Industry News
Shopify Capital Issued $60.4M in Merchant Cash Advances in Q1
May 1, 2018
Shopify Capital, Shopify’s small business funding arm, issued $60.4 million in merchant cash advances in Q1, according to the company’s earnings report, an increase of more than 300% year-over-year. The company has advanced $230 million to merchants since April 2016.
On the company’s earnings call, Canaccord Genuity equity researcher David Hynes, inquired about the patterns of seasonal demand one could expect for the company’s merchant cash advances.
“So in terms of seasonality on Shopify Capital,” said Shopify COO Harley Finkelstein, “it’s important to note that the use of proceeds for Shopify Capital for most of our merchants tend to be in the realm of inventory or marketing spend, which we quite like, because that leads to more sales, which makes it easier for them to return the capital to us.
“Obviously, there’s the seasonality of capital reflecting the seasonality of retail in general, which is certainly more of a Q4 issue than it is a Q1 issue,” he added.
Canaccord’s Hynes also referred to Shopify’s product as a loan but was corrected by Finkelstein.
“Just keep in mind, these are not loans, these are cash advances, so I want to be very clear about that,” Finkelstein explained.
Shopify is a Canadian e-commerce company headquartered in Ottawa, Ontario. It is also the name of its proprietary e-commerce platform for online stores and retail point-of-sale systems
View the company’s earnings report here
BlueVine Announces $200 Million Credit Facility
May 1, 2018
BlueVine announced today that it has secured a $200 million asset-backed revolving credit facility with Credit Suisse. This will be used to expand its business line of credit product and the company’s customers will now be eligible for a credit line of up to $250,000.
“Capital markets partnerships are critical to our ability to scale and effectively serve our expanding customer base,” said BlueVine CFO Ana Sirbu. “This financing will support our next phase of growth [as] we continue to build a business for the long-term by offering the best working capital financing solutions to business owners.”
The company offers two products – invoice factoring and business lines of credit. The latter was introduced in January 2016 with a maximum credit line of $30,000, Sirbu told deBanked. That maximum soon became $50,000 and has steadily risen. In February, the company increased its business line of credit from $150,000 to $200,000.
Founded in 2013 by CEO Eyal Lifshitz, the company first offered only factoring in March 2014. Now, Sirbu said that the breakdown of its business is about even between its factoring and business line credit offerings.
This is BlueVine’s first facility with Credit Suisse. Not counting this facility, the company had $318 million in funding as of October 2017, according to Crunchbase.
BlueVine is headquartered in Redwood City, CA, with other offices in Jersey City, NJ, New Orleans, LA, and a large office in Tel Aviv, Israel, where most of its Research and Development team is based. Altogether, BlueVine employs about 200 people.
Yellowstone Capital Funded $61 Million in April
May 1, 2018Yellowstone Capital originated $61 million in funding to small businesses in April, according to the company. The year-to-date total now exceeds $200 million.
Yellowstone Capital, which is based in Jersey City, NJ, originated $553 million in 2017.
Kabbage Acquires Orchard
April 26, 2018
Following speculation, Kabbage officially announced today that it has entered into a “definitive agreement” to acquire Orchard, a financial technology and analytics company that provides data to lenders and investors.
“I’m most excited about the people [at Orchard] because, while they’ve built this amazing technology, it takes a long time to get the right people in place,” said Kabbage co-founder Kathryn Petralia. “And they’ve built a great culture and great company of talented individuals who I think really understand the industry…and can help us get to where we’re trying to go.”
Kabbage and Orchard have enjoyed a working relationship for some time already, Petralia told deBanked. (Kabbage has been a client of Orchard).
More than 20 employees from New York-based Orchard will move to Kabbage’s New York office, including two of its founders, Matt Burton and David Snitkof. The company was founded in 2013 by Burton and Snitkof, along with Angela Ceresnie and Phil Rosen.
Burton previously worked at Google and Snitkof previously worked at Citigroup and American Express.
“Like most businesses, we often listened to interesting offers, but never found the best fit. Until Kabbage,” Snitkof said of its decision to be acquired by Kabbage. “Everything from their mission, technology focus and culture is aligned with Orchard. [And] there are really interesting innovations we can do together by combining our data science platforms.”
Orchard has a proprietary technology platform that simplifies mass-data analysis and Kabbage has a forecasting and predictive analytics engine that strengthens its automated underwriting platform. Together, they hope to create an even stronger platform that helps small businesses access capital quickly and efficiently.
“Integrating our two data science platforms will take time, but we’re excited for what’s to come,” said Snitkof.
Almost ten years old, this is Kabbage’s first acquisition. Asked if the company is “on a buying spree,” Petralia said no, but also acknowledged that they are now in a position to make acquisitions, like Orchard, that can help them build their business faster, as long the acquisition makes sense.
Founded in 2009, Kabbage is headquartered in Atlanta and has provided over $4 billion to more than 130,000 businesses.
Ascentium Capital Surpasses $4 Billion in Originations
April 18, 2018
Texas-based lender Ascentium Capital announced last week that it had surpassed $4 billion in origination volume since the company was founded in 2011.
The company has two key channels of business. The vendor channel, in which Ascentium creates custom finance programs for clients like equipment manufacturers, distributors and resellers. It calls these clients its “vendor partners.”
“We do a lot of our business with vendor partners, typically [a company] selling something to a small business,” said Ascentium Capital CEO Tom Depping.
The other business channel is a direct channel where Ascentium makes direct loans to small and medium sized businesses of up to $250,000. Depping told deBanked that the company’s direct channel makes up about 30 to 40 percent of its business. Not an insignificant percentage. But he said that the company’s primary business is equipment finance via vendor partners.
Ascentium gets its leads from an internal sales team of 120 people and Depping said that he anticipates adding 50 additional sales people this year. Why the significant growth?
“Our award-winning finance platform, elevated levels of efficiencies and our personalized service continue to drive demand for our financial products,” said Depping. “Everything with us is very simple and very fast.”
The company currently employs 250 people with headquarters in Kingwood, TX, near Houston, with smaller offices in Dover, NH and Irvine, CA. Depping also counts 30 to 40 locations throughout the country where Ascentium Capital sales people either work from home or in micro-offices of one to two people.
CAN Capital Hires New CFO
April 17, 2018
CAN Capital has just hired Tom Davidson, a finance veteran, to become its new CFO. Davidson joins CAN Capital from Sierra Auto Finance where he was Chief Financial Officer and Chief Capital Officer. Before that, he worked at GE Capital for 16 years, eventually becoming Chairman and CEO of GE Capital Markets, Inc.
“Given that we’re growing rapidly and looking to expand our business significantly, we were looking for someone with the kind of experience Tom has,” CAN Capital CEO Parris Sanz said. “Mainly an expert in capital markets [with] great experience and expertise with securitizations, treasury and investor relations. [The decision to hire Davidson] is reflective of our future growth plans and the speed with which we expect to be growing.”
CAN has funded more than $200 million to small businesses since their rebirth in July last year. Between term loans and MCA funding, Sanz said that CAN Capital’s business is about 80 percent term loans and 20 percent MCA.
“It’s rare to have the opportunity to join a company that is a genuine pioneer in its field and also so well-positioned for future growth,” Davidson said. “[Also] what attracted me to CAN Capital is the opportunity to serve the small businesses that form the backbone of the American economy.”
Davidson will be replacing Ray De Palma who is staying on at the company in the role of Chief Accounting Officer. Founded in 1998, CAN Capital celebrates its 20th anniversary this year. It has about 150 employees spread across three offices in New York, Georgia and Costa Rica. The bulk – about 120 employees – are in Georgia. The executive and accounting teams are located in New York and part of the company’s IT team is based in Costa Rica.
Kabbage to Acquire Orchard Platform Markets
April 14, 2018Update 4/26/18: The acquisition is now confirmed
Kabbage is set to acquire Orchard Platform Markets, a provider of lending data and investment advisory services, according to a Bloomberg report yesterday. However, neither company has confirmed this and both companies were unreachable today.
Orchard was founded in 2013 by David Snitkof, Angela Ceresnie, Jonathan Kelfer, Matt Burton and Phil Rosen. Burton and Kelfer both worked previously at Google and Snitkof and Ceresnie worked at Citigroup and American Express. The company has raised nearly $60 million in three rounds, according to Crunchbase, and investors include Spark Capital, Thrive Capital, as well as Vikram Pandit, former CEO of Citigroup and John Mack, former CEO of Morgan Stanley. Indeed, no shabby group.
As this acquisition has not yet been confirmed, the amount Kabbage might be paying for the company is also unknown. According to Orchard’s website, it employs 31 people (including executives) in an office in Manhattan’s Flatiron district, known as a hub for tech startups. The Bloomberg story indicates that co-founders Burton and Snitkof will join Kabbage at its New York office. Founders Ceresnie and Rosen no longer work for Orchard. With headquarters in Atlanta, Kabbage is one of the largest small business lenders in the country and recently launched a new feature of its loan product at LendIt.
Despite the big name investors Orchard had when it started, some suspect the company may have lost momentum. deBanked called a number of leaders in the alternative lending space and none were willing to comment until the acquisition was made certain.
World Business Lenders Responds to the New York Post Story
April 13, 2018
A controversial story published in the New York Post earlier this week about World Business Lenders has drawn a response from the company. The text below was circulated by email to all World Business Lenders employees. With permission, it is being republished here.
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As you may be aware, an article appeared earlier this week in a local tabloid which described entirely unsubstantiated allegations against our company and members of its senior management team made by a disgruntled former employee. Because the allegations are as inflammatory as they are baseless, I thought you should hear from me, since I am responsible for the day-to-day operation of the company’s business and ensuring compliance with its policies. Nevertheless, I am accountable to WBL’s Board of Managers. As soon as we became aware of these false allegations, we alerted the Board, including retired U.S. Congressman Edolphus Towns, who chairs the Board committee which focuses on WBL’s reputation in the business community. During his many decades of distinguished service to our country, Congressman Towns chaired the U.S. Congressional Black Caucus and the U.S. Committee on Oversight and Government Reform.
First, the allegations of race discrimination are patently false. I am very proud of WBL’s unwavering commitment to the practice of providing equal employment opportunities to all of its employees and applicants; our company has zero tolerance for employment discrimination or retaliation of any type. And, I want to remind you that, if at any time you feel you are being treated unfairly at work, for any reason, WBL’s policy encourages you to surface and escalate such concerns.
Second, I want to address this disgruntled employee’s outrageous and untrue allegations that WBL defrauded the State of New Jersey. Since we moved to Jersey City in 2016, we have been welcomed with open arms by the State and maintained a cooperative and constructive relationship. WBL has participated in and supported State programs designed to provide employment to some of New Jersey’s most vulnerable residents. We continue to enjoy our partnerships with various State agencies, including our ongoing grant from the Economic Development Authority. To be clear, at no time has any agency of the State of New Jersey expressed any concerns or reservations about our Company or its activities. Rather, we have been commended for our contributions to the economy, both locally and on a state-wide basis.
Finally, I want to assure you that WBL is not in the habit of succumbing to poorly veiled financial demands, and we will not do so here.
– Doug Naidus, CEO
