Automate or Be Left Behind: Inside the Fintech Revolution Transforming Traditional Private Credit

In the ever-evolving world of finance, few industries remain as traditional as private credit. Yet, one executive is looking to change that by applying innovative technology to streamline processes that have long been manual and inefficient. Nelson Chu is the Founder and CEO of Percent, a private credit marketplace that is transforming how investments are sourced, structured, and managed.

Percent was founded to address significant inefficiencies in the private credit market. According to Chu, the private credit sector has traditionally been dominated by large players like Apollo, Blackstone, and KKR, which mainly focus on the upper middle market. "We are focused on a different segment of the market that we think has a lot of potential, which is the lower middle market space," Chu explained. This space, often underserved by traditional banks and financial institutions, is ripe for disruption, and Percent aims to provide the tools to streamline the process for both borrowers and investors.

"We have software for borrowers who need money, for investors who want to invest and get a return, and for the professionals who do the work," Chu said. Through its technology, Percent enables investors to participate in private credit transactions from start to finish, automating much of the process that has traditionally been done through manual work and spreadsheets. The results have been impressive: Percent's gross margins have skyrocketed from 16% to 84% as automation has taken hold, showing that the company is well on its way to scaling its operations.

One of the primary challenges Chu faced when founding Percent was the lack of automation in the private credit space. "When we first got started, we thought, how hard could this be? It's just like investment banking," he recalled. However, he soon discovered that the process was far more complex than anticipated, involving client sourcing, investment structuring, syndication to investors, and extensive post-close monitoring.

"There's so much that goes into the process. There's a lot of Excel, phone calls, and emails," Chu explained. His goal was to bring technology to every step of the process, from initial sourcing to asset surveillance, and he has done just that. Percent now employs an order book management system, a compliance attestation system, and an asset surveillance system — all designed to improve efficiency and reduce the need for manual intervention.

Chu's path to founding Percent was anything but conventional. With previous roles at Bank of America, BlackRock, and as a consultant to several fintech startups, Chu had a wealth of experience in financial services. However, the world of private credit was new to him. "This is not my asset class. This is not my most interesting segment of the markets or sector," he admitted.

What prepared him, however, was his time in traditional finance, where he learned how to manage people, think strategically, and navigate complex financial environments. "You learn what you like about a manager, what you don't like, and how you can adopt that for yourself when you become a manager," Chu said. These leadership lessons, along with his consulting experience, gave him the tools to launch Percent, even if the specifics of the industry were uncharted territory.

For Chu, the startup journey was also about embracing uncertainty and learning through doing. "I went into this thinking that I knew what I was doing, but the reality is, you're never really prepared," he said, reflecting on the challenges of founding a company in an unfamiliar sector.

Running a company comes with its fair share of stress, and Chu is no stranger to tough times. He recalled a period when his bank account held just $50, forcing him to get creative and think on his feet to survive. "When you have $50 in your bank account, trust me, it's not that bad," he said, emphasizing that constraints often lead to greater creativity and smarter decision-making. This mentality helped Chu navigate even the toughest moments of entrepreneurship, including crises like the invasion of Ukraine, which affected the broader financial landscape.

His advice for dealing with these challenges is simple: "Stay level." Chu believes that keeping emotions in check during times of crisis is essential for making the best decisions. "Be objective about it. Do not let emotions run into it. It's easy to get emotional in this process, and that will lead to the poorest decisions."

While Chu is deeply committed to the growth of Percent, he also values giving back and nurturing his personal passions. His interest in art and philanthropy reflects a desire to make a positive impact beyond the world of finance. In his spare time, Chu has become an avid supporter of Asian American artists and has invested in their work, seeing art as a way to connect with deeper stories and cultural narratives.

On the philanthropic side, Chu has been involved with several nonprofits focused on underprivileged children, particularly in developing countries. He views giving back as a moral obligation: “If you are in a position of privilege, you should try to make the world better than when you came into it."

Looking to the future, Chu is eager to see Percent continue to scale, with the hope of securing larger transactions and expanding its reach. But his personal goals also involve growing as a leader. "There are things you do at a five-person company that you have to evolve and adapt to for a 50-person company," he said. "I’m much better now than I was when we had 15 people, but to get to 100 people, that's a whole different ball game."