|07/28/2020||Interview with Chad Otar, Lending Valley|
|09/06/2019||Lending Valley does 100+ deals in debut|
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|11/11/2020||Interested in opportunities? Welcome to Lending Valley, Inc|
Interview With Chad Otar at Lending Valley
I recently spoke with Lending Valley CEO Chad Otar, who told us that not only is his funding company still working remotely, but that he’ll probably never return to an office ever again. Watch below:
Brooklyn, NY – Lending Valley has originated 100 fundings to small businesses since the company’s debut in early June. The company was founded by small business finance veteran Chad Otar, the former CEO and co-founder of Excel Capital Management. Lending Valley focuses on micro funding deals of $1,500 to $10,000 with a variety of available payment structures. Otar is a Forbes Finance Council Member.
“We saw that the micro advances market needed another player and our goal is to help merchants’ businesses, not hurt them, and make it as easy as possible for them to obtain the capital and to be able to get them to the next step in their business venture,” Otar said. “Lending Valley is backed by years of industry knowledge and a diverse team that can provide the best support possible.”
About Lending Valley
Lending Valley was founded in New York City by Chad Otar. Otar is a member of the Forbes Finance Council. To learn more about Lending Valley, visit https://www.lendingvalley.com or call 866-888-3051.
Tel Aviv-based Lending Express announced its entrance into the U.S. market yesterday. It opened an office in San Matteo, CA and has officially appointed Moshe Kazimirsky as VP of Strategic Partnerships and Business Development to support the new West Coast office.
“After the immense success we’ve had in the Australian market, we knew that our platform was ready to take on the U.S.,” said Lending Express CEO Eden Amirav.
Lending Express initially launched its business in Australia in October 2016. The company provides an online marketplace that connects merchants to alternative funders. After only a year and a half, Amirav told deBanked that Lending Express is now the largest business of its kind in Australia – even though they only set foot on the continent a month ago.
Meanwhile, Lending Express has also been operating in the U.S. for months and has already partnered with leading online lenders like OnDeck, Kabbage and Fundbox, according to Amirav. Given the company’s experience in both the Australian and American markets, deBanked asked Amirav what he thought the differences were.
“In general, they are much more similar than people think,” Amirav said. “But in the U.S., people like to look around more.”
Generally, if an Australian merchant is approved, they will move forward with the deal right away, Amirav said. Lending Express offers a myriad of products on its platform, including equipment financing, invoice funding, business line of credit and merchant cash advance.
So far, Kazimirsky, who has worked in business development for other Silicon Valley technology companies, will be the only one in the new California office. But Amirav anticipates that the office with grow. The Lending Express office in Tel Aviv has 25 employees, many of whom – namely the account managers – start their day at 3 a.m. in order to speak to their Australian and American customers in different time zones.
Lending Express uses an algorithmic system called MatchScore to pair borrowers with lenders.
Don’t lose all hope on marketplace lending yet. Silicon Valley just made a big bet on one startup.
Silicon Valley’s leading venture capital firm Andreessen Horowitz invested $15 million in PeerStreet, a marketplace for secured real estate loans. PeerStreet was founded in 2013, by former Google employee Brett Crosby and former real estate attorney Brew Johnson, who oversaw the sale of travel website VirtualTourist to Expedia/TripAdvisor for $85 million. The Manhattan Beach, CA-based company’s crowdfunding platform offers investors secured real estate loans that it sources from local real estate lenders across the country.
“This round of funding will help us further execute on our goal of building a world class investment platform for real estate debt,” said co-founder and CEO Brew Johnson.
To date, it has funded over $165 million in loan investments with $50 million in returns to investors and has 50 lenders on the platform. The company has secured funding from marquee Silicon Valley investors including Michael Burry of The Big Short fame who predicted the 2008 subprime crisis and Adam Nash, former CEO of Wealthfront. Alex Rampell, general partner at Andreessen Horowitz and co-founder of consumer lending Affirm Inc led the investment and will take a seat on PeerStreet’s board.
“They (PeerStreet) have a unique distribution model that allows them to leverage existing lending networks to lower loss rates, and grow without direct marketing,” said Rampell in a statement.
In 2017, Ethan Senturia, the founder of a defunct online lending company, published a tell-all book about his startup’s rise and fall. He called it Unwound. It’s the fall that stood out. Senturia’s poorly modeled business had been heavily financed by an up-and-coming online lending hedge fund manager named Brendan Ross.
I first encountered Ross in 2014 on the alternative finance conference circuit. Ross’s major theory was that small businesses overpay for credit and that the padded cost served as a hedge against defaults and economic downturns.
“The asset class works even when the collection process doesn’t,” Ross said during a Short Term Business Lending panel at a conference in May 2014. “The model works with no legal recovery.”
As an editor, I helped secure a lengthy interview with Ross that Fall. In it, he placed a special emphasis on building “trust.” It’s a word he used seventeen times over the course of the recorded conversation. “Everything is about trust and eliminating the need for it whenever possible,” he proclaimed.
Ross stressed that his fund invested in the underlying loans of online lenders, not in the online lenders themselves. “I need to be the owner of the loan. I need it sold to me in a way that is completely clean.”
Ross would eventually connect with Senturia at Dealstruck, an online small business lender whose philosophy seemed to contradict Ross’s mantra of small businesses overpaying for credit. Dealstruck, it would turn out, had a tendency to have them underpay…
Senturia told the New York Times that year that Dealstruck’s mission was “not about disintermediating the banks but the very high-yield lenders.”
It’s a concept that failed pretty miserably. Senturia recalled in his book that “We had taken to the time-honored Silicon Valley tradition of not making money. Fintech lenders had made a bad habit of covering out-of-pocket costs, waiving fees, and reducing prices to uphold the perception that borrowers loved owing money to us, but hated owing money to our predecessors.”
As the loans underperformed, Senturia became aware that the hedge fund backing them, Ross’s Direct Lending Investments, might also be doomed. Senturia recalled an exchange with Ross in 2016 in which Ross allegedly said of their mutually assured destruction, “I am like, literally staring over the edge. My life is over.”
One would expect that in light of that conversation being made public through a book, that investors would question Ross’s report that his fund delivered a double digit annual return (10.61%) the same year his life was over.
Some actually did question it. deBanked received tidbits of information in the ensuing years, always seemingly off the record, that something was not right at Ross’s fund. There was little to go off other than the unlikelihood of his consistently stable stellar returns. Ross had been an especially popular investment manager with the peer-to-peer lending crowd and a regular face and speaker at fintech events. CNBC also had him on their network several times as a featured expert.
All told, Ross managed to amass nearly $1 billion worth of capital under management before his demise.
In 2019, Ross suddenly resigned. His fund, Direct Lending Investments, LLC, was then charged by the SEC with running a “multi-year fraud that resulted in approximately $11 million in over-charges of management and performance fees to its private funds, as well as the inflation of the private funds’ returns.”
Yesterday, the FBI arrested Ross at his residence outside Los Angeles. A grand jury indicted him “with 10 counts of wire fraud based on a scheme he executed between late 2013 and early 2019 to defraud investors…” An announcement made by the US Attorney’s Office in Central California revealed that the charges had been under seal for approximately two weeks prior.
The SEC simultaneously filed civil charges against him.
No reference is made to Dealstruck in any of it. The Dealstruck brand was later sold to another company that has no connection to Ross or Senturia where it is still in use to this day. Instead, the SEC and US Attorney focus on Ross’s actions allegedly undertaken with another online lender named Quarterspot. Quartersport stopped originating loans in January of this year.
Ross allegedly directed the online lender to make “rebate” payments on more than 1,000 delinquent loans to create the impression that they were current. Quarterspot has not been accused of any civil or criminal wrongdoing.
The SEC included in its complaint that Ross expressed concern about the scale of loan delinquencies.
“…more loans are going late each month than I can afford and still have normal returns, so that the can we are kicking down the road is growing in size,” he wrote in an email. It was dated February 8, 2015.
It’s a sentiment that seems to disprove his early premise that “the asset class works even when the collection process doesn’t.”
Ross is innocent until proven guilty, but an excerpt of an interview with him in 2014 is now somewhat ironic.
“I [understand] that people end up sometimes in the [industry] who have had colorful careers in the securities space. It doesn’t make it impossible for me to work with them,” he said. “But if they had been in the big house for white collar crime, then that is probably a non-starter.”
The Canadian Lenders Assocation (CLA) received 124 nominations for these awards from leaders in lending across the country. The CLA’s goal is to support access to credit in the Canadian marketplace and champion the companies and entrepreneurs who are leading innovations in this industry.
The Top 25 ﬁnalists in this report represent various innovations in the borrower’s journey from innovations in artiﬁcial intelligence powered credit modelling to breakthroughs in consumer identity management using blockchain technologies. These ﬁnalists also represent solutions for a wide spectrum of borrower maturity and needs, ranging from consumer credit rebuilding all the way to senior debt placements for global technology ventures.
The 75 year old ﬁrm is the only Canadian bank devoted exclusively to supporting entrepreneurs.
Borrowell helps Canadians make great decisions about credit. They were the ﬁrst company in Canada to offer credit scores for free, without applying for credit, and currently has over 800,000 users. Eva Wong and Andrew Graham were the joint recipients our the CLA’s awards in 2018.
Clearbanc offers a new approach to capital access for entrepreneurs that uses AI to determine funding terms with a focus on unit economics and repayment through revenue share as a way to get founders access to the capital they need to fuel their growth.
CreditSnap is a best in class pre-qualiﬁcation and cross selling engine to deliver highly relevant pre-qualiﬁed loan offers to CreditSnap banks and CUs.
Dealnet Capital services the home and retail sectors providing end-to-end ﬁnancing plus innovative technology and communication solutions.
Since 2009, Espresso Capital has provided over 230 early and growth stage technology companies with founder friendly capital. Espresso offers lines of credit and term loans to enable entrepreneurs to grow their businesses without dilution, board seats, or personal guarantees.
Financeit is a market leading point-of-sale consumer ﬁnancing provider, servicing the home improvement, vehicle and retail industries.
|First West Capital
First West Capital is a leader in Canadian mid-market business funding. First West Capital helps ventures acquire and transition through innovative junior capital ﬁnancing.
Home Trust Company is one of Canada’s leading trust companies. Home Trust offers Canadians a wide range of ﬁnancial product and service alternatives, including mortgages, Visa cards, deposits and retail credit services.
Inverite is the ﬁrst Canadian designed, developed and focused real-time bank veriﬁcation service. With coverage for over 240 Canadian FIs.
Based in Montreal, IOU Financial provides small businesses throughout the U.S. and Canada access to the capital they need to seize growth opportunities quickly.
Lending Loop is Canada’s ﬁrst and only regulated peer-to-peer lending marketplace focused on small business.
Magical Credit has been helping Canadians consumers get approved for quick and simple short term personal loans since 2014. They offer personal loans up to $10,000 regardless of the borrowers past ﬁnancial issues or credit.
Manzil is the market leader in the manufacturing and distribution of Islamic Financial products for Canadians who wish to balance material pursuits with their spiritual obligations.
Marble Financial uses smart technology and socially responsible lending practices to help Canadians rebuild credit once their past debt has been settled by a consumer proposal.
owl.co is a customer insight engine that helps ﬁnancial institutions make better decisions. By connecting to tens of thousands of trusted data sources, Owl is able to instantly aggregate and synthesize millions of data points to learn more about customers and entities.
Paays is a Canadian eCommerce ﬁnancing solution for a new generation of digital consumers seeking “point of inspiration” ﬁnancing.
PayPal Canada recently announced a new SMB loan offering in Canada – a quick application process that can approve an applicant in minutes and transfer funds in one to two business days.
Named by CB Insights to the 2018 Fintech 250, a list of the world’s top ﬁntech startups, Progressa is Canada’s fastest growing ﬁnancial technology lender focused on changing the way pay cheque to pay cheque Canadians access and build credit.
In its effort to become a one-stop e-commerce shop, Shopify Capital allows Shopify business owners to secure funding through revenue sharing on daily sales.
Silicon Valley Bank
For more than 35 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides a full range of ﬁnancial services and expertise to companies of all sizes in innovation centers around the world.
Spring Financial is a subsidiary of Canada Drives, one of the leading brands for auto ﬁnancing in Canada. Spring provides accessible solutions for Canadians to establish a positive payment history.
Thinking Capital is a leader in the Canadian Online Lending space, leveraging technology to be at the forefront of the FinTech industry. Since 2006, they have helped more than 14,000 small-to-medium sized Canadian businesses reach their full potential
Uplift’s mission is to make travel more accessible, affordable and rewarding by enabling travel providers such as JetBlue, American Airlines, and United to offer ﬂexible payments to their customers.
Venbridge is a leading Canadian venture debt ﬁrm. Venbridge provides SR&ED, grant and digital media ﬁnancing and consulting.
Lending Express, a company whose CEO was once a master gamer, has rebranded to Become.
“This transition comes at a pivotal point in the company’s growth and highlights its dedication to providing businesses with opportunities to improve fundability, secure funding, and ultimately become more,” a company spokesperson wrote.
According to the company, their online loan marketplace grew from just one lending partner in Australia to over 50 lending partners, operating in both Australia and the US. They’ve facilitated more than $150 million in funding and have over 150K members on their platform to date. Their journey is documented on a blog post published this week.
Liquid FSI announced today that it has entered into an agreement with TVS Next, an IT company, to build a blockchain platform to enhance its healthcare lending capabilities.
“Our Blockchain solution solves a myriad of issues including the privacy of provider [typically medical office], biller, payer, patient and bank data,” said Liquid FSI President and CEO, Frank Capozza. “Blockchain will also support our on-demand payment offering Convert2Pay…and we believe that TVS Next has the depth of resources we need to serve the $3.6 trillion healthcare market.”
The is an improvement of Liquid FSI’s Convert2Pay offering which can provide cash in as little as 24 hours to medical offices with insurance claims.
“Instead of waiting 45 days or 60 days to get paid, [the doctor] can get paid in 24 hours because we’ve done all the analytics, and we’re scored [the medical practice] on a scale from 1 to 10,” Capozza said. “If he’s a solid performer and he’s using our platform to level out his peaks and valleys in cash flow, we see all of that in the system.”
The new use of blockchain, a decentralized system that logs information anonymously into a ledger, should give increased confidence to Liquid FSI’s medical office clients, Capozza said.
Capozza said he has excellent relationships with a number of brokers who send him clients. But as evidence of the privacy problem, he said that he will occasionally get applications from some brokers that include patient names, addresses, and social security numbers. This information isn’t stolen, but can be released by a medical practice if it needs money urgently. Capozza said he would rather see less of this and is confident that the new blockchain technology will significantly reduce any privacy lapses.
“It’s the same product, but it’s improving the privacy for everyone involved,” he said.
He also said that they are in talks with three banks that will be able fund on the Convert2Pay platform and will be comforted by the increased privacy afforded by the blockchain technology to be used by Liquid FSI. Capozza said Liquid FSI has plans to offer credit to doctors and sees itself as a VISA for the healthcare industry.
Aside from working with broker partners, Liquid FSI also works with medical billing companies to obtain clients, like pediatrician or dentist offices. Founded in 2014, the company has made some key recruitments to its overall team over the past year, including the addition of Barry Blecherman, professor of Finance and Risk Engineering at the NYU Tandon School, to its Board of Advisors.
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