Industry News
Caught! Backdoored Deals Leads to Handcuffs
April 2, 2018
A case of sneaking deals out the backdoor has resulted in another arrest at Yellowstone Capital.
According to someone familiar with the arrest and the events leading up to it, an employee was led out in handcuffs by police officers last week after Yellowstone’s management discovered she was diverting company deals to an outside party.
Yellowstone Capital would not offer comment on the matter, though last September, CEO Isaac Stern had told deBanked that “Yellowstone is investing tons of time, money, and effort to prevent data theft. We are doing everything in our power, everything, to address it, and we have even enlisted the assistance of an outside security firm.”
At that time, deBanked had obtained a photo of a female employee being led out by Stern and several police officers. That employee is said to have pled guilty to a felony theft charge after being busted for transmitting sensitive company deal data to a third party. It was the second such conviction deBanked is aware of that involved backdooring deals.
Though funding companies are generally reluctant to share the extent of their security methods, deBanked has learned that the level of technology being used by some players to detect data theft would probably come as a surprise to many perpetrators. Chances are that if you have engaged in it, it has been tracked or recorded.
“They think we don’t know, but we know the industry,” Stern told deBanked last year in reference to questions about security. “Ultimately we will catch you.”
Strategic Funding Builds Executive Team
April 2, 2018
New York-based Strategic Funding has announced the expansion of its executive team with the appointment of a new CFO and the addition of two new roles, Chief Risk Officer and Chief Product Officer.
“It’s a very competitive world and you have to be able to offer more capabilities and have the right players on the field,” Strategic Funding CEO Andrew Reiser told deBanked regarding the creation of these new positions.
Jeffrey Newman will take on the new role of Chief Risk Officer and his responsibilities will be to enhance Strategic Funding’s credit, risk, and fraud management models.
“We’re rolling out 3.0 of our credit risk modeling,” Reiser said.
As Chief Risk Officer, Newman will also play a key role in managing the company’s portfolio to ensure that it meets profitability goals. Newman is not new to this role. Since 2010, he was Chief Risk Officer of Consumer & Small Business for Citigroup.
The role of Chief Product Officer will be filled Arun Narayan, who has been with Strategic Funding since 2014, most recently as Senior VP of Risk and Analytics. Raiser said that this role is very data oriented and deals a lot with the customer experience, for both brokers and merchants. The role will be about “keeping the process smooth, fast and predictable,” Reiser said.
The Chief Financial Officer, not a new role, will be filled by Anthony Rose. Rose developed strategic and financial initiatives at JPMorgan Chase, Credit Suisse and, most recently, at Dime Community Bancshares, a publicly traded finance company.
Founded in 2006, Strategic Funding primarily offers MCA financing and business loans, but also does some equipment financing and factoring as well. The company has 240 employees spread across four offices in New York, NY, Williamsburg, VA, Rockwall, TX, and Boca Raton, FL.
SBFA Braved Snow Storm for Spring Fly-In
March 23, 2018
The Small Business Finance Association (SBFA) had their Washington DC Spring fly-in earlier this week. SBFA members met with Karen Kerrigan, the President and CEO of the Small Business & Entrepreneurship Council, on Tuesday afternoon, and Congressman Josh Gottheimer (D-NJ) in the evening.
Despite the blizzard, a handful of members continued to meet with members of Congress on the Hill on Wednesday.
Founded ten years ago, The SBFA is a non-profit advocacy organization dedicated to ensuring Main Street small businesses have access to the capital they need to grow and strengthen the economy.
Merchant Advance Capital Closes $30 Million Debt Facility
March 15, 2018
Canadian Merchant Advance Capital closed a $30 million debt facility from Comvest Credit Partners today.
“This is giving us significant runway,” Merchant Advance Capital CEO David Gens told deBanked. “For the next 12 months in particular, we’ve got great visibility as far as where our incremental capital is going to come from. This will allow us to focus less on fundraising and more on just building the business.”
Founded in 2010, Merchant Advance Capital offers several small business financing products including fixed term loans and business lines of credit. It also provides something called “The Good Cents Loan,” which Gens said he would like see more applicants for.
These loans are designed for businesses “that will positively impact the community or environment around them,” according to the company website. They require a more thorough application and the entrepreneur needs to convey to Merchant Advance Capital how the funds will help further their more socially or environmentally responsible cause. The company has only made a few of these loans which Gens said do not make money because the rates are so low.
This is the largest facility Merchant Advance Capital has gotten to date. However, Gens said that the business is primarily equity funded so that even as the business uses this new debt facility, it will still have more equity than debt.
Merchant Advance Capital generates most of its business through ISOs and partners and has two offices, one in Vancouver and the other in Toronto. Of about 50 employees, two-thirds work at the company headquarters in Vancouver.
2017 Small Business Financing Leaderboard
March 14, 2018Thanks to several companies filing their annual earnings statements and Funding Circle disclosing their USA origination figures for 2017, we’ve been able to put together a leaderboard in the small business financing space. This list is not comprehensive and omits key players like PayPal Working Capital and Amazon Lending.
| Company Name | 2017 Originations | 2016 | 2015 | 2014 |
| OnDeck | $2,114,663,000 | $2,400,000,000 | $1,900,000,000 | $1,200,000,000 |
| Kabbage | $1,500,000,000 | $1,220,000,000 | $900,000,000 | $350,000,000 |
| Square Capital | $1,177,000,000 | $798,000,000 | $400,000,000 | $100,000,000 |
| Yellowstone Capital | $553,000,000 | $460,000,000 | $422,000,000 | $290,000,000 |
| Funding Circle (USA only) | $500,000,000 | |||
| BlueVine | $500,000,000* | $200,000,000* | ||
| National Funding | $427,000,000 | $350,000,000 | $293,000,000 | |
| Strategic Funding | $393,000,000 | $375,000,000 | $375,000,000 | $280,000,000 |
| BFS Capital | $300,000,000 | $300,000,000 | ||
| RapidAdvance | $260,000,000 | $280,000,000 | $195,000,000 | |
| Credibly | $180,000,000 | $150,000,000 | $95,000,000 | $55,000,000 |
| Shopify | $140,000,000 | |||
| Forward Financing | $125,000,000 | |||
| IOU Financial | $91,300,000 | $107,600,000 | $146,400,000 | $100,000,000 |
*Asterisks signify that the figure is the editor’s estimate
OnDeck CFO Moves On After 10 Years
March 13, 2018OnDeck announced yesterday that its CFO, Howard Katzenberg, would be leaving on March 26th and is being replaced by Kenneth A. Brause. An OnDeck spokesperson told deBanked that Katzenberg’s departure is completely amicable.
“[Katzenberg] is still a young man and he’s looking to make the next mark in his career,” the spokesperson said.
Katzenberg started with OnDeck in 2008 as one of its first employees. He will stay on as an advisor through the middle of April to guarantee a smooth transition. Brause, his replacement, has more than 30 years of experience in the financial services industry and currently works as Executive Vice President & Treasurer at CIT Group.
Thinking Capital Acquired by Canadian Finance Firm Purpose Financial
March 12, 2018
Thinking Capital, a leader in the fintech lending industry in Canada, was acquired last week by Canadian finance company, Purpose Financial, based in Toronto.
“Under the Purpose Financial umbrella, our time to market on product innovation and funding capacity will be greatly amplified,” said Jeff Mitelman, CEO and co-founder of Thinking Capital.
Mitelman, who co-founded Thinking Capital in 2006, has long been an advocate for improving the way small business credit is evaluated and communicated in Canada.
“The challenge in Canada is that our lending institutions historically either don’t lend to small business or don’t lend to enough of our small businesses,” Mitelman told deBanked. “And that’s driven by the fact that so many of the measures of small business credit worthiness simply don’t exist. Our credit bureaus don’t report on it, there aren’t metrics or scores unique to small business, and most significantly, small business credit has never been attached to retail or institutional conduits for funding.”
This is where Purpose Financial comes in. Mitelman believes that Purpose Financial’s investment arm and its relationship with Omers, a large Canadian pension fund, will provide small businesses with “access to conduits that historically small businesses have never been able to access.”
Thinking Capital provides an MCA product, which it calls Flexible, as well as a term product, which it calls Fixed. It also helps power loans provided by large companies like Staples.
Purpose Financial has three verticals: Investment Management (retail and institutional), Digital Technology, and Capital / Funding.
“Thinking Capital is a clear leader in the small to medium-sized business lending space…” said Som Seif, CEO of Purpose Financial. “[And] this acquisition brings together leading origination, asset management, and technology platforms as a unified entity, and enables us to bolster our product capabilities and optimize the technology, distribution, and funding model of our combined business.”
CIT Group Appoints Factoring Veteran for Southeastern Region
March 2, 2018CIT Group Inc. announced today the appointment of Jerry Younts, a factoring veteran, to its Commercial Services team.
According to Textile World, Younts will serve as Senior Business Development Officer. He will be responsible for offering factoring and asset-based financing services to furniture, textile, and floor covering manufacturers, among others, mostly in the Southeastern United States.
“CIT is continuing to build a best-in-class team to provide factoring and other financing options to Southeastern manufacturers and importers,” said Mike Hudgens, Southeast regional manager for CIT’s Commercial Services group. “We are pleased to welcome Jerry to our lineup of experts.”
The New York City-based public company also has a corporate office in Livingston, NJ and provides an array of financing alternatives including SBA loans and Syndicated loans.
Prior to CIT, Younts worked most recently as Senior Vice president at BB&T Commercial Finance in its factoring group. Before that, he was Senior Vice President at AdvanedAR, a Charlotte, NC-based AR company.
