Related Headlines
| 03/11/2022 | MeridianLink acquires StreetShares |
| 02/03/2021 | StreetShares ends veteran business bonds |
| 10/23/2020 | StreetShares secures $10M funding round |
| 04/02/2020 | StreetShares posts another loss |
| 10/02/2019 | Farm Bureau Bank launches StreetShares LaaS |
Stories
StreetShares Discontinues Veteran Business Bonds
February 3, 2021StreetShares, the former online lender that pivoted to Lending-as-a-Service in October, is no long offering its veteran business bond program as a result.
A note on its website says:
“Thank you Veteran Business Bond investors! We have achieved our Bond funding needs. As a result, we have discontinued our offering of Veteran Business Bonds. New Bonds are no longer available for purchase or investment. Your current Bonds continue to earn 5% annual interest. Investors are able to log in to access their accounts.“
StreetShares Stops Lending Directly to Small Businesses, Records $10.7M Annual Loss
November 1, 2020
StreetShares, the online lender known for its focus on veteran-owned businesses, is no longer lending directly to small businesses, the company disclosed last week. This became effective as of October 26.
“We still offer lending products to small business customers via our LaaS clients,” the company said however.
“As of June 30, 2020, 47 banks, credit unions, and alternative lenders have contracted to use our Lending-as-a-Service (LaaS) small business financing technology.”
It defined LaaS as:
“Since the launch of LaaS, the Company has offered several LaaS packages, which include various products and services depending on the package, such as: online product presence for small business lending, web design collaboration, client-branded landing page, intelligent online loan application for small business borrowers (client-branded or StreetShares-branded), decisioning platform, loan analytics platform, and small business loan marketing services. Depending on the LaaS package, either the Company or the LaaS client will originate, underwrite, and service the small business loans. Our LaaS products and services are available in all 50 states and the District of Columbia.”
Financially, StreetShares’ June 30 fiscal year-end report revealed a massive $10.7M loss on only $4.5M in revenue. Despite the impact of covid, these figures are actually in line with (and perhaps even better than) historical performance. The company had a $12.3M loss on only $4.4M in revenue for the fiscal year prior, for example.
“Beginning in March 2020, we experienced an increase in late payments and requests from our borrowers for payment deferments. As a result, there has been an increase in predicted losses on our loan portfolio and we expect to observe an increase in our charge-off ratio in the near-term; however, we are unable to predict a long-term trend in our charge-off ratio. Beginning in March 2020, we instituted a deferment program that permitted our small business borrowers to defer loan payments as necessary due to the COVID-19 pandemic. We worked closely with our borrowers and have exited all of them from the deferment program as of this filing. We also provided, and continue to provide, certain borrowers with payment plans with reduced payments as necessary. The payment deferments or modifications made as a result of the COVID-19 pandemic consisted of short-term payment deferrals or reduced weekly payments.”
Earlier in the month of October, StreetShares announced they had secured a $10 million round of funding from Motley Fool Ventures, Ally Ventures (the strategic investment arm of Ally Financial), and individual fintech angel investors.
StreetShares Posts Another Loss
April 2, 2020Sales and Marketing Expenses declined dramatically for StreetShares for the six-month period ending December 31, 2019, according to the company’s latest SEC filing, but the company’s payroll expense still wildly exceeded revenue, putting them yet again into deep net loss territory.
StreetShares recorded total operating revenues of $2.43M, payroll expenses of $3.49M, and a net loss of $5.18M for the period.
The company’s accumulating losses over time has translated into a stockholder deficit of $35.2M. This reporting period is pre-COVID-19 but the company disclosed that future financial results may be adversely affected by the virus.
The company also borrowed $3M in the form of a convertible promissory note issued to an investor.
Only 16.81% of loans on the StreetShares platform were funded by institutional investors for the period. Retail investors, the largest segment by far, funded 70.63%.
StreetShares Discontinues Major Segment of Its Financing Business
December 3, 2019
StreetShares quietly discontinued a major part of its financing business on November 15, a new disclosure filed with the SEC revealed. “For new customers, the Company is no longer offering to factor invoice receivables,” the letter signed by General Counsel and Chief Compliance Officer Lauren Friend McKelvey says.
The company had purchased more than $112 million in receivables since it began offering this product in December 2016, had serviced 40 customer accounts, and had advanced as much as $7 million on a single invoice as recently as Fiscal Year 2019.
The company has only facilitated $180 million in funding to small businesses since inception in 2014. That would indicate that the invoice factoring portion was roughly half of the company’s funding volume.
As of November 15, the company said it only had one customer remaining that was still using this product and no new ones would be accepted. Instead it would continue to offer only loans and lines of credit.
StreetShares relied heavily on individual retail investors to purchase receivables, their publicly filed financials show. 98.28% of all funds advanced on invoices in FY19 came from the retail investor segment whereas it was only 50.22% in FY18.
The company had also recently reported a heavy net loss and soaring costs.
Costs, Losses Soar At StreetShares
November 12, 2019StreetShares increased revenue by nearly 40% year-over-year, according to the company’s latest fiscal year 2019 filing, but costs soared and increased by almost 90%.
StreetShares reported a staggering $12.3M loss on only $4.4M in revenue. That loss was much wider than the previous year’s loss of $6.5M on $3.2M in revenue.
Whereas startups may spend heavily on sales and marketing as they prioritize growth and scale, StreetShares’ primary cost, as in prior years, continues to be payroll. The company spent approximately $7 million in payroll and payroll taxes in fiscal year 2019.
The margin by which payroll exceeds revenue is increasing (157% in FY ’19 vs 144% in FY ’18). For comparison purposes, payroll expense makes up less than 25% of revenue for StreetShares rival IOU Financial.
StreetShares’ source of funds has shifted away from institutional investors and professional investors to retail investors. Retail investors only provided 43.89% of funds in FY ’18 but provided 86.72% of funds in FY ’19.
Retail investors, permissible under Regulation A, do not invest in individual loans but rather they lend money to StreetShares for which the company can use for lending or for “general corporate purposes” or “other products at the discretion of the company.” In return retail investors receive a fixed 5% annual return.
As of May 2019, the company reported that 80% of funds they lend out go to US veteran small businesses. A veteran small business is defined as “a company that is at least 25% owned by a veteran or military spouse or has a veteran or military spouse as the co-guarantor.”
Top Accounting Officer at StreetShares Resigns
January 31, 2019Jesse Cushman, who served as StreetShares’ Chief Business Officer and Principal Financial & Accounting Officer, has resigned, according to a Form 1-U filed with the SEC this week. His exit was made effective as of January 1, 2019.
StreetShares president Michael Konson is currently filling the role in an interim capacity until a permanent successor can be named.
StreetShares’ financials have left something to be desired. The company recently reported a 12-month net loss of $6.5 million on only $3 million in revenue.
Payroll Costs Still Exceed Revenues at StreetShares
November 7, 2018
According to the June 30 fiscal year-end earnings report for StreetShares, the veteran-run small business lender, the company’s annual payroll expenses of $4,580,130 exceeded its annual revenue of $3,078,766.
StreetShares, which focuses on lending to veteran-owned small businesses, posted a loss of $6,559,702, more than last year’s loss of $6,193,154. But revenue did increase year over year, from $2,168,067 to $3,078,766.
“Our patient approach means we’re not going to be profitable for a couple more years,” StreetShares CEO Mark Rockefeller told deBanked back in January in response to the fact that the company’s losses from 2017 exceeded its revenues by about 4 million. “But it also means we’ll still be here in 50 years.”
The gulf between StreetShares’ losses and revenues is narrower this year, but still considerable. In January 2018, StreetShares completed a $23 million series B funding round led by Rotunda Capital Partners, LLC.
StreetShares offers term loans and business lines of credit from $2,000 to $250,000. This in an increase from last year’s maximum loan amount of $150,000. Loans can be repaid between three months and three years.
Founded in 2013 and based in Reston, VA, StreetShares now employs 46 people, up from 32 last year.
StreetShares Moves Headquarters
August 16, 2018
StreetShares announced yesterday that it has moved to another location in Reston, Virginia in order to accommodate its growing staff, according to the company’s blog. From January of this year to August, SteetShares says it has doubled the size of its workforce and the new space is 10,300 square feet, more than four times the size of the previous office.
Established in 2013 in the home basement of CEO Mark Rockefeller, StreetShares offers term loans, lines of credit and a factoring product, with a focus on funding veteran-owned small businesses. Rockefeller is a veteran himself.
According an SEC filing for StreetShares, for the six months ending December 31, 2017, the company generated $1,533,143 in revenue and spent $3,224,131, for a net loss of $2,673,466. The company also received capital at the beginning of 2018, with the completion of a $23 million series B round in January.
StreetShares’ new office has a “tech” aesthetic.
“No cubicles or offices allowed,” Rockefeller said. “Standing desks, teams working together in pods, as well as glass, metal, and exposed concrete reflect a technology startup. And vintage World War II posters and an enormous American flag remind our team of the special members we serve.”
See Post... streetshares , smartbiz, celtic bank, etc... and other sba lenders/placement agents, , hey carl- congrats and good luck on new venture! it's been awhile., , we prese... |
See Post... streetshares , smartbiz, celtic bank, etc... and other sba lenders/placement agents... |
See Post... streetshares commenting on how great they are on linkedin. streetshares who lost 3 million on 2 million of revenue last year. you have to try really really hard to generate those results.... |
