Live Oak Bank’s latest spinoff emerged last month with the announcement of its $4.8 million seed round.

Synply, a loan syndication platform, is the most recent company incubated inside the Wilmington-headquartered Live Oak Bank and spun off. Company officials credit an atmosphere of innovation and entrepreneurship as a key driver of the bank’s successful spinoffs.

Chip Mahan, Live Oak Bank’s chairman and CEO, traces the company’s spinoff success to Live Oak’s early years. After founding the company in 2008, its leaders began to look for solutions to one of the bank’s most difficult tasks then and now – closing on loans.

After trying unsuccessfully to find a developer who could streamline the process, Mahan said, the company began working on its own solution.

“We began writing code to make sure that we could perfect the handoff between the lender, the underwriter, the closer and the servicer in 2008, 2009, and that company was nCino,” he said. “Everything took off from there.”

nCino became Live Oak’s first incubated company, according to Stephanie Mann, Live Oak Bank’s chief strategy officer. Today, nCino has more than 1,650 employees, a net worth of nearly $5 billion and a growth plan. The firm recently announced its plans to acquire FullCircl, a London-based business-to-business, software as a service (SaaS) platform, for $135 million. Earlier this year, nCino acquired DocFox, a South Africa-based onboarding service provider, for $75 million.

In the years that followed nCino, Live Oak Bank incubated, spun off or invested in a range of fintech companies, including Apiture, Vantaca, DefenseStorm and Lumos, among others. It also sold off companies Finxact and Payrailz in 2022.

Live Oak Bank and fintech companies with ties to Live Oak have contributed to a growing technology sector in Wilmington. A state of the industry report released earlier this year by the North Carolina Tech Association shows just over 11,000 direct tech industry jobs were created in the Wilmington MSA in the past five years, a growth rate of 12%.

The development of both nCino, the first incubated company, and Synply, just the latest, stemmed from a “pain point” within the banking industry that wasn’t being addressed by existing products on the market, officials said.

“In the culture and the spirit of Live Oak, when we see problems that we can solve to make the bank better and the industry better, we take a hard look at them,” Mann said.

In Synply’s case, its founders identified a market gap in the loan syndication process for small- to mid-sized banks, according to Synply CEO Corbin Penland. Until Aug. 1, Penland headed up the loan syndication team at Live Oak and co-founded Synply with Radek Filarski, who now serves as the company’s chief technology officer.

“Over time, we really started to realize that there was just kind of a gap in the market with what was available to community banks and commercial smaller regional banks as it related to syndicated lending,” Penland said, “and so in 2019 we put together the first white paper outlining what a product could look like.”

In its most basic form, a syndicated loan is a loan to a single borrower funded by multiple banks, Penland said. One bank is typically assigned by the borrower as the lead arranger, which means that bank is responsible for interacting with the borrower and finding other banks to participate in the loan. The resulting process is “very limited to manual movement of files and data points,” Penland said. The goal was to create a tool that would allow all lenders involved to see the same information simultaneously.

“This technology helps to facilitate that entire process, from the origination, initial structuring, finding the other banks that would be interested, negotiating legal documents and then helping to service that loan, and the relationship between the borrower and multiple lenders to the life of the loan,” Penland added.

The idea had the initial support of Live Oak leaders, but the onset of the COVID-19 pandemic slowed momentum, delaying work on Synply for about two years. In late 2021, Penland and Filarski built out the first iteration of Synply’s proof of concept and spent time talking with banking leaders about the product and how it could better address pain points in the loan syndication process.

The company launched the platform and a beta version at Live Oak in May 2023, and by the end of the year, it was the only platform the team was using, Penland said. Testing the platform inside Live Oak before moving to commercialization allowed company officials to work out some of its early bugs, Penland said.

In April of this year, Synply launched a $5 million fundraising effort. Its $4.8 million seed round, which was co-led by Live Oak Ventures, the investment arm of Live Oak Bancshares and Canapi Ventures, closed on Oct. 21. Capital commitments also came from Woodforest Financial Group, OFG Bancorp and TReK Capital Partners, along with other industry veterans who backed the platform as individual investors. Penland called the seed round a “major milestone” for the company.

“We’re really just excited about the group that all got together to support this from a financial perspective,” he said, “but also just collaboration and idea-sharing and helping sculpt the future of the product.”

According to Mann, Live Oak Ventures led Synply’s funding round because the platform was built by people already in the loan syndication field and they saw its industry potential.

“It’s a very relationship-driven business,” Mann said about loan syndications, “and so having tools that allow real-time communication, real-time sharing of deal information and ongoing updates around both deal and loan performance have historically all been very manual processes for a loan syndications team.”

The round gives Synply about three years of runway under the company’s current budget, said Nick Strakhov, Synply’s business operations manager. The recent round will be used to hire new developers to build out the company’s products and tools. Over the next year, Synply plans to add three to four new full-time U.S. employees and about 10 offshore software developers, Strakhov said. The firm’s offices are located in Building 4 on the Live Oak Bank campus.

“We love being part of the Live Oak campus,” Penland said, “but I think there’s value in us being able to create our own culture and our own team, and really having not a wall, but a dotted line between us and the bank.”

When Mahan considers fintech investments, he looks for company leaders who have experience in their field and who have a personal stake in their company’s success.

“When Live Oak invests money, we want some experience,” Mahan said. “People that have done something in the space before.”
While most banks don’t have the budget to invest in new banking solutions and technology, Live Oak Bank is different, according to Mahan.

“We take more chances than most banks take and are a little bit more fleet of foot,” he said, “so if we see an opportunity to use some really new software that can propel us down the road to the moat that surrounds this bank … we’re probably going to do it.”

Canapi, a fintech-focused venture capital fund with a presence on Live Oak Bank’s Wilmington campus, is on the frontlines of evaluating potential investments, Mahan said. When Live Oak does decide to incubate a company, officials have to decide if the business is viable and worth commercializing, Mann said.

“To be really effective in incubation, you need to fail fast, so if it’s not a good idea, and if for a multitude of reasons, it’s not working, you need to have the discipline to move on to the next idea,” she said. “And so in the incubation phase, we like to provide ourselves a lot of flexibility to dream big and try new things, but not be married to the results.”

As Synply moves out of its incubation phase and into commercialization, Penland said the company will lean on the experience of its investors as they work to shape the future of their platform. His near-term focus is building relationships with the platform’s customers and understanding the unique needs of each bank.

“We’re just excited to be another spinout in the story of Live Oak,” Penland said. “Hopefully the next successful one. There’s a pretty high bar before us.”