation, higher valuation multiples.
• 32:27
  SPEAKER_00: It's like, what else do you need?
• 32:29
  SPEAKER_00: I would just say this to the founders and builders of vertical software companies.
• 32:35
  SPEAKER_00: In this value chain that I just described, you actually possess and you own something truly valuable that everybody else wants.
• 32:45
  SPEAKER_00: You own customer relationships, you own the workflow and you own the data.
• 32:51
  SPEAKER_00: Take advantage of it and make everybody around you, from financial institutions to your customers and their customers, happy and make money while doing that.
• 33:01
  SPEAKER_00: It seems like a no-brainer to me.
• 33:03
  SPEAKER_03: It is.
• 33:04
  SPEAKER_03: It is, it is, without a doubt.
• 33:06
  SPEAKER_03: Well, I think that's a great way to wrap up the show.
• 33:08
  SPEAKER_03: So thank you both so much, Jane, Jake, for being on the show today.
• 33:12
  SPEAKER_03: I know your time is very valuable.
• 33:13
  SPEAKER_03: So thank you for being here and sharing all your insights and knowledge with the audience.
• 33:17
  SPEAKER_00: Greg, Jake, it's been so fun.
• 33:19
  SPEAKER_00: Thank you so much for having me.
• 33:21
  SPEAKER_02: Thank you, Greg, and look forward to seeing you both in Lehigh in about a month.
• 33:26
  SPEAKER_03: Yeah, I look forward to it as well.
• 33:27
  SPEAKER_03: So to everyone out there that's listening, if you want to learn more about the show, go to Embedify2026.com.
• 33:34
  SPEAKER_03: You can register and learn more there.
• 33:35
  SPEAKER_03: And again, thank you both for being here and until the next episode.
• 33:39
  SPEAKER_01: Thank you for joining us this week on the Leaders in Payments Podcast.
• 33:43
  SPEAKER_01: Make sure you visit our website at leaders in payments.com where you can subscribe to the show and where you'll find our show notes.
• 33:50
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