The combined company will be called NextPoint Financial.
NextPoint will acquire LoanMe at an enterprise value of approximately US$102 million, US$18 million of which is payable in cash, approximately US$49 million of which is payable in NextPoint common stock equivalents and with the balance of which reflects the assumption of existing corporate net debt at LoanMe.
“We are a one-stop financial services destination empowering hardworking and credit-challenged consumers and small businesses to get to the NextPoint in the financial futures,” the company said of its newly formed self.
The company says that LoanMe had originated $2 billion since inception, 340,000+ borrowers since inception, and has a $200 million loan portfolio. Liberty Tax, meanwhile, processes 185,000+ SME tax returns, 1 million+ US consumer tax returns, and 400k+ Canadian tax returns.
Combined, the company projects $317M in revenue in 2021.
“NextPoint has obtained a commitment for a new US$200 million revolving credit facility, advances under which may be used for NextPoint’s general corporate purposes, including to fund the Liberty Tax and LoanMe cash purchase prices, and to fund potential future acquisitions,” the company said in a public release.
Affirm, an online buy-now-pay-later platform, was listed on the Nasdaq on Wednesday at $49 a share under the ticker AFRM. Based on outstanding shares sold to IPO investors, the company saw an $11.9B valuation. Minutes after public sales began at noon, the price shot up to $100/share.
Company founder Max Levchin spoke through the big Nasdaq screen in Times Square as he virtually rang the starting bell. Levchin championed the hard work of the Affirm team.
Hear from the CEO of @Affirm, Max Levchin (@mlevchin) on the company improving the lives of consumers by empowering shoppers with honest financial products. @Affirm joins us this morning to ring the Opening Bell in honor of its IPO. #AFRM pic.twitter.com/QfkZsgXItM
— Nasdaq (@Nasdaq) January 13, 2021
Affirm makes money when a customer uses their tech to make a purchase at the point-of-sale.
Levchin is a member of the “PayPal mafia,” a co-founder of the online payments firm that went on to establish massively successful tech startups. Members of the “mafia” include Tesla’s Elon Musk, Linkedin chairman Reid Hoffman, and Yelp founder Jeremy Stoppelmen.
After publishing earnings this summer, the San Francisco-based firm filed for an IPO on Nov 18. The move revealed revenue of $465M for the first 3 quarters of 2020 with a $66M net loss.
Embedded with the company’s S-1, were comments from Levchin that said:
“The barely-readable fine print makes only one thing clear to consumers: You’ll never know exactly what your purchase will really cost you,” Levchin wrote. “With most of the payments industry deriving profits from late fees, overdraft charges, and gimmicks like deferred interest, it’s not hard to agree that there has to be a better way; it’s time to evolve payments again.”
Levchin took to Twitter to post about the firm, championing the millions of transactions the platform has serviced since 2013, all without one late fee.
“More than eight years ago, we set out to take on credit cards and change the way we pay,” Levchin wrote. “We built Affirm from the ground up to align with the needs of consumers and merchants and to succeed when they succeed.”
On New Year’s Day, OnDeck Head of Business Development Kevin Chin announced he was parting ways with the company and joining Avant. “As we wrap up 2020,” Chin posted on LinkedIn, “I wanted to take a moment to thank all of my colleague at OnDeck as well as Noah Breslow and Cory Campfer for building such an outstanding company with great people and culture.”
Similarly, Matt Cluney, who was VP of Brand and Product Marketing at OnDeck, announced that he was leaving to become Chief Marketing Officer for Yardline Capital. On LinkedIn, he wrote: “New year, new adventures… excited to join Ari Horowitz, Tomo Matsuo, Seth Broman and the rest of the team at Yardline Capital at a time when ecommerce is booming and the opportunity to provide a differentiated growth capital solution for ecommerce sellers is big!” Cluney will be in good company at Yardline with another OnDeck veteran Dennis Chin.
SRS Capital, a merchant cash advance company based in Long Island, NY, has entered Chapter 7 bankruptcy, according to court documents obtained by deBanked. In September, several of the company’s creditors petitioned for involuntary bankruptcy. Although it was contested by SRS, the Court granted relief under the Code and appointed a trustee.
The primary entity is listed as SRS Capital Funds, Inc.
The company had revenues of $1.5 million in 2020.
The proceedings are ongoing. SRS Capital’s website is presently offline.
Elliot J Dabah, CEO of NYC-based Merchants Cash Partners, LLC, recently passed away. Known throughout the merchant financing industry, friends and colleagues began collecting kind words to reflect on his life to be able to share them here.
Elliot Ashkenazie, his business partner and best friend, said “Elliot Dabah would step up and help anyone in need whether that be his own employee, another ISO, or a complete stranger on the street. He didn’t keep any secrets so he would have an advantage over others, he simply paid it forward and helped the community as a whole benefit from it. Merchants Cash Partners will work tirelessly to carry on his legacy and his values.”
“Elliot Dabah was the heartbeat of the Financial District and he was an integrated part of my life, both professional and personal,” said Gigi Russo. “Not only did Elliot and I live three blocks from each other, but I first had the privilege and pleasure of meeting him while I was working for deBanked, at CONNECT San Diego. We quickly became close friends. He truly never took advantage of our tight knit friendship. His professional support was a reflection of his character— a respectable person that respected his family, friends and business associates. Elliot wanted everyone to succeed. He believed that friends and business colleagues should support one another to build a viable network.”
Tom Dool of Power Funding, said “Of all of the offices I’ve ever visited, I can honestly say that no other partner of mine compares to Merchants Cash Partners. From the moment I met both Elliots, they were inviting. I could tell right away that they had a special bond of shared enthusiasm, honesty, generosity, thoughtful, caring people.” He adds, “Elliot [Dabah] lived life with such a genuine love for people and getting to know people, discussing higher level ideas, sharing feelings. He was one of the best and I’ll never forget him.”
“Elliot was one of the most welcoming people I had the pleasure of knowing,” says Colt Kucker of Libertas Funding, “and always tried helping out whether it be a customer, myself, or anybody in need. He was a hard worker and will truly be missed by all he came across.”
Justin Friedman of Enova SMB, described Dabah, “Smart, strategic, urgent, generous and wise are a few words to describe Elliot. He was universally popular and a known professional in our industry, which isn’t common to come by. He cared about his customers and business relationships. Elliot’s presence in alternative lending was a positive one and he will be remembered for exactly that.”
Ben Lugassy of SOS Capital states that he was “Always smiling and enthusiastic, Elliot was the embodiment of joyful. A friend with tremendous respect and gratitude, he will always be remembered and in our prayers.”
Paul Boxer of Velocity Capital Group added, “Every-time I met Elliot he had the largest smile, always happy to talk shop and discuss the industry. He was very knowledgeable and had a wealth of information, he will surely be missed.”
Ken Peng of Elevate Funding recounts that Elliot, “was always great to work with. He was always very friendly and understanding when we did review any of his files. He will be missed.”
Gigi Russo, who was instrumental in putting this tribute together, further added that Elliot “treated everyone he came into contact with as a friend.” He has “a sincere, dignified, and affable reputation that will follow him after his passing. He will surely be remembered for supporting his colleagues, clients, business acquaintances, and network. The legacy Elliot has left behind is simple: Respect one another. Support one another. Honesty and hard work are necessities of success.”
Part of Elliot’s legacy is the company he built. Merchants Cash Partners, despite the pandemic, was so successful this year that it outgrew its office space.
“Elliot had a revolutionary style of making this industry a community,” says his partner Ashkenazie. “He referred clients and prospects alike to small firms and national firms, expecting nothing in return.”
Coincidence would have it that a photo of Elliot at a deBanked event was often used in event marketing promotions. As to how that picture came to be used so prominently, deBanked President Sean Murray said that “Elliot embodied the community we were trying to portray. A nice young business professional who radiated positive energy. Who is part of this industry? It’s guys like Elliot. That’s what we wanted everyone to know.
“Elliot totally noticed how often we were sharing his photo,” Murray said. “He told me that he thought that was pretty cool.”
Neuberger Berman, an investment manager with $374B under management, is acquiring a 15% stake in IOU Financial, a small business lender. As part of the deal, one of the firm’s funds has agreed to purchase up to $150M a year of IOU’s loans over the next two years.
“This investment by a Neuberger Berman managed fund represents a strong vote of confidence in the fundamental, long-term value of our business, and is a testament to IOU’s loan origination and servicing capabilities in addition to its capital markets capabilities” said Phil Marleau, CEO of IOU, in a public statement.
Additionally, Neil Wolfson, a former board member to rival OnDeck, is joining IOU’s board of directors.
This month, Franklin Capital Group was acquired by Wing Lake Capital Partners with the help of Rocky Mountain Bank. Franklin Capital will change its name and add funding capability- but the entire team will stay on. CEO Shaya Baum was happy to announce the deal, explaining that the firm would use acquisition funds to create more deals and continue to grow.
“It gives us the ability to fund many deals that are outside of our box previously,” Baum said. “We’re going to be launching a couple of sister funds alongside what we currently have and scale the business.”
Franklin Capital was founded in 2012 as an equity fund for companies in financial trouble during, before, or post-bankruptcy. The firm discovered a market for refinancing MCA advances, finding companies that should have never obtained cash advances in the first place. Franklin Capital began offering a tailored debt product to refinance cash advances and offer a pathway to larger, more traditional bank loans.
“We buy out the cash advance deals,” Baum said. “In fact, most if not all of our deals come from brokers in the cash advance industry saying ‘Hey can you get us out of these deals?'”
The firm services a capital class all its own: from $500k to $10 million. Baum noted that most alternative lenders focus on smaller amounts or $25 million+ traditional amounts, and his firm offers a middle ground.
“There is no one in between to provide a more traditional type loan to a borrower that should not be in a cash advance or is in default on their cash advances,” Baum said. “We’re really the outlet for them from the cash advance world into traditional financing.”
Baum further said that his firm had seen a continually growing demand for capital this year.
“I know the cash advance companies have gotten killed, but we’ve actually had the opposite problem,” Baum said. “We don’t do one-off restaurant [advances.] We’re dealing with companies that are larger, more established: they’ve all pivoted into industries that have grown during this period of time.”