Oarex Leverages YBI Network to Secure $50M Credit Line
YOUNGSTOWN, Ohio — A $50 million line of credit recently secured by Oarex Capital Markets Inc. will help the Cleveland-based firm expand its customer base. But founder and CEO Hanna Kassis says it’s his connection to Youngstown and the Youngstown Business Incubator that got him to this point.
Oarex is a digital revenue exchange for online businesses, according to its website. Its capital-as-a-service platform gives clients immediate access to capital based on projected revenue payouts and sales.
“Online businesses like media companies and e-commerce or apps, they all have daily sales,” Kassis says. “But the problem is, they have to wait 60 to 90 days to get paid for those sales.”
Oarex uses its capital borrowed from institutional lenders to buy the future digital payout from those companies, charging clients a monthly percentage, typically about 1% to 3% depending on how long the payout is outstanding, he says. Oarex serves companies in industries such as digital media, marketing, mobile apps, streaming, e-commerce, software, IT and the cloud that earn digital revenue on a number of platforms, including Amazon, Shopify, Walmart Marketplace, Google Play and the App Store.
Since 2017, it’s processed more than $400 million in future digital payouts, Kassis says. In 2020, business slowed as companies benefited from loans from the Small Business Administration. “But we still saw 30% revenue growth in 2020, even with COVID,” he says.
In December, the company closed on a $50 million line of credit with East West Bank, bringing its total line of credit to $100 million with another $50 million it secured from Arena Investors, New York, in July 2019. This will enable Oarex to offer its capital at lower fees, helping it to serve a wider range of customers, he says.
“We want to cross $1 billion in total payouts in the next year and a half,” Kassis says. “The bank line allows us to do it a lot faster.”
The credit line will give Oarex the opportunity to have more serious conversations with bigger companies, he says. Oarex doesn’t charge an interest rate for its services, rather a flat rate fee anywhere from 12% to 24% annually, which is “much cheaper than equity, but bigger companies would come to us and say you’re too expensive,” he says.
Before the credit line with the bank, Oarex had been borrowing from a hedge fund, which had higher interest rates, he says. The bank’s rate is “well below what we were paying the hedge fund,” he says. “Basically, less than half of what we were paying before.
“We have to respond to the marketplace,” he continues. “If the world falls apart and the banks offer 0% interest, you have to respond. By raising this money, it came in just the nick of time.”
The company has grown substantially since 2013, when Kassis cashed in his 401k to launch the company while he was attending law school. Before that, Kassis, a Girard native, attended YSU, where he earned a B.S. in accounting and master’s in economics.
From 2008 to 2011, he worked as a campaign manager for U.S. Rep. Tim Ryan, D-13 Ohio. In that time, he connected with the YBI and Jim Cossler, its former CEO.
Cossler was always poking holes in the Oarex business plan and offering advice to Kassis while he attended law school, he says. Cossler also introduced Kassis to a group in Cleveland that helped him raise $25,000 for his company, bringing Oarex to the next level. That helped Oarex go after the hedge fund financing, which in turn helped the company secure the bank financing, he says.
“One of the things that we did very early on for Hanna was to give him a lot of faith in his idea,” Cossler says. “He had taken the idea around to a number of people who just didn’t get what he was doing.”
By promoting the company and the idea through social media channels, Cossler and the YBI increased exposure for the company and the concept, he says. The exposure drew the attention of the media, as well as customers and potential investors, he says.
A recent LinkedIn post generated nearly 10,000 organic engagements in two days, he says. “We have some really powerful connections on LinkedIn,” Cossler says.
Kassis credits Cossler and the YBI network for assisting in the growth of Oarex, which is still one of the incubator’s portfolio companies.
“Whenever we think the YBI can help, we reach out to them,” Kassis says. “We’re the epitome of the power of the YBI network.”
The YBI works across the 21 counties in northeastern Ohio, which includes the Cleveland area, says Barb Ewing, YBI CEO. As an organization, having these types of wins among its portfolio companies benefits the YBI “because your reputation is only as good as your last win,” she says. These messages attract businesses to the incubator while raising interest among potential investors for the next big idea.
“It just underscores a point that Jim [Cossler] continues to make. There are really great people here, there are really great ideas here, and everybody needs to be looking at their own industry and business model to see how things can be turned on their heads to generate new lines of revenue,” Ewing says. “That’s true innovation. And it doesn’t just happen on the coast. It happens in the Midwest and we need more of it.”
As for the future of Oarex, Kassis sees opportunity in the digital economy with streaming TV and new forms of social media, he says, as well as the massive growth in e-commerce.
“We’ve never seen anything like this in the economy. Anything and everyone is going digital,” he says.
There are no plans to relocate or establish a satellite office in Youngstown, he says. “But we do hope to actively recruit from Youngstown.” The company employs six and looks to hire at least two over the next six months.
“We’re making an active effort to recruit out of YSU,” Kassis says. “We’re talking to a handful of Youngstown students and plan to hire in the spring.”
Ideal candidates will pair operations experience with a finance and marketing background, he says.
Pictured: Hanna Kassis is the CEO and founder of Oarex Capital Markets Inc. (Image: Oarex)
Copyright 2021 The Business Journal, Youngstown, Ohio.