Revolutionizing Finance for Emerging Brands: An Interview with William Hayden of Bags

We recently sat down with William Hayden, co-founder of Bags, a financial management platform for small business owners. Bags has become a key player in the financial ecosystem supporting emerging brands, and is a close partner of Lunr Capital. William shared his journey, the vision behind Bags, and how they're changing the game for entrepreneurs, especially those traditionally underserved by financial institutions. Here's what we learned:

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Can you tell us about your background and what led you to create Bags?

My journey to Bags was unconventional. After working in crisis management, I transitioned to the media industry, where I helped build an independent film studio within IPG, a Fortune 500 media company. We focused on brand storytelling in entertainment, including a documentary about the nurses who built the first AIDS ward at San Francisco General Hospital. Due to the success of that film and others like it, I worked to develop data-driven marketplace technology to connect brands with directors for creative collaborations.

These experiences in storytelling, community impact, and data-driven matchmaking shaped the initial vision for Bags. However, the real turning point came during the pandemic, following the murder of George Floyd. My high school best friend, Daniel Taylor, reached out with a desire to build something with a tangible impact. We both come from entrepreneurial families, and we saw a path to address systemic inequalities by improving access to capital for underserved founders.

I believe entrepreneurship is the most viable path to economic equity. Small businesses contribute more to community-related causes, provide better jobs at a local economic level, and produce the capacity of an economy to sustain itself at that local level.

How would you describe Bags to someone unfamiliar with your platform?

Bags is a financial management platform for small business owners. We help business owners improve their financial hygiene, implement financial efficiencies, and then unlock financial growth through access to capital. Our focus is on supporting women and minority-owned businesses, LGBTQ+ owned businesses, veterans, disabled entrepreneurs, and other underserved groups – categories that have historically been marginalized and lack access to financial data and resources.

What sets Bags apart from other loan marketplaces?

We are the first and only accounting firm that actually tries to help businesses unlock money and grow their business. Most accounting firms simply generate books, often sacrificing monthly accuracy for annual tax purposes. We ensure monthly financials are accurate and paint a clear picture of the business, and then use that to unlock access to capital. 

What are some key strategies that set Bags apart?

One of our key strategies is ensuring that our commitment to financial hygiene for our clients. We know that 60-80% of lender underwriting time is spent reformatting accounting data. If your books aren't in good order, that's a really easy way to get declined for a loan, not get the amount you want, or delay the process. We’ve also built financial efficiency tools that help entrepreneurs make strategic decisions that improve their financial position and unlock more and more cash.

We also don't think about lending as a one-off thing. We consider it a long-term strategy. We help businesses understand and articulate their financial story when it's time to meet potential funders. We've developed the most sophisticated lender-matching software in the world, which allows us to digest lender criteria and match them to business metrics accurately.

Aa part of our long-term thesis, we also love to build debt stacks – working with multiple lenders to handle various parts of a specialized process. These strategies have even impressed equity investors, opening up even more opportunities for our clients.

How does your business model set you apart in the financial services industry?

Our subscription-based model is a key differentiator. Unlike traditional lending marketplaces that get paid by lenders and therefore might prioritize lender interests, we work for our clients and are fully aligned with their best interests. We tier our pricing based on revenue, making our services accessible to businesses at various stages of growth. 

With Bags, you're hiring a partner, and it's a service that's going to make sure that you're not just getting your P&L, balance sheet, and cash flow statement, but you also understand those documents, the metrics you can distill from them, and what action steps you should take moving forward. 

This approach allows us to focus entirely on what's best for the business owner. We're invested in our clients' long-term growth, confident that as they succeed, we succeed too. This model has allowed us to build deeper, more meaningful relationships with our clients.

What are the primary ways that clients find Bags?

Historically, referrals have been our strongest channel. A business that works with Bags tends to turn into three new potential customers because they're passing the good word along. We also work with many community groups and other entrepreneurial service providers who refer people our way when they need financial management.

Interestingly, a lot of lenders send businesses to us when they encounter clients whose books aren't in order or who aren’t quite at the right stage to work with them. They know we can help get these businesses ready for financing.

Your marketing approach seems unique in the financial services space. How does this tie into your company culture?

Our guiding principles are culture, community, and cash. None is more important than the others. We're working with businesses and business owners who have often been disenfranchised and felt alone. Traditional institutions aren't really trying to talk to them. We want to shake that up. We want it to feel like a partnership. We want to feel like a part of our client's team. Being tied into community, being tied into culture, being really up on the importance of cash is the way that we do that.

Can you share a success story that highlights the impact of Bags?

We recently had a great experience with a business in the snack space. This client was bringing on a big national retail partner, but they were worried about their cash flow capacity. We built one of our classic debt stacks, with Lunr as an integral part, which allowed the brand to scale up a multi-million dollar channel almost overnight, without reducing their cash on hand at all. This is akin to a miracle in CPG, where more businesses fail due to a lack of supply, not demand. The fact that this business was able to build that channel without spending $1 out of their own bank account changed the game for them.

Can you tell us more about your relationship with Lunr Capital?

Lunr Capital has been one of our favorite partners to work with. I first learned about them through a press release about their initial fund, and I was immediately impressed. Their loan product seemed perfectly designed to address the needs we were seeing in the market. It's rare that you have challenger institutions that are willing to do something different. But there's such an acute need for what Lunr does that it's a no-brainer for us and for a ton of our clients.

In what situations do you typically recommend Lunr Capital to your clients?

Lunr becomes a great option when a business is in need of an inventory financing partner. We've built our funding plans to be use-case tied and long-term. Even if a business isn't quite ready for Lunr, we often put them on the roadmap as a guiding light. We present certain metric targets to our clients and say, "When you hit this, we're going to call Lunr, and it's going to change your business.”

Lunr has been a crucial partner in some of our most successful debt stacks. For example, in the snack business case I mentioned earlier, Lunr was a tentpole piece of the debt stack that allowed the company to scale up rapidly without depleting their cash reserves.

Any advice for emerging brands?

The only metric that matters is profitability. If you are not profitable, you are just slowly or quickly going bankrupt. Getting profitable is the key, and effective cash flow management is the way that you can achieve that. This is where partners like Bags and Lunr Capital can make a real difference, providing the financial tools and capital needed to achieve sustainable growth.

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William Hayden and the team at Bags are revolutionizing how small businesses approach financial management and access to capital. Their innovative platform is helping entrepreneurs to overcome traditional barriers and to achieve sustainable growth.

Unlock your business's full potential with Bags' innovative financial management solutions at securebags.com. And if you're an emerging brand ready to scale your retail presence, don't let inventory constraints hold you back – explore Lunr Capital's tailored financing options at lunrcapital.com.

Together, Bags and Lunr Capital are powering the next generation of retail success stories. Is yours next?