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Friday, Jun 9, 2023

Tim Nguyen: From Refugee to Fintech Star

When Tim Nguyen in the late 1990s wanted a symbol of American success—his first car—he became frustrated with the arcane method of getting a loan.

“I found the process painful and time consuming,” Nguyen told the Business Journal. “I knew there had to be a better way.”

That better way culminated in the Vietnamese refugee becoming an American success story, by starting MeridianLink Inc., which has grown to a company with a $2 billion market cap (NYSE: MLNK).

Nguyen on Sept. 9 was honored with a Business Journal Innovator of the Year Award during an event at the Irvine Marriott.

“I am deeply honored and humbled to receive this award,” he told the audience of 250.

“If you have ever applied for a loan in the past 20 years, chances are you have crossed paths with us digitally as we have touched millions of consumers.

“We’re like the Intel Inside chip of financial institutions.”

A Boat Person

Nguyen’s journey to America began in the early 1980s when his family fled Vietnam and he lived in a refugee camp for about six years.

“I was considered a boat person,” he recalled.

At the age of 10, he made it to Huntington Beach where his great aunt was a sponsor for his family.

He eventually graduated with a bachelor’s degree in information and computer science from the University of California, Irvine. While studying there, he met Binh Dang. The pair first started the company as a consultancy before growing into a software developer. Dang is no longer with the company.

After talking to a lot of financial entities, Nguyen knew the lending process could become digitalized long before the industry understood the potential.

“Like many entrepreneurs, I started the software company to solve a problem out of frustration,” he recalled. “My goal was simple: to empower small and medium size institutions.”

He said the name MeridianLink is in homage to the North pole and the North star as well as the popular nickname for connecting to the internet in the late 1990s.

Bravo Buy

The company has had 20 years of uninterrupted growth and profitability, including during the 2008 Great Recession and last year’s pandemic.

San Francisco-based private equity firm Thoma Bravo in 2018 purchased MeridianLink, paying $228 million in a pair of transactions, regulatory filings indicate.

At that time, some employees were able to exchange their holdings for stock then worth $105 million, according to the registration statement.

Nguyen turned over the CEO role at the company in 2019 to Nicolaas Vlok, a native of South Africa who has been an operating partner with Thoma Bravo since June 2018, and counts ties to other area tech companies. Nguyen now counts the chief strategy officer title at the company.

MeridianLink went public in July, raising $241.5 million.

Momentum Continues

In its first report to Wall Street on Sept. 8, MeridianLink said second-quarter sales climbed 38% to $68.5 million. Its adjusted EBITDA was $33.4 million, or 49% of revenue.

“We have great momentum,” Vlok said in a statement. “Given our leadership position in the market, our operational execution and the positive market dynamics, we are confident in our growth trajectory.”

It’s projecting 2021 sales in the range of $256.7 million to $257.9 million, implying a 27% growth rate.

One reason that it can be so precise in its forecast is that its recurring revenue stream model often results in customers signing three-year contracts.

The company’s services are used by smaller banks and credit unions to set up digital lending and deposit accounts, among other services; it says it serves 63 of the top 100 credit unions in the country.

“The financial services sector is in the midst of a transition from offering primarily in-branch services to providing hybrid in-person and digital services,” the company’s registration statement said.

“Our core customers tend to lack the resources required to match the modernization and technology investment efforts of larger industry players.”

Among MeridianLink’s 1,900 customers are the Los Angeles Federal Credit Union, First Bank of Ohio and the USF Federal Credit Union in Florida.

It estimates a total addressable market of $10 billion, including $5.8 billion in loan originations. It predicts annual spending on software as a service (SaaS) in the U.S. will about double to $19 billion in 2024.

Blessed Dream

MeridianLink’s employee count has jumped from 472 on Dec. 31 to 582 earlier this month. Nguyen said the company will be continuing to hire.

Notably, Nguyen set up an independent entity to buy the building leased by MeridianLink for a large part of its Costa Mesa operations. Nguyen said that was out of necessity because his data center needs to operate every day of the year without any down time.

“We gotta own the place,” he said. “If we lease our building, we couldn’t guarantee we would continue operations there. Since Day 1, we haven’t had any global outages.”

After going public, Nguyen became the company’s largest individual shareholder, owning 14.4 million shares, or 18%, worth an estimated $360 million.

Nguyen knows he’s been living the American dream.

“I’m very blessed and fortunate to have met a lot of good people that have helped me along the way.” 

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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