Industry News
Funding Circle US Originated $800M in 2020, More than 90% of Borrowers Were Making Payments
March 26, 2021
Funding Circle US revealed originations of £581M in 2020, equivalent to about $800M at current exchange rates. More than 90% of the company’s American borrowers were making full regular payments on their loans, Funding Circle reported. Approximately 7% were on a “payment holiday” at year-end or were not paying.
Funding Circle’s US loans generate low annual returns, its highest being a projected return of 4.1% to 4.9% for its 2016 cohort. Its 2020 cohort is projected to generate an annual return of between 1 – 3%.
Overall, Funding Circle reported a total net loss of £108.1M (approx $150M US) on just £103.7M in revenue, a massive loss that stemmed entirely from the first half of the year, attributed mostly to a write-down in “fair value.”
Funding Circle’s primary market is the UK. When comparing the market with the US, the company said that the US is in an earlier stage of development even though the market is 5x larger.
Tune In Tuesday at 10:30 AM EST: deBanked TV Live – With Guests From the Business Funding Industry
March 22, 2021
deBanked is hosting a livestream broadcast tomorrow beginning at 10:30 AM from a venue in Midtown Manhattan with guest speakers from two broker shops and a business funding company. There is no need to register for anything. Anyone can tune in live at deBanked.com/tv to watch it. The broadcast will run for 2.5 hours and end at 1 PM. This is an-person event being broadcast with no Zoom or virtual conversation. The event will also be recorded and made available free.
deBanked’s massive in-person conference, Broker Fair, will return to NYC later in the year on December 6th at Convene at Brookfield Place in lower Manhattan.
Square: Banking, Bitcoin, Now Streaming Beats?
March 4, 2021
Square bought a majority stake in Tidal, a music streaming service owned by Jay-Z, for $247 million.
Jay-Z will be joining the Square board and Tidal artists will keep their ownership in the firm. Jack Dorsey announced the move on Twitter, seeming to assuage worries from the first post.
“Why would a music streaming company and a financial services company join forces,” Dorsey wrote. “We believe there’s a compelling one between music and the economy. Making the economy work for artists is similar to what Square has done for sellers.”
Square is acquiring a majority ownership stake in TIDAL through a new joint venture, with the original artists becoming the second largest group of shareholders, and JAY-Z joining the Square board. Why would a music streaming company and a financial services company join forces?!
— jack (@jack) March 4, 2021
Dorsey and Jay have been friends for years and were spotted hanging out with Beyonce on a yacht in the Hamptons this summer. Dorsey and Jay-Z last month went in on a multimillion Bitcoin trust fund to support Bitcoin development in India and Africa.
Beyoncé, JAY-Z, Rumi, Blue Ivy w/ Twitter CEO Jack Dorsey in the Hamptons — Aug. 24th. pic.twitter.com/bNEz0Nch2y
— BEYONCÉ LEGION (@Bey_Legion) August 25, 2020
Jay-Z bought Tidal in 2015 for $56 million, but despite working with top music artists like Coldplay and Kanye West, the service has struggled to compete with Apple and Spotify. After a year of closed venues, Billboard reported that last year Tidal had a cash problem and was missing payments to rights holders. Tidal got a cash injection from the sale, while Square spent less than 1% of the firm’s value to bring Jay-Z’s leadership and network of music industry heavy-hitters into the fold.
“I said from the beginning that Tidal was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers,” said Jay-Z in a press statement. “Artists deserve better tools to assist them in their creative journey. Jack and I have had many discussions about Tidal’s endless possibilities that have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board. This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”
LoanMe Has Been Acquired Along With Liberty Tax By Canadian Listed SPAC
February 22, 2021
LoanMe has been acquired. The announcement was made by Nextpoint, a SPAC listed on the Toronto Stock Exchange that simultaneously acquired Liberty Tax.
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 Goes Public at $11.9B Valuation and Climbing
January 13, 2021Affirm, 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.”
Additional OnDeck Employees Set Their Sights Elsewhere
January 4, 2021On 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 Enters Chapter 7 Bankruptcy
January 4, 2021SRS 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.
deBanked Meme Time – Happy Thanksgiving
November 21, 2020It’s Thankgiving time, which means…. more deBanked memes! This tradition started 8 years ago. Enjoy the holidays and be safe!
