David Zalik managed to avoid outside investors for his company’s first eight years. The CEO and founder of GreenSky Credit took on a staggering $10 million in debt. He simply wagered his Atlanta-based real estate on his financial tech startup company.
In 2014, GreenSky Credit opened up for investors. Companies like QED, PIMCO, TPG and Wellington Management all ponied up more than $500 million. This has enlarged the company’s valuation to $4.5 billion. GreenSky Credit has quietly become one of the most powerful financial tech startups in the country.
Zalik has done all of this rather quietly. The reclusive founder eschews attention. He avoids the media like the plague and you won’t find him talking at a convention anytime soon. Zalik is rather content to sit on his fortune of $2.5 billion while staying under the radar in his home city of Atlanta, Georgia.
GreenSky Credit’s slow growth was actually fairly attractive to investors. Many tech startups receive tens of millions of dollars right at the outset which inflates the valuation of the company. Zalik forced himself to be responsible by taking out $10 million in debt using his own property as collateral. He wasn’t buying any ping-pong tables for the office.
He has also flown in the face of conventional Silicon Valley wisdom. Zalik has embraced the traditional brick-and-mortar bank that other tech startups tend to avoid. But it’s a rather brilliant move. GreenSky Credit allows the bank to assume all the risk of default while still receiving 1% of the balance sheet at the end of the year.
GreenSky Credit also makes money on the other side of the equation. Working with over 17,000 renovators, the company simply connects the contractors to the banks. The contractors give the financial tech services company 6% of the loan amount in return.
Everything works smoothly through a smartphone app. Homeowners log into the app, check out the financial products and approval happens lightning fast. Renovators are then eager to show up to begin work. It’s no wonder that Zalik, who didn’t even graduate from high school, has amassed such a fortune.