Industry News
Brief: Cross River Bank Raises $28 Million in Equity
November 1, 2016
New Jersey-based Cross River Bank, a marketplace lending partner bank, secured $28 million in equity, led by Boston-based investment firm Battery Ventures, along with Silicon Valley venture capital firms Andreessen Horowitz and Ribbit Capital.
The capital will be used to expand the bank’s technology and product-development teams, invest in compliance infrastructure and plan new business lines to the online lending industry. Battery General Partner Scott Tobin will also join the Cross River board of directors.
Cross River originated over $2.4 billion loans in 2015 and partners with over 15 online lenders including Affirm, Borrowers First, Marlette Funding, Rocket Loans and Upstart.
Letter From The Editor – Nov/Dec 2016
November 1, 20162016 didn’t produce the robots, laser beams and interplanetary colonization I jokingly predicted in the final issue of last year. Instead, the year was rife with terrestrial matters like profitability, sustainability, legal compliance and adjusted expectations. The advances made in financial technology revealed their vulnerabilities and in some cases, their mortalities. But those still standing at the end of 2016 may be better prepared for the future than when they started. Change, in whatever form it may take, can be good.
You need not look further than Mark Cerminaro, the chief revenue officer of RapidAdvance who once aspired to play football in the NFL. Change came for him in several forms, from a sports injury to a harrowing experience in the World Trade Center on 9/11. Today, he’s a major mover and shaker in alternative finance, having made it on the Commercial Finance Association’s 2016 “40 under 40” list of achievers. In this issue, you’ll learn more about Mark and his rapid advance with RapidAdvance.
Change for another fellow came at a more significant cost. In October, an MCA broker turned-debt negotiator was arrested and charged with mail fraud. It’s alleged those debts he offered to negotiate didn’t actually get negotiated and he left a trail of damaged merchants and funders in his wake as a result. But that’s just the tip of the iceberg, you’ll learn, as the scheme descended into a legal war that involved Native American tribes, fake names and phony lawyers. It’s a side of the story that even federal agents left alone.
Change was also once promised by a man known as Senator Barack Obama, many years ago. Did he accomplish it? One thing for certain is that a bigger change, a “yuuge” change even, is coming in the form of a President Donald Trump. He has pledged to repeal and replace Dodd Frank, a bold intention made by an even bolder man. Trump is the curveball that breaks predictive models, a force that could be really good or really bad. Most of the advances in fintech have only known a world in which Obama is President. Is the industry ready for Trump?
It’s difficult to project what will happen in 2017, but in this issue, funders bid adieu to 2016. See you next year.
What Next? SoFi Wants to Sell Life Insurance
October 31, 2016After student loans, mortgages and parent loans, Sofi is making a new leap into life insurance.
The company is set to launch a life-insurance product in partnership with Protective Life Insurance Co, that was acquired by Japanese life insurance company Dai-ichi, last year. The Wall Street Journal reported that SoFi obtained licenses to operate as an insurance broker in states including Arkansas, California, Florida, Massachusetts, New York and South Dakota.
According to KPMG and CB Insights report ‘Pulse of Fintech 2016,’ the first two quarters of 2016 saw $1 billion in VC investment, making insurance “ripe for disruption.”
“Insurers across the world are struggling with a myriad of challenges: low levels of consumer trust, high competition, a low interest rate environment, shrinking profitability and legacy IT issues. Addressing these challenges and creating opportunity for growth can be difficult as any solutions, especially those involving technology, can be complicated, expensive and potentially high risk,” the report said.
Founded in 2011 by Mike Cagney and his fellow classmates at Stanford School of Business, SoFi started refinancing student loans with a pilot loan program of $2 million. Since then, the company has branched out into mortgages, personal loans, parent loans and wealth management services.
Coming Soon: The OCC’s Fintech Innovation Office
October 27, 2016Coming soon: An innovation office to work with fintech upstarts poised to disrupt to the industry.
The Office of Comptroller of the Currency that regulates and supervises banks plans to set up a dedicated “fintech innovation office” early next year with branches in New York, San Francisco and Washington.
In an attempt to “identify, understand and respond” to the changing banking landscape, the OCC said that the unit will establish an outreach and technical assistance program for banks and nonbanks, conduct research and promote inter-agency collaboration and act as a point of contact for information and requests.
“By establishing an Office of Innovation, we are ensuring that institutions with federal charters have a regulatory framework that is receptive to responsible innovation and the supervision that supports it,” said OCC chief Thomas Curry.
Last month, Curry said that his office was evaluating the “unique risks” fintech companies might pose to the banking system under a less favorable credit cycle. The OCC also plans to release a paper in the next two months raising issues with a limited-purpose charter for nonbanks similar to credit card banks and non-deposit taking entities.
Brief: Lendio Raises $20 million for Growth Marketing
October 25, 2016
Salt Lake City-based loan marketplace Lendio raised $20 million in new funding through a round led by Comcast Ventures and Stereo Capital. Other participants included Napier Park, Blumberg Capital, Tribeca Venture Partners and North Hill Ventures, all of whom were exiting investors. Lendio plans to use the funds towards growth marketing.
“Over the past year, we’ve been busy testing new customer acquisition strategies. With this new round of capital, we now have the resources to launch these exciting new initiatives that will help us to expand our brand awareness and help small businesses find the best loan for any situation,” said Lendio CEO Brock Blake.
Lendio is a loan marketplace that has done partnerships right. The company’s three lucrative deals with American Express, GoDaddy and Staples fueled $63 million in Q3 funding. Last month, the company added Detroit-based working capital financing company Supplier Success to its platform, to improve capital access to businesses owned by minority and women owners.
“Lendio’s success securing meaningful partnerships and impressive year-over-year growth shows the company is poised to go big,” said Dave Zilberman, managing director of Comcast Ventures, who will join Lendio’s board of directors as part of the transaction.
Total Merchant Resources Obtains California Lending License
October 17, 2016Piscataway, N.J. – October 17th 2016 – Total Merchant Resources, a Piscataway based business funder and a veteran in the merchant cash advance space, has obtained their California Lending License to capitalize on providing businesses with working capital in the Nation’s most populous state. This new designation allows TMR to quickly and easily extend money to small and medium sized business throughout the Golden State.
“We are thrilled to have access to this very important market. In addition, TMR is now perfectly positioned to do business in California as we await the imminent and necessary regulation of the industry,” said TMR Co-Founder and CEO Jason Reddish.
Reddish and co-founder and CFO Val Pinkhasov, who were recently featured on CNBC’s ‘Shark Tank’, were among the very first business lenders to enter this space. They are a respected name in the industry and thanks to their major prime time TV appearance, have brought attention to this underutilized model for businesses to obtain working capital.
For more information contact Gary Lane, Director of Business Development at (212) 220-9872.
Time To Get Back On Track! The Commercial Loan Broker Conference and Lend360 Kick Off This Week
October 2, 2016
If you’re one of those people who book things at the last minute, well then there’s technically still time to register for the NACLB’s Commercial Loan Broker Conference and Lend360. As each are taking place over roughly the same few days this week, you should expect a great experience regardless of which one you choose to go to. You could also split your staff up and attend both!
I’ll personally be at the Commercial Loan Broker Conference at the Red Rock Casino in Las Vegas and am scheduled to participate in an industry reporter’s panel there early Thursday morning.
At last year’s Lend360, Congressman David Scott (D-GA) famously blessed the online lenders after urging them to educate policymakers about what they do.
The industry hopes to see you at one or both of these shows:
Commercial Loan Broker Conference
Who should go?: Business loan brokers, MCA brokers, equipment finance companies, lenders, MCA funders, investors, etc.
When is it?: October 4 – 6
Where is it?: Las Vegas
How do I sign up?: Register here
Lend360
Who should go?: Consumer Lenders, Business loan brokers, MCA brokers, MCA funders, investors, etc.
When is it?: October 5 – 7
Where is it?: Chicago
How do I sign up?: Register here
Bonus: Use promo code deBanked15 for 15% off the registration price
Kalamata Capital Chairman Steven Mandis Authors Second Book
September 25, 2016
Kalamata Capital Chairman Steven Mandis is doing more than just approving small businesses up to $750,000 in under 24 hours. He’s also just authored a new book, The Real Madrid Way: How Values Created the Most Successful Sports Team on the Planet.
Not a subject you expected from a tech-driven small business lender? Steven Mandis is not your average industry executive…
Prior to Kalamata, he worked at Goldman Sachs in the investment banking, private equity, and proprietary trading areas. He assisted Hank Paulson and other senior executives on special projects and was a portfolio manager in one of the largest and most successful proprietary trading areas at Goldman. After leaving Goldman, he cofounded a multibillion-dollar global alternative asset management firm that was a trading and investment banking client of Goldman’s.
During the financial crisis, Mandis was a senior adviser to McKinsey & Company before becoming chief of staff to the president and COO of Citigroup and serving on executive, management, and risk committees at the firm.
He’s also an adjunct professor at Columbia Business School, where he teaches classes of MBA and executive MBA students on strategic issues facing investment banks and the European financial crisis.
His first book, What Happened to Goldman Sachs? was widely acclaimed. “Several authors have tackled the question of how Goldman’s culture changed post-1999 but none so deftly as Steven G. Mandis, a banker-turned-sociologist,” wrote the Wall Street Journal. I also read it cover-to-cover myself back in March of 2015.
In Real Madrid, “Mandis is the first researcher to rigorously analyze both the on-the-field and business aspects of a sports team. What he learns is completely unexpected and challenges the conventional wisdom that moneyball-fueled data analytics are the primary instruments of success.”
Former NBA Commissioner David Stern said of the book, “With unprecedented behind-the-scenes access, this book is the most complete study of any sports team ever done–which leads to fascinating conclusions.”
Are you a finance buff? Sports buff? Perhaps both? You’ll want to read his new book.
