Industry News
OnDeck Hires Capital One Exec to Head Products
August 11, 2016
Online lender OnDeck appointed Capital One Garage co-founder, Gagan Kanjila as vice president of Product to lead design, manage channels and spearhead business initiatives.
Kanjila joined Capital One in 2001 as program manager in the credit card collections department. Since then, he has built and ran the digital product for financial services, auto finance and home loans divisions. With 20 years of experience, Kanjlia launched the first savings product that earned airline miles, the mortgage industry’s first instantly-issued mobile prequalification and the country’s second largest digital-only bank.
“This newly created role on our senior management team reinforces our commitment to product and technology innovation as key drivers of our growth,” said CEO Noah Breslow in a statement. “In addition to leading the product team to optimize our customer experience and existing credit offerings, Gagan will spearhead new initiatives that build upon OnDeck’s expertise in using new data, analytics, and technology to transform small business lending.”
This comes at a time when the company is transitioning from a marketplace lender to a balance sheet lender. Earlier this week, (August 8th) the company reported a $17.9 million loss in its Q2 earnings but funded a record $590 million in loans. The move cost the company a fair share of its cash reserve — from $160 million on December 31, 2015 to only $78 million at the end of Q2. OnDeck CFO Howard Katzenberg said that this wasn’t a burn, but rather cash being invested into their loans, all part of their plan of moving away from the marketplace.
Letter From the Editor May/June 2016
July 16, 2016
How can I possibly sum up the events that have occurred between this issue and the previous one? At the LendIt Conference, the excitement was still there but it had retreated from the blinding levels of sensational bliss it had exhibited in years past. That energy would only drop further in the weeks thereafter. Q1 reports showed a slowdown in originations at some of the industry’s largest players. Then, of course, Lending Club announced their chief executive had resigned in what originally appeared to be a small scandal.
The timing couldn’t have been worse because regulatory scrutiny was already starting to pick up. A controversial bill introduced into the Illinois State Senate was one of the first signs that the times are a-changin’. Several trade organizations have formed in 2016 to educate policymakers, an accomplishment that seemed almost impossible in previous years because of the competitiveness between rivals. And yet, there they were on Capitol Hill just recently, grouped together to tell their stories and explain the positive impacts they are having on the American consumer or small business.
The Internet will indisputably have a central role in how lending takes place in the future. But does that make the companies that provide loans over the Internet online lenders? Or will they just be lenders that are perhaps more tech-enabled or tech-dependent? Even banks are using technology and the Internet to interact with their customers. That makes naming the industry or sub-industries of which each company is a part of even more challenging these days. Are they online lenders? Marketplace lenders? Balance sheet lenders? Fintech companies? Crowdfunders? Peer-to-peer lenders? Non-bank funders? An identity crisis only makes advocacy more challenging, especially when distracting headlines are dominating the news. One can only imagine what a regulator must think. Hopefully all becomes clear in due time.
Letter From the Editor – July/August 2016
July 1, 2016Challenges facing some of the most well-known consumer lenders in the technology era has caused the mainstream media’s love affair with “marketplace lending” to erode. For example, the Wall Street Journal published a story on July 7th with the cheeky title New Growth Plan for Online Lenders: Layoffs. “In the world of online lending, the hot, new thing is the pink slip,” wrote WSJ’s Peter Rudegair. But if you make it past the headlines, you’ll notice that most of the gloom is constrained to the consumer side. The commercial side on the other hand, is still booming.
I saw this firsthand at a ribbon cutting I attended to celebrate the opening of a new office in Jersey City. And I saw it firsthand when a commercial finance ISO put up help-wanted ads after signing a long-term lease in lower Manhattan. And when I didn’t see it with my own eyes, I read the press releases or conversed with the execs that had just closed major deals. While confidence has retreated from its euphoric highs, a feeling we were actually able to attribute a score to, optimism certainly persists.
In this issue, we shed a spotlight on some of that optimism, while continuing to do what we do best, keeping you apprised of what’s happening out there. Whether it’s ways to keep salespeople motivated or exploring the boundaries of a product at home and abroad, I hope you walk away from this magazine and all of our future ones, a little delighted, determined and debanked…
Pearl Capital Secures $20 Million Financing Deal
June 22, 2016
NYC-based Pearl Capital has secured $20 million from Arena Investors, LP.
In their official company announcement, Pearl CEO Solomon Lax said, “With the support of our outstanding financial partners we can continue to expand our mission of supplying funding to any small business with the desire for capital and ability to thrive.”
Pearl Capital was acquired by Capital Z Partners last year.
Letter From the Editor – March/April 2016
March 1, 2016In early 2016, a recession seemed inevitable, until it didn’t. Rumors of rising defaults across a variety of marketplace lenders have been defended as falling within model estimates. The stock market’s sudden plunge recovered. And Madden v Midland’s long-term impact is being chalked up as overblown. All is well again, well mostly anyway. Institutional investors have gotten a little spooked and the once insatiable appetite seems to have become just a little bit satiable.
But we’re back, and so is the beast that has come to be known as “marketplace lending.” The FDIC says that term can encompass unsecured consumer loans, debt consolidation loans, auto loans, purchase financing, real estate loans, merchant cash advance, medical patient financing, and small business loans. It can “include any practice of pairing borrowers and lenders through the use of an online platform without a traditional bank intermediary,” they wrote in their Winter 2015 Supervisory Insights report.
In this issue, we examined one piece of marketplace lending that has created many success stories, the merchant cash advance industry. For years, it’s turned hungry 20 somethings into front-page worthy stars. Will that trend continue or has the moment passed? The quality of leads will play a role in who makes it big and who doesn’t, said some of the folks we interviewed. Ironically, while the industry is often considered to be online, the Internet is reportedly becoming a less reliable place to acquire customers because of competition and cost. Having problems with leads? You’re not alone, we’ve learned.
But not everyone is struggling. In March, we published a list of the top 8 alternative small business funders of 2015. The numbers were either reported to us directly or we determined them using publicly available information. In this issue, we’ve got the year-over-year statistics for 18 companies. Some of them might surprise you.
I don’t want to finish off my introduction to this issue with the R-word, but since there were signs of weakness earlier this year, we did ask the wider marketplace lending industry what to expect from the next recession. Everything is at risk, they said, from borrower defaults to institutional backing to regulatory action. Marketplace lending, however big and strong it is now, is not believed to be impervious to market forces. Will the beast prevail? Or is it destined to fail?
–Sean Murray
Lending Platform Orion First Appoints CTO
February 24, 2016
Lending platform Orion First hired Paul Marcoe as its Chief Technology Officer.
Marcoe joins Orion from Financial Pacific Leasing where he was the vice president of information systems and security where he spent 20 years spearheading the direction and development of several campaigns to update and improve internal systems.
“Paul is a talented Information Technology executive with proven industry experience.” said David T. Schaefer, CEO of Orion First. “His robust skillset, numerous successful projects managed and overall IT vision make him a perfect fit to lead technology initiatives here at Orion.”
Orion is a third-party servicer in small business commercial finance marketplace. In 2014, they secured a relationship with Raisworks, an online direct lending platform that connects small businesses with institutional lenders looking to lend directly to private businesses.
During a 2015 conference panel, Orion First CEO David Schaefer had said that humans should still play a role in underwriting.
Letter From the Editor – Jan/Feb 2016
January 1, 20162016 is here and the world of alternative finance isn’t slowing down. If you’re a commercial finance broker, the environment has gotten a little bit more competitive. Sorry folks, the Ferrari might have to wait, at least that’s what some of the sources we interviewed are saying.
But it’s not all bad, the path to success is just changing. Cold calling and direct mail are giving way to new ideas such as Times Square billboards, referral relationships, and diversified product lines. Along the way, regulatory compliance is permeating thought processes more than ever before. The SBFA (formerly NAMAA) is evolving and other groups are trying to make their presences felt as well.
Certain models may be tested by rising interest rates in 2016. Investors in marketplace lending may be wooed by safer investments that pay out a smaller, yet acceptable yield. Or perhaps a volatile or declining stock market will encourage more investors than ever before to flock to marketplace lending. Several predictions made by the “experts” in 2015 will be tested. It’s amazing to think that we really haven’t had economic or market conditions change in a long time.
The fact that it’s a presidential election year could also stir things up. Democratic contender Bernie Sanders for example, has pledged to wage war on lenders by instituting nationwide interest rate caps to levels that would likely cripple both marketplace lenders and credit card companies.
With all of these things to consider, perhaps the two guys that lost God and found $40 million (as told in Bloomberg this past October) are better off retired on a beach in Puerto Rico. Then again, we’ve got a more compelling story in this issue with two guys from somewhat similar circumstances. Jared Feldman and Dan Smith, co-founders of Fora Financial, sold a part of their company to Palladium Equity Partners LLC late last year. Fora fittingly means marketplace in Latin and the pair still run the company from New York City. The two entrepreneurs are featured on this issue’s cover and should serve as a reminder to anyone reading, that the industry has so much more room to grow.
–Sean Murray
Advertising in deBanked’s E-mail Newsletters is Sold Out
November 1, 2015deBanked’s twice-monthly email newsletters have had such tremendous industry reach that advertising space in them is currently sold out.
Thanks to everyone that has made them such a huge success. Our readership continues to get bigger and bigger.
deBanked still has limited availability in its other channels including website sponsorship, print magazines, and email blasts. If you are interested in that, please give us a shout.
