[Top Finance & SaaS Series] Future of Securities-Backed Borrowing With Joseph Wang

Joseph Wang is the Co-founder and CRO of SyntheticFi, a fintech company that provides affordable, securities-backed financing solutions for financial advisors and their clients. He leads revenue growth, strategic partnerships, and business development. Previously, Joseph worked at D. E. Shaw Group and gained experience in institutional finance and startups. He earned his undergraduate degree from The Wharton School at the University of Pennsylvania and later left his graduate studies at Harvard University to co-found SyntheticFi.

Here’s a glimpse of what you’ll learn: 

• [3:49] Joseph Wang discusses SyntheticFi’s approach to accessing cash without selling investments 
• [8:27] How investors can access liquidity without selling stocks or realizing capital gains
• [11:11] Joseph talks about managing risks associated with securities-backed loans and market volatility
• [15:45] Choosing between fixed-rate loans and floating-rate lines of credit
• [19:28] Joseph’s entrepreneurial journey from hedge funds to co-founding SyntheticFi
• [25:38] How SyntheticFi secured its first customers and improved its lending platform
• [31:06] Developing innovative financing products for concentrated stock portfolios and hybrid mortgages
• [37:31] Building strategic partnerships and long-term relationships with financial advisory firms

In this episode…

Accessing affordable financing can be challenging for investors and financial advisors seeking liquidity without selling valuable assets. Traditional lending options often come with high interest rates, restrictive repayment terms, and potential tax consequences. How can investors unlock portfolio value while minimizing borrowing costs and managing financial risk?

Joseph Wang, a fintech entrepreneur and securities-backed financing expert, explains how investors can use stocks, ETFs, and other liquid investments to access lower-cost financing through box spreads. He discusses strategies for financing real estate purchases, business acquisitions, and other major expenses without liquidating investment portfolios. Joseph also highlights the importance of managing collateral risk, choosing the right loan structures, and working with financial advisors to make informed borrowing decisions.

In this episode of the Inspired Insider Podcast, Dr. Jeremy Weisz interviews Joseph Wang, Co-founder and CRO of SyntheticFi, about making securities-backed borrowing more affordable and accessible. Joseph discusses his entrepreneurial journey through Y Combinator, innovative financing solutions for investors, and building strategic partnerships with financial advisory firms.

Resources mentioned in this episode:

• Joseph Wang on LinkedIn
• SyntheticFi  

Special mention(s): 

• Dan Sullivan on LinkedIn 
• The D. E. Shaw Group 
• Able Wealth Management
• Revolve Wealth Partners
• Michael Batnick on LinkedIn

Related episodes:

• “Automation Solutions with Wade Foster Founder of Zapier” on the Inspired Insider Podcast 
• “Pipedrive: Brain Surgery, Married, & Moved Company from Estonia to U.S. All at Once – with Urmas Purde [Inspiration]” on the Inspired Insider Podcast
• “[SaaS Series] Revolutionizing Online Forms and Productivity With Aytekin Tank of Jotform” on the Inspired Insider Podcast
• “[Top Finance Leader & Author Series] 100X Growth Without 100X the Work With John Bowen” on the Inspired Insider Podcast 

Quotable moments:

• “You can build all the things that interest you as a hobby, but if you want to build a successful business and grow, you need to build something that has demand.”
• “That’s when we’re like, okay, you can’t really get a more obvious demand pull than that.”
• “The best way to protect against it is to not overborrow.”
• “You just have to build your reputation. You have to earn the trust.”
• “I think this type of community is super important, especially for entrepreneurs at early stage when it is very, very tough.”

Action steps:

1. Leverage your investment portfolio for affordable financing: Explore securities-backed lending to access liquidity without selling investments while considering potential tax implications and collateral risks.
2. Evaluate borrowing risks before making financial decisions: Work with financial advisors to assess market volatility and determine appropriate borrowing limits to protect your investments.
3. Build products that solve real customer problems: Engage potential customers early to identify their needs and validate market demand before investing heavily in product development.
4. Develop strategic partnerships to drive business growth: Establish strong relationships with financial advisors, custodians, and industry professionals to build trust and create long-term opportunities.
5. Prioritize customer education and transparent communication: Use webinars, podcasts, and personalized discussions to explain complex financial products and help clients make informed decisions.

Episode Transcript:

Intro: 00:00 

You are listening to Inspired Insider with your host, Dr Jeremy Weisz.

Dr. Jeremy Weisz: 00:22 

Dr Jeremy Weisz here, Founder of InspiredInsider.com, where I talk with inspirational entrepreneurs and leaders today is no different. I’ve. Joseph Wang. You can check him out at Syntheticfi.com. And Joseph, before I formally introduce you, I always like to point out other episodes of the podcast people should check out. 

This is part of my Top Finance Leader series and software series. So some of the top you know, episodes to check out. I had one of the co-founders of Zapier on who was also a fellow Y Combinator grad like Joseph. That was an interesting one. The Pipedrive, one of the co-founders of Pipedrive. 

 That was a good one. Jotform was a good one. That was he was interesting. He was talking about the freemium model, Joseph, and how they, you know, scale to tens of millions of users and why freemium and how get those freemium people to not freemium. I guess you could say.

And then on the the finance series, I’ve had a number of people recently, a John Bowen, he had a book come out with. You know, actually about 100 times growth with Dan Sullivan. And that was a really interesting one, talked about 100 times growth without 100 times the work that many more and inspiredinsider.com. Before we get into the episode, a quick word about what we do. The number one thing you know in my life is, and business has always been relationships.

And so over the past 30 years, I’ve been obsessed with finding better ways to build relationships and give value. you know, first through Rise25 and The Podcast Consultant, we help businesses launch and run podcasts for ROI. Second, through Inspired Insider, I help companies systematically get in front and stay in touch with their most valuable relationships. So they gave me a list of 50 to 100 of their best prospects, clients, and partners. And, you know, we nurture those people through packages.

I, you know, basically, what do you say? Ethically bribe Joseph with cookies and brownies with content, with valuable content. Right? In this digital world, I always find these thoughtful, physical touch points are, are key. So I found no better way to build relationships than featuring the great people and companies through my podcast and sending sweet treats in the mail. So if you have questions, [email protected] to learn more and email us. 

But I am excited to introduce Joseph Wang. And as I was saying, Co-founder and CEO of SyntheticFi, which is a fintech company, making borrowing better, also more affordable and more accessible for financial advisors and their clients. SyntheticFi has grown to more than 2 billion in regulatory AUM and serves over 3000 advisors across 300 plus firms. And Joseph leads revenue partnerships, growth at the company. 

And as the company expands access to smarter liquidity and financing solutions, and he’ll go into what SyntheticFi does and how it works. But Joseph, thanks for joining me.

Joseph Wang: 03:33 

Thank you. Jeremy. Wow. That was one take. That was amazing. Oh.

Dr. Jeremy Weisz: 03:37 

Listen, even if I messed it up, it’s always it’s always one take. But start off and talk about SyntheticFi and what you do. I’m going to pull up the site so you know, we can check it out.

Joseph Wang: 03:49 

Yeah of course. So as SyntheticFi like one sentence introduction is we just make borrowing cheaper and easier. We specialize in. We specialize in security backed borrowing, meaning that you borrow, you have liquid investment, and you borrow against it. So let’s say you are an entrepreneur or like you’re a Google engineer that has $1 million Google stock.

Want to buy a house? You instead of selling the securities because you believe in the company, and also because you don’t want to pay capital gains tax, you’re able to borrow against it at very low interest rates around, I would say, 5%, 5.5 right now for five year fixed, and to use it to buy a house or to pay a down payment compared to using like 6 or 7% mortgages. So that’s really a lot of the use case we see today. And we’re super excited to bring this out to market.

Dr. Jeremy Weisz: 04:39 

What are some of the other things people use as collateral to get it? You mentioned stock, right? If someone has stock in a company, what else do people use? So they can borrow and use SyntheticFi.

Joseph Wang: 04:51 

So for us we are a liquid investment focus. So like stocks, ETFs, mutual funds, munis, treasuries, anything you can sell on the open market, you can use.

Dr. Jeremy Weisz: 05:01 

So Tom, let’s walk through a use case. I’m thinking so like let’s say someone has like a Fidelity account and they have you can link that up to SyntheticFi. So like, okay, you’re proven to have this amount of stock or whatever it is and they can borrow against that.

Joseph Wang: 05:18 

Absolutely. So we work in SMA models. So for those who doesn’t know, that means like advisory model. Essentially what we do is we will work together with the custodian, Fidelity, Schwab, whoever it is, we help you use something called a box spread to borrow directly from the options market, right? So this is something that’s only available for sophisticated traders and also especially family offices, those institutional guys for decades, I want to say, and what we have done is to make it accessible for everyday investors or anyone that has a brokerage account to access this institutional market and get rates much, much cheaper. 

As you can probably see on our website, it’s advertising 4.2% for like a floating rate loan that is so far, plus around 30-40 Bips. And what you see on Fidelity or Schwab is silver plus like 5%, right? Like for retail especially. So you’re saving like five, 4 or 5 percentages by using a service like us.

Dr. Jeremy Weisz: 06:17 

I mean, if you look at loans out there, they’re way higher than that. Typically though, even.

Joseph Wang: 06:22 

They’re even higher ones than that. Yeah. Like margin loans, margin loans has already been the one of the cheaper financing mechanisms and is still quite expensive. And what we do is to use this more institutional tool to make it more available and make it more accessible.

Dr. Jeremy Weisz: 06:38 

We’ll get into just like how you came up with this idea and, and how this came about. But I do want to dig into this a little bit more so individuals can use this also. And then financial advisors can use this for their clients. Like if they’re like, okay, we know we have this investment platform, we don’t have this sophisticated way of loaning you, you know, getting money so they can use your, your service to do that against with their clients. So to give them options, because I’m sure clients are buying businesses, maybe they want to buy whatever a house or other items. 

And so that, but individuals can also go to this and hook up there if they have like an online, I guess, investment portfolio.

[Continue to Page 2]