Archive for 2021
More than eight months after deBanked announced that FTC Commissioner Rohit Chopra would be the next head of the Consumer Financial Protection Bureau, his appointment has finally been confirmed by the Senate.
The confirmation of Chopra is notable given the agency’s objectives to collect data from small business finance companies and the fact that Chopra himself has been very vocal about merchant cash advances in particular.
One year ago, in his capacity as an FTC commissioner, he referred to the industry as “opaque” with “pay-day style” products whose structure “may be a sham.”
In an interview with NBC around the same time, he used stronger language, saying that he was “looking for a systemic solution that makes sure they can all be wiped out before they do more damage.”
Chopra knows his way around the CFPB. He worked for the agency when it first started in 2010 and was there for five years as the Assistant Director & Student Loan Ombudsman. He later moved to the FTC as a commissioner and now returns back at the CFPB in the director’s seat.
XRP, the digital assets tied to Ripple, surged this morning from a price of $0.95 to $1.04 on the supposed announcement that the SEC had dropped its lawsuit against Ripple.
The news came via press release service Accesswire in the headline “SEC vs Ripple Legal Fight is Over.” Other news outlets immediately picked it up, including Yahoo, and it made its way to the top of Google’s search results.
The problem is that the entire press release was fake.
“Ripple, the leading provider of enterprise blockchain and cryptocurrency solutions for global payments, is pleased to announce that the SEC vs RIPPLE legal battle is finally over,” it began. “The lawsuit that lasted over ten months has finally been settled between the Securities and Exchange Commission (SEC) and the cryptocurrency company Ripple. The SEC has announced it would drop its charges.”
Accesswire deleted it as did Yahoo. deBanked obtained it via archive.org. Merely googling: ripple sec, however still shows the fake headline as the top result.
The public may not be fully aware that the news is false yet, if the price is any indication. It’s still trading at $1.04 as of the time this story is being written.
Two weeks ago, GlobeNewsWire fell victim to a similar scheme, when it distributed a fake announcement that Walmart would begin accepting Litecoin.
Fundomate Announces $50 Million Line of Credit to Bring Embedded Automated Funding and Real-Time Banking to Payments and SMB MarketplacesSeptember 30, 2021
Los Angeles, September 30, 2021 — Fundomate, a leading embedded finance provider of automated business funding solutions and real-time banking tools for merchant-facing platforms, announced the closing of a $50 million line of credit with Revere Capital today. The new line of credit is Fundomate’s largest to date.
Fundomate will leverage the credit facility to scale up its partnerships with merchant-facing businesses and grow the company’s new white-label banking platform. The platform enables merchant-facing platforms and marketplaces to rapidly expand their product suite and enhance engagement by offering automated financing and embedded banking tools under their own brand.
“With the closing of the $50 million credit line, Fundomate can scale its proven automated funding platform via its one-touch funding tool already embedded within 100+ payment processing partners and marketplaces”, says Sam Schapiro, CEO and Founder of Fundomate. “We’re excited to also focus on our new embedded real-time banking platform, which uses AI and advanced forecasting to provide our partners the ability to offer their customers free short-term working capital that’s available for immediate use.”
Revere Capital Managing Director Christopher Gilker said, “We’re incredibly excited to grow with Fundomate. As I tell all my colleagues, Fundomate is a company at the right place at the right time. The team is ambitious, and I have no doubt the company will disrupt the fintech, payments, and banking space in a big way.”
Revere Capital Managing Director Suman Mallick commented further, saying, “I’m very excited about Fundomate’s potential to change how businesses manage their banking and credit needs. I believe the company will benefit from strong secular tailwinds and has vast opportunities for growth with merchant-facing businesses throughout the US.”
Waterford Capital structured and arranged the line of credit on behalf of Fundomate. Dave Piotrowski, Managing Director at Waterford Capital, said, “Fundomate has an advantage over others in the merchant finance space through the products offered through their payment processor partners. This financing relationship with Revere Capital will help take the company to the next level and further broaden their competitive advantage.”
Fundomate is an innovative fintech company that operates in the alternative lending space and provides both direct-to-business and white-labeled turnkey solutions, enabling merchant-facing platforms to offer alternative funding products to their customers as a value-added proposition.
The company has deployed over $100M to more than 2000 merchants across various industries in
the United States.
About Revere Capital
Revere Capital is a private credit manager with expertise in lower middle-market real estate bridge lending & specialty finance. The firm’s disciplined underwriting utilizes fundamental real estate analysis and research, emphasizing intrinsic value to create a diversified portfolio for investors. Revere also specializes in financing other commercial interests, consumer interests and insurance-backed interests. With a national footprint, Revere Capital offers speed, certainty of execution, and creativity to structure loans to fit borrowers’ needs and provide contractual income for investors.
About Waterford Capital
Waterford Capital is a leading arranger of structured finance and asset securitization transactions. The firm advises specialty finance companies and asset managers in connection with warehouse credit facilities, private placements of asset-backed securities, whole loan sale programs, and mezzanine and equity capital raises.
New Jersey’s recent announcement of tax breaks to the fintech company Fiserv in exchange for the company’s commitment to a major hub in the state showcases one of the top private corporate tax breaks in Governor Phil Murphy’s tenure. The move is one of many by the state in recent years as they continue their push to establish a permanent home for fintech.
Fiserv is seeking the benefits of the state’s Emerge program, an economic development plan that provides businesses with tax incentives based on the number of jobs created. Fiserv’s relocation to a brand-new 428,000 square foot campus in Berkeley Heights will probably come alongside approximately 2,000 new hires, according to the company.
“This announcement from Fiserv is exactly what we envisioned when we created the Emerge program – an innovative company that provides high-paying jobs choosing to expand in New Jersey,” said Murphy. “We’re excited that Fiserv sees what we see in New Jersey, and we look forward to the company’s continued success.”
Fiserv’s brass noted that the move to the new offices is a great opportunity to expand their presence while providing opportunities in an area where current employees and customers are familiar with.
“[This company] has been in New Jersey for decades” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “Our new location in Berkeley Heights will be a dynamic hub of collaboration and innovation, bringing our people together in an inspiring workplace environment to create opportunity for unmatched energy and career growth experiences as we move payments and financial services forward on behalf of our clients.”
The neighborhood is also embracing the company’s big arrival, as the move drew support from local politicians. Mayor of Berkeley Heights Angie Devanney praised the move, referring to Fiserv as a “great partner” of the city.
“The company’s technology focus and commitment to diversity are an ideal complement to our community, and we look forward to a long-term partnership that will continue to grow,” said Devanney.
According to Fiserv, they have intentions to partner with universities in the area to create programs for students and graduates. Programs with universities would allow Fiserv to have a direct pipeline from top colleges in New Jersey to their employment applicant pools. Rutgers University was the only school mentioned by name in the company’s press release.
Already employing over a thousand New Jersey residents, the move will have more of an impact on how the company is perceived in the area. Their new offices will have a “Leadership in Energy” and “Environmental Design” (LEED) certificate, alongside a pledge to provide $50 million to help minority-owned small businesses return to pre-pandemic normalcy.
Fiserv’s top executive expressed the company’s desire to have a positive impact on its new community as its tax-motivated investment comes to fruition. “As part of our investment in this new Fiserv location, we look forward to being a force for good by engaging in and creating positive and meaningful impact in the Berkeley Heights community,” Bisignano said.
The fintech company Enzo is set to launch a money managing app within the end of the year and is handing out tremendous incentives to draw customers. The company is offering 10% cash back on Uber rides, 5% cashback on Doordash, 1.5% cashback on rent payments, and 1.25% cashback on everything else. Checking accounts offered by Enzo will also get a 0.50% interest rate.
Enzo’s cashback program has its limits. Annual cashback bonuses are capped at $500, and monthly cashback bonuses are capped at $65. According to their site, if a user spends $2,000 on rent, $150 on Uber, and $400 on DoorDash in one month, they would be credited $65 at the end of the month into their Enzo checking account. Once the monthly and/or annual cap has been triggered, an account will continue to earn 1.25% cashback on all other purchases.
“We started Enzo because we kept seeing our friends make the same money mistakes over and over,” said Jeremy Shoykhet, CEO of Enzo. “We saw people who excelled at every aspect of their lives struggling to get their finances in order [and] we felt there had to be a better way.”
Enzo will also be offering their first batch of account holders equity in the company.
“We feel very strongly about helping our members build and steward wealth,” said Shoykhet when asked about the company’s equity offer. “In connection with that mission, we are launching a first of its kind equity program where we will be giving equity to early evangelists of the Enzo brand, more information about the specific mechanics of the program will be available toward year-end,” he said. “The program does not require opening an Enzo account and is subject to terms and conditions.”
The company also has a stock trading interface within its mobile app, so customers can manage liquid cash and investments in the same place. According to Enzo’s website, customers can automatically track gains, dollar cost average over time, customize portfolios, and manage checking accounts all in the Enzo app.
“At our core, we want to help the millennial generation build the financial foundations that help them live the lives they desire,” Shoykhet said.
The company’s banking services will be FDIC insured through Blue Ridge Bank, who will hold all the money and process the transactions. They are also partnered with Unit for the backend technology in the software. Customers will have access to funds in their checking accounts with an Enzo debit card, which will be uniquely designed by artists for the first ten thousand account holders.
Enzo’s webpage claims that their inaugural staff is a “diverse team of veteran Wall Street investors, engineers, operations, and product folks.” They claim to have gathered top level employees from some of the top financial institutions around the globe.
Enzo’s accessibility and seemingly user-friendly software combined with their incentives for account holders portrays a very interesting notion in non-bank finance. Customers are looking for an easy to use, easy to understand, and easy to access multi-platform money management system with perks and incentives.
Enzo has a waiting list approaching 14,000 potential account holders as of Wednesday. As of now, according to Shoykhet, the program will launch as invite-only. They will add new customers into the program on a rolling basis.
This may not be the end of new financial services for Enzo, according to Shoykhet. He hinted to the company’s future plans in his explanation of the product. “We are also planning to launch innovative financial planning features through a mix of human advice [and] technology-powered advice.”
As the small business finance market gets back to normalcy, the industry’s latest challenge is filling all of the open positions. Jobs that would once attract hundreds of resumés are now ending up with very few, if any at all.
Even after pursuing LinkedIn, the applicant pool just looks light.
In our research, deBanked found five fintech companies on LinkedIn that have ads that are at-least a week old with three or less applicants.
One company based on Long Island, promoted a $5,000 signing bonus for an underwriting position and only had five applicants. Meanwhile, a self-acclaimed “prestigious” Manhattan lender even has a month-old ad posted that offers a $10,000 per month salary. That job has one active applicant, according to LinkedIn.
Chad Carter, Director of Franchise Success at Lendio, says the hiring process has been difficult, but isn’t impossible to navigate. “Being based in Utah has been somewhat challenging as unemployment is extremely low and the Silicon Slopes area has a lot of tech headhunting,” said Carter. “We’ve hired and are hiring hundreds more people this year so we feel it too. Luckily we have extremely good reviews on Glassdoor, which helps keep applications coming and our culture keeps them here.”
Some companies have gotten creative when it comes to building their staff to counter the lack of applicants in the workforce. “We have seen some open roles have more interest than others,” said James Webster, CEO of ROK Financial. He says his company has been able to expand hiring by offering remote sales positions that opens the applicant pool nationwide.
“We have been hiring and building an outside sales division known internally as the Remote Sales Division,” Webster said.
He claims the number of applicants for remote sales positions have been high, but that doesn’t mean his company is hiring a ton of staff to add to the program. “We are still extremely selective on who we allow onto the platform as they represent ROK in the market,” said Webster.
“All in all, recruiting is harder now than it has been in previous years,” Webster said. “Especially when the culture in the office is such a priority to maintain.” He noted that the roles that are currently difficult to fill are mostly administrative positions, not sales.
A recruiter for a large finance-centric company that wishes to stay anonymous told deBanked that the finance industry in general is having hiring troubles, not just fintech. “There’s tons of turnover all around,” said the recruiter, who claims that they themselves are actively being poached by other companies due to the lack of people wanting to work.
“I can only assume that fintech is just as crazy,” the recruiter said.
MJ Capital Funding investors holding out hope that a return to business as usual could be in the cards for the company accused of being a ponzi scheme, might find that outcome a little less likely.
The Receiver has agreed to auction off all of the assets at the company’s Pompano Beach offices on September 28, and everything must go, from the 60″ TV to the garbage cans to the houseplant.
Such powers afforded to the Receiver, a law firm partner named Corali Lopez-Castro, also gives her the ability to enter into binding legal agreements on behalf of the company, the latest ones being Consent Agreements with the SEC. In doing this, the two MJ companies (MJ Capital Funding, LLC and MJ Taxes and More Inc.), have agreed to disgorge of “ill-gotten gains,” accept a civil penalty, and be permanently restrained from continuing its former business. Such an arrangement is standard fare when companies are thrust into forced Receiverships like this one. The Receiver’s job will be to collect as much money as possible so that it can be distributed to afflicted investors.
The MJ Capital Funding Website has also been shut down. It now forwards to law firm Kozyak, Tropin, Throckmorton. Regular updates on the case are available for free at: https://kttlaw.com/mjcapital/.
The consent orders do not apply to former CEO Johanna M. Garcia individually, who lost control of the company and ability to act on the company’s behalf when it was placed into Receivership.
An astounding 3,160 people have signaled their support for Garcia in this case. That’s the number of signatures on the online petition for her located on change.org.
“Our goal with this petition is to get those funds unfrozen as soon as possible,” it says. “This is Johanna’s desire as well proving once again Johanna’s unwavering support for us and in building a strong team and community. Johanna has helped countless amounts of people and charities with the work she does local and worldwide.”
Marcus by Goldman Sachs, the prestigious investment firm’s attempt at being a conventional bank, announced that they have over $100 billion in deposits after just five years in operation. The online platform that began as an invite-only savings platform has transformed into a full-blown consumer bank, operating on the futuristic model of operating savings and CD accounts digitally.
“If you told me we would accomplish so much in just five years from launch, I would have said you were crazy,” wrote Harit Talwar in a LinkedIn post on Thursday that announced his retirement from Marcus. “It shows that nothing is impossible when you have the best people.”
In his post, Talwar praised Marcus’ desire to take risks, acting as a separate entity while having to operate within the confines and upkeep of the Goldman Sachs reputation.
“We had the audacity to think big, and it’s safe to say we proved the skeptics wrong – eight million customers, $100 billion in deposits, nearly $10 billion in card and loan balances, $1.5 billion in run rate revenue, two J.D. Power wins and partnerships with the top brands in the world including Apple, Amazon, Walmart, JetBlue, AARP, General Motors and more,” Talwar wrote.
Marcus launched in 2016 with some of the best interest rates in the banking industry. It introduced the Goldman Sachs brand to an entire new group of customers by offering up high interest rates on accounts with no fees, which was nearly unheard of at the time. Two years after launch, Marcus had over $35 billion in deposits.
Marcus’ path was almost completely different prior to its launch. The original idea prior to Marcus was a platform called Mosaic, a banking concept meant for borrowers with good credit that were looking to refinance other debt.
In his retirement post, Talwar credited the camaraderie that developed between employees as a major factor resulting in the success of Marcus. “The team has given more than perhaps in prior jobs, but maybe that is the price of building something this extraordinary at an unprecedented pace,” Talwar wrote. “Yet by sharing those experiences in the trenches, we’ve made lasting friendships and redefined what a consumer business looks like.”
The outlook for Marcus is seemingly endless. Online banking is trendier than ever, and the outlook for banking is losing the brick-and-mortar mentality.
Experts also believe that Marcus has helped Goldman Sachs’ progress into new markets. “Marcus has taken advantage of a core strategic advantage—[Goldman Sachs’] lack of a preexisting deposit customer base— to prove that digital deposit gathering at scale is possible for a large institution,” Todd Baker, Managing Principal of Broodmoar Consulting and Senior Fellow at Columbia University told deBanked.
When the company first came about, deBanked reported that Marcus may be poaching customers from a peer-to-peer lender named LendingClub. The two companies are now more alike than ever given that LendingClub is also now a bank. LendingClub, still new to the banking scene however, had only amassed $2.5B in deposits as of June 30, 2021.
It seems that Marcus may have been ahead of the curve when it comes to fintech’s place in traditional banking, racking up staggering figures across the board and showing young upstart competitors just how strong it is.