Industry News
IOU Financial Originated $41.4M in Loans in Q3, Continued Profitability
November 14, 2019IOU Financial originated $41.4M in business loans in Q3, according to the company’s latest published financial statements. The figure is a modest increase over Q2’s $38.5M. IOU also kept up its trend of profitability with net income $1M.
Shares of IOU, which trade on the Toronto Stock Exchange, are valued at around (CAD) 14 cents and equate to a market cap of approximately (CAD) $14M.
BFS Capital Hires New COO
November 12, 2019
BFS announced this morning that it has hired Brian Simmons as its new Chief Operating Officer. The news come as the company is preparing for the North American launch of its tech platform in December, a move that is part of BFS’s vision to become a more customer-focused business.
This planned “journey,” as CEO Mark Ruddock calls it, has been demonstrated in the past with the hiring of Fred Kauber as Chief Technology Officer and Chief Product Officer in May.
“If you’re going to be a successful venture-backed company,” Ruddock explains, “you need to think differently and act differently.” And this approach is manifested in Simmons’ history. Having worked in a diverse set of fields, the new COO has previously worked with Openlane, a B2B digital automotive marketplace; Wonga, the peer-to-peer lender where he was Head of Global Products and where he was introduced to Ruddock; and the IATF, or International Axe Throwing Federation, where he was a Co-founder and board member.
Together these experiences form a patchworked career, highlighting different skills and industries, but Simmons affirms that they’ve molded him to fit into BFS. “I think that the overarching theme has been that I’ve always been drawn by innovation,” Simmons explains, noting that his experience with Wonga provided him with a knowledge of financial services that is crucial to his role at BFS, while his time with the IATF benefitted him by endowing an intimate knowledge of the financial pressures small businesses face.
“What’s spoken to me at each turn is the opportunity to be involved with organizations who are at the bleeding edge of what they are doing and just incredibly innovative in their approach to doing business […] I’ve been really fortunate to work with a number of quite successful organizations at different phases in their life cycle and I think that’s given me an understanding of what works and what doesn’t.”
Going forward, Simmons will be managing the progress of transforming lead-loan operational processes and focusing on the company’s transition to a fully digital-enabled lending platform.
“To transform anything successfully is an exercise of effective change management, and there’s a real art to doing that right,” Simmons notes. “It’s not just doing things better, it’s how you communicate to people, how you do it in the right sequencing, how you get the right team together to affect things in the right way.”
PIRS Capital, Fundera Make Crains’s Fast 50
November 7, 2019
Crain’s New York Business has revealed its Fast 50 companies. Among them are Fundera (#22 with 720% 3-year growth) and PIRS Capital (#50 with 230% 3-year growth).
Crain’s says that to be considered for the Fast 50, firms had to be at least four years old, generate at least $10 million in 2018 revenue and be headquartered in the New York metropolitan area, which includes the five boroughs; Nassau, Suffolk and Westchester counties; and Bergen, Essex, Hudson, Morris and Union counties in New Jersey.
#1 on the list was Hoboken-based Bear Mattress with 3-year growth of 13,481%.
Who Exactly Got Paid In Knight Capital’s Sale… And How Much? ($27.8M)
November 6, 2019
Update 11/7/19 9:05 AM: Ready Capital Corporation confirmed this morning that Knight Capital’s total sale price was $27.8M. $10M was in stock.
When Ready Capital Corporation acquired Knight Capital last week for $10 million in stock and an undisclosed amount of cash, questions abounded over who directly benefitted from the sale and how much cash was actually exchanged.
Documents later submitted by Ready Capital revealed that Knight Capital was owned by a San Jose, CA-fund named Len Co, LLC. Len Co began lending to Knight Capital in 2014 and later converted a large principal balance into a major equity investment in Knight in early 2018.
Several months later, Len Co’s primary creditor forced Len Co into Chapter 7. Shares in Knight, being a major asset of Len Co, became a talking point of that proceeding, ultimately propelling Knight into the hands of an eager buyer, Ready Capital Corporation.
The stock in the sale was therefore almost entirely paid out to the Estate of Len Co, LLC (640,205 of the 658,771 Ready Capital Corporation shares to be precise). This being the case was a reflection of the predicament Len Co was in, not necessarily that there was anything adverse about Knight.
On May 31, the bankruptcy court presiding over Len Co approved a proposed sale of Knight Capital to a confidential buyer for a grand total of $25 million, via $10 million in stock and a whopping $15 million in cash to be completed by December 31, 2019.
The buyer was identified as a publicly traded company. Assuming no better bids were received by Mid-August, the company would be sold for the $25 million under the terms offered to the publicly traded buyer. The court reaffirmed it on August 15th.
In October, Ready Capital Corporation announced that they had acquired 100% of Knight Capital in a deal for $10 million in stock and an undisclosed amount of cash.
Update: After this story was posted, Ready Capital confirmed on a morning earnings call that the sales price was slightly more than $25M and was finalized at $27.8M.
Merchant Cash Advance Industry Pioneer David Goldin Launches Lender Capital Partners To Provide Financing To Merchant Cash Advance / Alternative Business Loan Providers
November 5, 2019
White Plains, NY – November 5, 2019 – David Goldin, one of the merchant cash advance industry pioneers who founded one of the first US merchant cash advance providers in 2002, Capify (formerly known as AmeriMerchant), that later expanded to the UK and Australia has partnered with a subsidiary of Basepoint Capital, a seasoned specialty finance group, to form Lender Capital Partners (http://www.lendercapitalpartners.com). Basepoint has provided over $300 million in committed financings / forward flow purchases in the merchant cash advance / alternative business loan industry.
Lender Capital Partners (LCP) provides MCA and alternative business lending platforms with strategic capital including:
- Forward flow programs – LCP funds 100% of the amounts disbursed by the platform in connection with their funding of advances / business loans including sales commissions to their customers to free up cash and avoid the burden of equity requirements or “hair cut” money associated with traditional asset-based credit lines.
- Participations / Syndication – by having LCP purchase a participation in larger deals, the platform is able to offer larger size approvals to their customers and brokers / referral partners without taking on concentration risk. LCP can participate up to $1 million in each deal and provide strategic capital by offering our many years of industry experience underwriting larger size deals.
- Credit facilities – LCP provide credit facilities for MCA and alternative business loan providers that begin at a minimum of $20 million and can go up to $100 million+. Our credit facilities typically offer a higher advance rate than a bank and less stringent concentration limits.
- Broker Graduation Program – LCP will allow brokers to take the next step of becoming a direct lender by providing the capital and know-how needed to fund deals on their own. Designed for brokers that can originate a minimum of $500k/month, LCP can provide the capital needed and set up brokers with one of our partners to provide a back office if needed for underwriting / servicing without having to make the investment on their own.
- Point of Sales / Credit Card Processor Merchant Cash Advance / Merchant Financing Program – LCP can provide a turnkey solution for POS / Credit Card Processing companies to offer a merchant financing program to their merchants to compete with some of the larger POS providers / credit card processors that are now offering these programs in-house and have had great success. LCP can provide the capital needed for a merchant financing / merchant cash advance program as well as introduce one of our underwriting/servicing partners if needed.
“After exiting the US MCA business in 2017, I have decided the time is right to offer my 17+ years of global MCA / business lending experience to the industry by partnering with Basepoint to supply capital to the MCA / business loan industry. I believe the various programs we offer at Lender Capital Partners are tailored for just about any company in the industry – for both current lenders as well as larger brokers/ISOs that are looking to graduate to the next step of becoming a lender as well as to POS providers / merchant acquirers looking to offer an in-house program to their merchants. And my 17+ years industry experience is a great value-added benefit that very few lenders, if any can bring to the table”, says David Goldin, a principal of Lender Capital Partners.”
About LENDER CAPITAL PARTNERS
Lender Capital Partners provides capital to commercial lenders, particularly in the merchant cash advance / alternative business loan industry. One of the founders of Lender Capital Partners is David Goldin. David is the Founder of Capify, one of the first merchant cash advance providers in the US founded in 2002. David scaled Capify to 225 employees operating in 4 countries and sold the US business to a competitor in 2017 and secured a $95 million credit facility with Goldman Sachs to fund Capify UK and Capify Australia which has over 125 employees total today operating in each of those markets. David has over 17 years experience in the merchant cash advance / alternative business finance industry and is considered a pioneer in the industry. David’s extensive expertise allows Lender Capital Partners to bring strategic value to our relationships, not just capital. For more information on Lender Capital Partners, visit http://www.lendercapitalpartners.com
Janene Machado Appointed Director of Programs for PCMA’s New York Chapter
November 4, 2019
DeBanked’s Director of Events, Janene Machado, has been appointed the Director of Programs for Professional Convention Management Association’s (PCMA) New York Chapter. Machado will oversee the Program Committee for a three-year term (January 2020 – December 2022). The Committee is responsible for deciding on the topics, programming, logistics, and speaker invitations for the New York Chapter events.
PCMA, a volunteer driven organization, is the world’s largest, most respected and most recognized network of business events strategists with more than 7,000 members and activities in 30 countries.
Machado has overseen and directed deBanked’s exceptional events including CONNECT and Broker Fair since joining the company in July 2018. The volunteer position with PCMA will be in addition to her continuing to work for deBanked.
Knight Capital Has Been Acquired
November 1, 2019
Publicly-traded Ready Capital Corporation has acquired 100% of Knight Capital LLC. The total sales price was undisclosed but it consisted of cash and 658,771 common shares of Ready Capital stock. A share currently trades at $15.83, valuing the stock portion in excess of $10 million.
More details may emerge when Ready Capital publishes quarterly earnings next week.
“The acquisition of Knight Capital expands Ready Capital’s product offering to small businesses and does so on a platform that has achieved scale,” said Tom Capasse, Ready Capital’s Chairman and Chief Executive Officer, in a public statement. “Furthermore, the addition of Knight Capital will allow us to leverage its proprietary technology to further increase the efficiency of Ready Capital’s lending platform, enhance our borrowers’ experience and expand existing customer acquisition channels.”
Ready Capital, a multi-strategy real estate finance company, is better known by its management company, Waterfall Asset Management, LLC. Waterfall has previously provided credit facilities to companies like OnDeck, Fundation, and UK-based Lendable.
Ready Capital is headquartered in New York City and employs 400 lending professionals nationwide.
Become Closes Series A with $12.5 Million
October 29, 2019
Become, formerly known as Lending Express, has finished its Series A funding round with $10 million having been raised from Benson Oak Ventures and Magenta Venture Partners, among others, as well as an additional $2.5 million in venture debt from Viola Credit.
“We strongly believe it is time to disrupt conventional and ‘alternative’ lending practices,” said Become’s CEO and Co-founder Eden Amirav in a press release. “Become’s technology provides SMBs with the transparency and insights they need to improve their unique financial profiles to attract legitimate funders. This creates a new market for alternative lenders and opens opportunities for formerly ‘unfundable’ SMBs to be bigger, better and [sic] more successful. This funding will allow us to expand our global reach and change the industry for the better, as we ensure that every business that deserves funding has the tools to make it happen.”
The technologies being referred to here are Become’s LendingScoreTM, an analytics program that uses a host of variables to determine businesses’ chances of funding; and their new online marketplace that was launched last month.
Marketed as “Expedia for loans,” the marketplace allows all players in the alternative funding ecosystem, be they funders, brokers, or small business owners, to carry out their functions in one place. The draw being that all processes, such as the looking around for funders, the application for funds, and the approval, can be done through the marketplace. Beyond this, Amirav told deBanked that Become’s systems monitors the performance of those businesses who have signed up to the marketplace and makes recommendations of when to apply for funds, as well as how much to apply for, based on the data they accrue.
“There’s nothing like this in small business. The idea is to give small businesses the power, instead of sending them to lenders, where they’re applying for funding and each application hurts their credit score,” asserted Amirav. “Until today the only ways businesses would get money would be to go out and beg lenders. But now we’re giving the businesses the power.”
