Yellowstone Capital and Green Capital Join Family of Companies Under New Brand, FundryOctober 1, 2015 | By: Sean Murray
With Yellow and Green together, the business financing industry just got a little bit more colorful.
Yellowstone’s CEO Isaac Stern and President Jeff Reece have become Fundry’s CEO and President respectively.
“We have a solid foundation and a very successful business model,” Stern said. “But to maintain a position of leadership in this industry, we need to grow and we are evolving.”
Yellowstone Capital has been the subject of several news stories lately, most recently by being approved for up to $3.3 million in tax credits to move their business from New York to New Jersey.
In April, it was revealed that Stern had led a management buyout backed by a private family office that made Stern the only remaining co-founder to retain an equity stake. And in June, the industry learned that the company had originated more than $1.1 billion in deal flow since inception, ranking them high above many of their more well-known peers.
The funding leaderboard which debuted in deBanked’s May/June magazine issue and was broadcast to attendees at the 2nd Annual AltLend conference in New York City, was in many ways a turning point for the industry.
“I would think there are many more branded funders that would have made the list but didn’t,” said Arty Bujan, Managing Member of Cardinal Equity. “Most shocking is Paypal’s $500 million.”
Richard Battista, Vice president of Business Development at theLendster commented on the eye-opening figures of the industry’s largest players in general. “This is reflection of the explosive growth that the industry is experiencing at the present time,” Battista said. There is a huge demand for funding from small businesses, who have consistently expressed interest in trying out new funding options.”
Perhaps the story of Yellowstone Capital’s rise can best be explained by Grant McCracken’s Five Stages of Disruption Denial. McCracken, who is a Canadian anthropologist and author, known for his books about culture and commerce, explained the theory behind these five stages in the Harvard Business Review in April, 2013. They are Confusion, Repudiation, Shaming, Acceptance, and Forgetting.
Yellowstone Capital confused their competitors when they were first founded in 2009 by substituting split-processing payments for ACH to high-risk merchants. Very few people within the industry understood why they were using the ACH network over relationships with credit card processors that everyone else relied on.
That of course led to the repudiation stage where people thought they were crazy and that their model wouldn’t work and segued into shaming where the concept of providing working capital to high-risk businesses was perceived to be something that no one should do.
Through it all, Stern and his team believed many of America’s small businesses were still being overlooked and underserved despite non-bank financing and online lending growing by leaps and bounds.
“At what point do we stop helping small business?” Stern said to deBanked in response to an inquiry about whether or not some businesses are simply unfundable.
Today, we are in between the Acceptance and Forgetting stages. The ACH debit methodology has almost entirely replaced split-processing and dozens of funding providers claim to specialize in high-risk deals, the very same kind that the industry years ago didn’t understand and resisted.
Yellowstone Capital will serve as Fundry’s ISO relationship arm while Green Capital will serve merchants directly.
“2015 is our biggest year yet, but we really see it as a year of block and tackle work to set up for what needs to be done in 2016 and beyond,” said company president Jeff Reece.
“Yellowstone’s success will simply become the baseline for what Fundry is about to do.”Last modified: October 1, 2015
Sean Murray is the founder of deBanked, a 10-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.