Paul Hakim’s characterization of himself as “a recovering banker” is a good start toward self-description. His direct banking experience consisted for the most part of seven years and four months between 2004 and 2011 as a regional vice-president working in the Kingston office on the eastern end of the territory of Wilber National Bank, bought in 2011 by the Community Bank System.
In a LinkedIn recommendation in 2010, Wilber Bank then-CEO Douglas Gulotty described Hakim’s broad experience as a commercial real-estate developer, marketing manager and financial advocate. “Unlike most bankers,” wrote Gulotty, “he lives the life of an entrepreneur. No one could be better suited as a business partner.”
With his two brothers, Paul Hakim is owner of the Twin Lakes Lodge, a long-established family resort on the Rosendale edge of Hurley. In 1988 he became a real-estate broker and started Pioneer Realty Advisors, billed as “market experts equipped with full spectrum knowledge to help you sell, acquire or lease property.” That business still actively provides debt and equity consulting services to investors and developers nationally.
Hakim is widely respected in his specialized community. “I cannot say enough just how knowledgeable Paul is with regard to all the many facets of commercial real estate,” Kingston expert Joe Deegan wrote on LinkedIn in 2009. “He is simply excellent.”
In 1996 Hakim founded OWNX, which started a mutual fund with State Street Corporation that wrapped a frequent-flyer-type program around it. Corporations could offer consumers equity in exchange for purchases and loyalty. As a founder he raised multiple rounds of private placements and venture capital. The company and its IP are now owned and operated by Upromise, which offers a points-based program for college savings through a tax-advantaged plan called a 529.
During and after his banking stint, Hakim became involved locally with the Ulster County Development Corporation, heading its committee on balanced growth in 2008. He was active as a founding member and acting CFO of The Solar Energy Consortium.
In October 2012 he and others started the Pioneer Capital Group, a direct lender to small and mid-size businesses which has facilitated hundreds of deals and funded close to $40 million in loans over the past few years. Hakim estimated last week that Pioneer Capital receives 120 to 150 applications in an average month, of which about 30 to 50 get funded directly by Hakim and his investors. The remainder are put out on the secondary market.
Pioneer Capital is a national business. Hudson Valley businesses comprise only about three percent of the customer base, Hakim said. “We are a source of capital for businesses that can’t qualify for, don’t have the proper collateral, or cannot wait for conventional lenders to provide all of the capital they need,” he explained. “We match borrowers with the right financing at the right time.”
Hakim pops up in unpredictable places in Ulster County. Two years ago, he bid $660,000 for the Kingston school district’s Cioni administrative building. He also worked on the finance team for the unsuccessful bidders for a state casino license for the Nevele Hotel in Wawarsing.
Finally, Hakim, Johnny LeHane of Rhinebeck, Chad Gomes of Esopus, Noa Simons of New Paltz and Tony DeMarco of Kingston are the five managing directors of the Hudson Valley Startup Fund, a year-old member-managed seed-capital angel fund “comprised of successful business and community leaders who invest time and resources to support the region’s entrepreneurial ecosystem.” Its website describes the HVSF as strengthening the path for entrepreneurs by providing seed funding, mentorship, and connections for local entrepreneurs, while delivering investment returns to its members. “We are a catalyst to strengthen the path for entrepreneurs in the region, and support a vibrant, thriving local economy.” The managers meet Friday mornings at Hakim’s office in Kingston and the almost 50 investor members meet monthly.
When we want to find out exactly what a word means these days, we Google it. I Googled “fintech.” The Investopedia definition described it as a portmanteau word connecting financial technology to an emerging financial-services sector. The term has expanded, Investopedia explained, “to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment, and even cryptocurrencies like Bitcoin.”
Though the banks are still the indispensable cornerstone of the capital market, they’re not the same players they used to be. Their wings have been clipped in all advanced economies. Even if they hadn’t been, however, they were not and are not built to meet everyone’s financial needs. Peer-to-peer banking, in which financial transactions take place without intermediaries, is growing rapidly. The trend is in its early stages. Pioneer Capital aggregates individual investors as participants in the deals they fund.
Don’t worry for the increasingly more concentrated banking industry, however. Even as banks complain about overregulation — and the Trump administration loosens the rules — the largest ones find new loopholes that enable them better to compete. “The fact that so many firms have repeatedly chosen to expand their range of financial activities [beyond]‘boring’ deposit-taking and loan-making,” wrote New York Federal Reserve economist Nicola Cetorelli in a blogpost last week, “seems to suggest the existence of economic forces pushing toward broader firm boundaries.”
Financial technology has grown exponentially since the Internet revolution. Increased information, more accurate analytics and decentralized access are creating unprecedented entrepreneurial opportunities for fintech innovation.
Fintech is becoming more widely distributed geographically. Though most fintech startups are on the West Coast, the strength of its financial industry is keeping New York City in the game. “New York has come up pretty quickly as Number Two” in fintech venture investments, New York Times reporter Randall Smith last Sunday quoted Boston fintech executive Jean Donnelly as saying.
Johnny LeHane expects the next year to be a good one for seed capital in the Hudson Valley. When it closed its initial investment round last year, the HVSF had accumulated a fund of $1.15 million for investment.
In its first year, the HVSF has closed three deals: $150,000 with Eco-Shrimp Garden in Newburgh, $100,000 with Kingston-based State Book International, and most recently $50,000 with White Plains sports-app innovator U-Stadium.
LeHane says two other very good prospects for investment are in the pipeline. He anticipates three to five new deals within the next year, after which plans for a second round of Hudson Valley venture-capital fundraising might be appropriate.
The HVSF investor-members listen to two pitches a month from applicants. Prior to the HVSF managers’ meeting last Friday, Hakim and Noa Simons attested to the quality of the prospects. There’s a viable supply of capital-seeking entrepreneurs with ideas for businesses out there in the Hudson Valley, it seems.
Both Pioneer Capital and HVSF are complementary peer-to-peer lending platforms that allow people to borrow and lend money without the necessary participation of a financial institution. At this time, they provide a rewarding combination of activities for a recovering banker with an entrepreneurial mindset.
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