Thursday January 24 2019, Weekly News Digest

millennials loan money

News Comments Today’s main news: Funding Circle, Stripe partner on small business expansion. Goldman, Citi drop Chinese P2P lenders. RateSetter attracts 75K investors. MarketInvoice gets 56M GBP in equity, debt funding. Hexindai shares credit data with Baihang Credit. Today’s main analysis: PeerIQ on bank earnings. Today’s thought-provoking articles: The link between marketplace lending and personal bankruptcy. 10 best places to […]

The post Thursday January 24 2019, Weekly News Digest appeared first on Lending Times.

millennials loan money

News Comments

United States

United Kingdom

China

International

Other

News Summary

United States

Goldman, Citi Drop Chinese Peer-to-Peer Lenders After Crackdown (Bloomberg), Rated: AAA

First came a sweeping government crackdown and a surge in defaults and failures at thousands of China’s peer-to-peer lenders. Now, in another troubling sign for the industry, some of the biggest investment banks have stopped taking them public.

Wall Street firms including Goldman Sachs Group Inc. and Citigroup Inc. walked away from U.S. initial public offerings of Chinese P2P lenders in recent months, people with knowledge of the matter said. Their concerns mainly stemmed from the timing of the deals, with an uncertain outlook for P2P companies and a slumping market knocking down valuations. In each case, the businesses went ahead with their offerings after finding new underwriters.

Marketplace Lending & Personal Bankruptcy: Cause and Effect (Lend Academy), Rated: AAA

A national wave of personal bankruptcies that began in 2008 reached a peak in the year ending September 2010, when nearly 1.6 million bankruptcies were filed.

Filings fell by 1.8 percent for the 12-month period ending March 31, 2018, compared with the year ending March 31, 2017. The data continues a national trend of declining bankruptcy filings since 2010-2011.

An interesting white paper (The Real Effects of Financial Technology: Marketplace Lending and Personal Bankruptcy) co-authored by Dr. Piotr Danisewicz, University of Bristol and Ilaf Elard, Assistant Professor of Finance at Shanghai University of International Business and Economics was released last summer.

Among the many additional conclusions Danisewicz and Elard reach in the white paper are:

  • The Madden win triggered Lending Club and Prosper, the two largest U.S. marketplace lenders, to reduce lending in the states affected by the verdict.
  • The co-authors attribute the increase in the incidence of personal bankruptcy following Madden to the reduction in marketplace lending. This hypothesis is supported by a number of further results.
  • The consequences of Madden are limited to the enforceability of marketplace loans and suggest that the increase in bankruptcy rates following Madden arises predominantly from changes in marketplace lending.
  • Danisewicz and Elard also rule out that the rise in bankruptcy following the verdict could be the result of an increase in defaults by marketplace borrowers in the affected states. This may occur if marketplace borrowers are over-indebted and default after being unable to obtain additional marketplace loans in the affected states.

Strong Bank Earnings (PeerIQ), Rated: AAA

Banks had a rough quarter for trading revenues. FICC revenues at MS dropped by 30% YoY and by 18% YoY at GSBank of America’s 15% YoY drop in trading revenues was offset by a 10% increase in consumer banking revenuesRevenues at Wells Fargo dropped by 5% YoY driven by lower consumer loan balances. WFC faces a regulatory asset cap until the end of 2019 which is hampering loan growth. JPM was the only bank where the provision for credit losses increased, driven by a reserve build for credit cards due to loan growth.

Source: PeerIQ

10 Best Places to Pay Down Debt (LendingTree), Rated: AAA

Americans’ debt balances continued climbing in 2018, with total consumer debt tracking to top $4 trillion by the end of that year. With balances climbing high, many borrowers will want to use the new year to take their debt down a peg. For those who do so, prioritizing paying off debt can bring major rewards both in the near and long distance future.

86 Million Americans Fear Maxing Out Plastic on Large Purchases (WalletHub), Rated: AAA

The holiday shopping season is over now, and many Americans are seeing the impact on their credit card bills and bank statements. During the holidays, people often make a lot of large purchases, and sometimes max out their cards in order to do so. In a nationally representative survey conducted by WalletHub, 34 percent of respondents say they worry about maxing out their card with a large purchase.

Source: WalletHub

Credit Line Increases Drive Consumer Engagement and are Most Likely to Happen at the Beginning of the Year (AP News), Rated: A

According to a new study from TransUnion (NYSE: TRU), consumers are 50% more likely to receive a credit line increase (CLI) between the months of January and May. However, credit line decreases (CLD) occur at twice the normal rate during the month of January.

Lendio Provides More Than 5,000 Kiva Loans to Support Women-Owned Businesses Around the World (Lendio), Rated: A

Lendio announced today that through continued efforts to support business growth around the world, the Lendio Gives program has funded more than 5,000 Kiva microloans. To-date, Lendio’s employee contribution and employer matching program has provided more than $130,000 in loans to underserved business owners in 78 countries.

Lendio Franchising Named No. 1 Financial Services Brand in Entrepreneur’s Franchise 500 (Lendio), Rated: B

Lendio Franchising recently ranked in Entrepreneur magazine’s Franchise 500, the world’s first, best and most comprehensive franchise ranking. Named #1 in the Business Financial Services category for the second year running, Lendio Franchising was recognized for its outstanding performance in areas including unit growth, financial strength and stability, and brand power. Placement in the Franchise 500 is a highly sought-after honor in the franchise industry; Entrepreneur received more than 1,000 applications this year, making it one of the company’s most competitive rankings ever.

Commercial Real Estate Finance Platform CrediFi Milestone: Total Capital Raised Has Surpassed $ 29 Million (Crowdfund Insider), Rated: A

CrediFi, a fintech and commercial real estate finance platform, on Wednesday it has raised an additional $6 million in funding. This funding comes on the heels of the $13 million previously raised in Series B funding. The company reported that the total amount it has raised has surpassed $29 million.

Lending Express Celebrates $ 100M Lending Milestone & California’s Golden Opportunities (Crowdfund Insider), Rated: A

Lending Express, an Israeli tech company dedicated to creating a better world of funding for SMBs, has surpassed $100 million in financing facilitated between small and medium business owners and online lenders. Lending Express also obtained state permission to open for business in California.

Fundation Launches Digital Lending Capability with Banc of California for Small Business Customers (OAOA), Rated: A

Fundation announced that it has recently launched a digital lending solution in partnership with Banc of California, enabling the California-based bank to offer a new, streamlined end-to-end solution for small businesses seeking a business loan or line of credit. The solution enables small businesses to apply for loans and lines of credit through a simple online application at Bancofcal.com and receive funds in a little as one business day.

Entrepreneurs Take Note: Success Is Within Reach (WWD), Rated: A

With insight from 600 “thriving” U.S. small business owners, a study by global financial services platform Kabbage, Inc. reveals one-third of small businesses started with less than $5,000 in start-up capital.

According to the report, particularly scrappy or thrifty entrepreneurs may want to consider starting a business in one of the three categories costing $5,000 or less “during the first six months.” Accounting; at 45 percent, online retail; at 44 percent and construction and landscaping; at 39 percent represented the least amount of start-up capital, or lowest entry barriers.

Officials caution federal workers of predatory online payday lenders during federal shutdown (News 8), Rated: A

Attorney General William Tong and Department of Banking Commissioner Jorge Perez cautioned federal workers on Wednesday to avoid predatory online payday lenders who may seek to exploit the struggling workers during the partial government shutdown.

Most People Would Not Loan Their Loved Ones Money to Start a Business (Fundera), Rated: A

The time and effort it takes to raise the funds for your startup can quickly get out of hand, which may be the reason that 29% of new small businesses run out of cash and fail.

In fact, 38% of startups are funded by friends and family members.

We surveyed 1,000 Americans on whether or not they would loan a friend or family member money to start their business and found that 82% of people would not loan a friend or family member money to start a business.

Source: Fundera

No Pay Stub? No Problem. Unconventional Mortgages Make a Comeback (WSJ), Rated: A

Lenders issued $34 billion of these unconventional mortgages in the first three quarters of 2018, a 24% increase from the same period a year earlier, according to Inside Mortgage Finance, an industry research group. While that makes up less than 3% of the $1.3 trillion of mortgage originations over that period, the growth is notable because it came as traditional home loans declined. Those originations fell 1.2% over the same period and were on track for a second down year in 2018.

North Capital Launches REITless Impact Income Strategies (PR Newswire), Rated: A

North Capital Investment Technology Inc. recently launched a new investment vehicle, REITless Impact Income Strategies (REITless), focused on lending and strategic debt investments to primarily single- and multi-family real estate development and redevelopment projects that aim to produce positive social impact in communities nationwide. The impact initiatives targeted by the company are energy efficiency, employment generation, affordable housing, and green-housing improvements that promote environmental sustainability. REITless is managed by North Capital Inc., an SEC-registered investment advisor (RIA).

BFS Capital Achieves $ 2 Billion in Financing (BusinessWire), Rated: A

BFS Capital, a leading small business financing platform, today announced it has now issued more than $2 billion in financing to over 22,000 small businesses across the United States, Canada and, through its United Kingdom subsidiary, Boost Capital.

KeyBank To Acquire Online Lending Business Laurel Road (PR Newswire), Rated: A

KeyBank National Association today announced that KeyBank and Laurel Road Bank have entered into a definitive agreement for the acquisition by Key of Laurel Road’s digital lending business; Laurel Road’s three bank branches located in southeast Connecticut are not part of this transaction. Through the acquisition, Key will enhance its digital capabilities with state-of-the-art, customer-centric technology and will leverage Laurel Road’s proven ability to attract and serve professional millennial clients.

GROUNDFLOOR Launches Real Estate Investments Specific To Georgia Residents During Federal Shutdown (PR Newswire), Rated: A

Today, Atlanta-based GROUNDFLOOR is launching new investment opportunities specific to Georgia residents. The crowdsourced real estate investing and lending platform regularly offers investment opportunities to accredited and non-accredited investors throughout the country. Due to the federal shutdown and furloughs at the Securities and Exchange Commission, GROUNDFLOOR is now resurfacing state-by-state securities to continue to offer investors the opportunity to invest on a fractional, self-directed basis in Georgia real estate.

Is community banks’ loan growth too much of a good thing? (American Banker), Rated: A

Total loans at publicly traded banks with assets of less than $20 billion rose 9.2% in the fourth quarter from a year earlier, based on Jan. 18 data compiled by FIG Partners. Publicly traded banks above that threshold have reported a 2.7% increase in loans.

Breakout Capital Finance expands Board of Directors, appoints Neil Gurvitch and Firoze Lafeer (PR Newswire), Rated: B

Breakout Capital Finance, a leading fintech innovator, announces the expansion of its Board of Directors by appointing Firoze Lafeer, company CTO, and Neil Gurvitch as an independent director.  In making the appointments, Carl Fairbank, Breakout’s Founder and CEO, said, “We continue to see rapid growth in our lending- and technology-focused endeavors.  Adding more seasoned leadership continues our expansion and growth plans.”

Samsung NEXT, NBKC Executives and Ellie Mae Veteran Join ProPair Advisory Board (BusinessWire), Rated: B

ProPair, a Silicon Valley innovator using machine learning and predictive decision-making to change how mortgage lenders are assigning and prioritizing their leads, today announced the additions of Leo Chang, Chad Cronk and Nick Hedges to its advisory board.

United Kingdom

RateSetter attracts over 75,000 investors (Bridging and Commercial), Rated: AAA

RateSetter has announced that over 75,000 investors have put money into its platform.

Since its launch in 2010, investors have earned £120m through the P2P lending platform at an average interest rate of 4.4% per year.

RateSetter currently has £830m of investment under management, including £170m invested through its Isa.

MarketInvoice secures £56m equity and debt funding (MarketInvoice), Rated: AAA

Fintech business MarketInvoice today announced it has raised £26m in new equity funding. This Series-B funding round was led by Barclays and Fintech fund, Santander InnoVentures with significant participation from European venture fund Northzone, an existing investor in the company. Technology credit fund Viola Credit, who also participated in the equity round, will provide a debt facility of up to £30m. The facility will help scale the MarketInvoice business loans offering that sits alongside their core invoice finance solutions.

Goldman Sachs’ Marcus platform reveals AUM (AltFi), Rated: A

The US investment giant said its digital bank attracted has more than £5bn in UK savings just three months after its launch.

The US investment giant debuted its online lending and deposit platform, Marcus, in the UK at the end of last summer, and pulled in 100,000 customers and £5.4bn in the final quarter of the year.

Metro Bank shares crash after loans blunder revealed (The Guardian), Rated: A

Metro Bank has revealed a major blunder in how it classifies its loan book, an admission that drove its share price down by nearly 40% on Wednesday, wiping £800m off the value of the company.

The bank, which has been opening new branches as established rivals cut back, revealed that hundreds of millions of pounds of commercial property loans and loans to commercial buy-to-let operators had been wrongly classified in risk terms, and should have been among its “risk-weighted assets” (RWAs).

Glenhawk grows team with LendInvest hire following strong start to 2019 (Property Funds World), Rated: B

Having originated GBP28.4 million of potential loans since the start of the year, and completed on just over GBP4 million, early indications are that 2019 will see accelerated demand for Glenhawk’s fast and flexible short term property finance. Wareham joins Glenhawk’s 20-strong team of real estate professionals, supporting an increasingly diverse range of borrowers across the South of England and Midlands.

China

Hexindai Begins Sharing Credit Data with Baihang Credit (PR Newswire), Rated: AAA

Hexindai Inc. (NASDAQ: HX) (“Hexindai” or the “Company”), a fast-growing consumer lending marketplace in China, announced today that it has connected its systems and begun sharing credit data with Baihang Zhengxin (“Baihang Credit”).

China crackdown aims to push peer-to-peer lenders out of the industry (Australian Financial Review), Rated: A

Chinese authorities have further tightened controls on the peer-to-peer lending industry, aiming to clear out as many P2P platforms as possible, according to an official document seen by Caixin.

Microlenders need to obtain licences from the regulators and meet certain minimal capital requirements. For instance, a microlender in Shanghai needs to register its business with more than 200 million yuan ($41.2 million). P2P platforms usually don’t have to meet such requirements.

Chinese investors try to storm company after P2P lender failure (Business Times), Rated: A

In the latest sign of turmoil in China’s once booming peer-to-peer (P2P) lending sector, around 80 investors in failed lender Xinhehui protested outside the Hangzhou headquarters of a related company on Tuesday, demanding a US$330 million bailout.

Mrs Xue, who would only provide a surname for fear of retaliation, said she arrived at 8am with around 80 other investors from Zhejiang and neighboring provinces, demanding payment for 2.26 billion yuan (S$452 million) of products that Xinhehui had sold, including 860 million yuan (S$172 million) worth that were due for repayment on Jan 6.

Xi Tells Cadres to ‘Prevent and Control’ Risks as China’s Economic Woes Mount (The Epoch Times), Rated: B

At a high-level meeting of senior Chinese Communist Party officials held in Beijing, Chinese leader Xi Jinping gave an opening speech on Jan. 21 that hinted at the severity of China’s economic downturn.

European Union

Fellow Finance Launches Peer to Peer Lending in Denmark (Crowdfund Insider), Rated: AAA

Finland based peer to peer lender Fellow Finance is now operating in Denmark. The company says it will offer Danish consumers access to credit while Fellow Finance investors will be able to fund Danish loans. Currently, Fellow Finance provides consumer loans in Finland, Germany, Poland, and Sweden.

Note to Irish and US parents: college not the only path for your cherished offspring (Irish Central), Rated: A

According to the student loan marketplace www.lendEDU.com, the average debt per borrower at a public college is $26,872. This rises to $31,710 if you’re inclined to a private college experience. For graduate school students – whose parents have by now presumably said, “Time to pay your own way, sunshine” – the average debt is a staggering $57,600.

International

Funding Circle partners with Stripe to help small businesses expand (PR Newswire), Rated: AAA

Funding Circle, the global small business loans platform, today announced that it has joined the Stripe Partner Program, providing businesses using Stripe with access to affordable business financing through Funding Circle. As a verified extension partner, Funding Circle now enables Stripe users to import their data directly and securely to apply for a business loan up to $500,000 — making the process faster and easier so they can get back to running their businesses.

Boost Capital ups firepower as US parent hits $ 2bn lending milestone (AltFi), Rated: A

Small business lender Boost Capital has refinanced its credit facility lifting its funding capacity to $60m, as its US parent targets European growth.

The Chelmsford-based platform, which provides business loans and merchant cash advances, said it upped its credit firepower from $40m after signing a deal with New York-based investment firm Atalaya Capital Management.

India

Matrix Partners invests in P2P lending platform LiquiLoans (Techstory), Rated: AAA

Mumbai based peer to peer lending platform LiquiLoans, one of the few players to have secured a P2P license, has now secured an undisclosed amount of funding from some of the existing investor that is Matrix partners India.

Fintech startup floated by ex-Lendingkart execs MoneyOnClick raises funding (VC Circle), Rated: A

Two former executives from online lending platform Lendingkart have quit the firm to set up a new venture in the alternative lending space, catering to consumers.

According to their respective LinkedIn accounts, the startup, which has been operational since October 2018, has already raised $2.25 million (Rs 16.02 crore at current exchange rates) as part of its first institutional funding round from undisclosed investors.

Women, non-metros topping up on credit, says BankBazaar survey (MoneyControl), Rated: A

Non-metro cities have emerged as the bigger market for unsecured credit in terms of volume than the metros in 2018, according to BankBazaar Moneymood 2019 report.

The average personal loan ticket size in non-metros is Rs 2.80 lakh compared to Rs 2.55 lakh in metros. The unsecured credit portfolio includes personal loans and credit cards which are used more for consumption activities than secured loans.

Online rental marketplace Sacorooms Rises fresh funding Pre-Series A (Times of India), Rated: A

Sacorooms, a start-up that is building co-living spaces, has closed a pre-Series A round of funding for an undisclosed amount from Mr. Broadway. The investment comes after a strategic round led by Incubate Fund and a group of investors from the real estate industry this year.

Asia

OJK Zero Down Payment Policy Drives Multifinance Growth (Tempo.co), Rated: AAA

The recent policy of zero percent down payment for vehicle credit issued by the Financial Services Authority (OJK) believed to be able to drive the performance of the multifinance industry. Businesses are confident that multi-finance companies will perform better with the new regulation.

Chairman of the Indonesian Financing Company Association (APPI) Soewandi Wiranto, said that the business expansion stated in the new regulation can increase financing industry growth. Based on APPI’s calculation, industrial asset growth for 2019 can reach up to 9 percent while the growth rate of receivables is predicted to be in a range of 6 to 7 percent.

Authors:

George Popescu
Allen Taylor

The post Thursday January 24 2019, Weekly News Digest appeared first on Lending Times.

Thursday April 13 2017, Daily News Digest

small business fintech lenders

News Comments Today’s main news: Small businesses hate fintech lenders more than big banks. All is not well in the world of student loans. UK equity crowdfunding investments set new record in March 2017. Lending Works registers 8.8M GBP in ISA since launch. Today’s main analysis:  VC funding report. Small biz lending approval rates. Today’s thought-provoking articles: Portfolio review – […]

small business fintech lenders

News Comments

United States

  • All is not well in the world of student loans. GP: “There are many parallels between credit crisis in general: investors wrong feel of safety is, I think, the main one. And in this case student debt can only be releaved in bankruptcy in very exceptional cases, in short, nearly never. So investors feel that student debt is safe. The same way as mortgages perhaps? I think we are far away from a crisis or bubble. However student debt is growing and questions have to be asked of where this is going and why. Brian from BlueElephant told me one day that any market that is being skewed by government intervention from its normal equilibrium should be avoided as the price doesn’t reflect the risk. Is the government skewing the student debt market? Certainly. I have no issue with the risk in the student debt market, I am worried about the price pressure from non-profit participants. ”  AT: “Lenders need to get better at judging risk and cutting down on defaults.”
  • Small biz lending approval rates. GP: “We now see for a few quarters an improvement in small bank’s approval rate for small business loans.”AT: “Small banks and institutional investors are doing better at approving loans than big banks and alt lenders. I wonder what this means. Could be a trust issue.”
  • Small businesses hate fintech lenders more than big banks. GP:”As a small business you have a choice to borrow money below 10% from a bank, a product you will not qualify for, or to borrow moey from MCAs and fintech at rates often above 20%, a product you will nearly always qualify for. Who do you have more? The people who have a great product they don’t want to sell to you or the ones who have an expensive product you have no choice but to buy? To me this is a huge issue for the SME fintech lending sector. This means that as soon as credit from any other institution is anywhere close to being competitive the small businesses will not use a fintech offering. The second question is why are fintechs ranked so low? My personal believe is that it’s due to the onerous terms fintech usually charge small businesses especially in comparison to banks.  “AT: “This is interesting. Significant is the fact that this data comes from successful applicants, not non-borrowers. Driving this data could be the varied nature of borrower profiles. Small banks are likely lending to prime borrowers whereas online lenders are heavily weighted toward sub-prime borrower who likely expect to be treated like prime borrowers and can’t get a loan from a bank. This requires further investigation.”
  • VC funding report Q1 2017. GP:”Unaccredited investors had no scalable legal way to invest in private stocks before. The money inventory for unaccredited investors is fixed or at best stable given the wage stagnation, and the small inflation. And I think crowdfunding also includes more entertainment thant the stock market with the benefit of often also receiving a product. “AT: “I think it’s interesting that fewer people in the U.S. are investing in stocks? Does that mean they are investing in crowdfunding asset classes?”
  • Elevate Credit not trading at elevated price. GP:” I would compare them to Yirendai more. “AT: “The comparison to Square is interesting.”
  • Should fintech startups buy banks? GP:”If you want a bank, there is rent, buy or build. These approaches are standard business questions. The real question is should you work with a bank or not. Why not an insurance company? Why not with another deposit taking structure that is not a bank? ”  AT: “I don’t see why not. The most likely targets would be community banks, if they can get there before the big banks swallow them up.”
  • Diversification 101 in MPL. AT: “Basic investing advice.”
  • Podcast: Economic analysis of real estate, Part 2.
  • Redfin vets raise pre-seed round, launch digital mortgage platform.
  • Opus releases new version of OpusNotes.

United Kingdom

European Union

International

Asia

News Summary

United States

All is Not Well in the World of Student Loans (Lend Academy), Rated: AAA

It is clear that burdensome student debt is now holding many people back financially. Student loan debt now stands at a staggering $1.3 trillion (as of the end of 2016) an increase of 170 percent over the preceding 10 years. There are three contributing factors to this increase:

  1. More students are taking out loans.
  2. The loans are for larger amounts.
  3. Borrower repayments have slowed down.

Borrowers are now leaving school with over $30,000 in student loan debt and they are defaulting more. This is particularly true of those borrowers with balances of $100,000 or more. Over 20% of borrowers who left school in 2010 or 2011 owing that amount have already defaulted on this debt (a default means they are at least 270 days past due). That is an astonishingly bad default rate.

Small Biz Lending Approval Rates Improve at Institutional Investors and Small Banks, Stall at Big Banks in March 2017 (Biz2Credit), Rated: AAA

Loan approval rates at institutional investors and small banks improved in March 2017, according to the latest Biz2Credit Small Business Lending IndexTM, the monthly analysis of more than 1,000 small business loan applications on Biz2Credit.com. Big banks’ ($10 billion-plus in assets) loan approval were stagnant in the last month, but remained at an all-time Index high. Meanwhile, loan approval rates at credit unions and alternative lenders continues to falter.

Small businesses hate fintech lenders more than big banks (Financial Times), Rated: AAA

On Tuesday, the Federal Reserve Bank of New York released its 2016 small business credit survey, which gives us an idea of the experiences of over 10,000 firms across the US. As Matt highlighted yesterday, one of the things we learn from the research is that small business expectations doesn’t tell us much about the economy. But we also get some information on how small business owners view various sources of credit. The results for fintech startups, specifically online lenders, are not as great as you might expect:

So, the hype about streamlining processes and building better customer experiences is not all hype, though they do just slightly worse in terms of transparency.

But there is something going on with the cost of credit provided by online lenders, and the terms they demand. The survey defines ‘online lenders’ as “nonbank alternative and marketplace lenders, including Lending Club, OnDeck, CAN Capital, and PayPal Working Capital”, so there are potentially two things going on here.

One is that online lenders typically have a higher cost of capital than banks, and so they also charge higher interest rates, which is what drives the dissatisfaction. The second is that online lenders are targeting riskier businesses, who wouldn’t be able to borrow from a bank. That would suggest the higher level of dissatisfaction about repayment terms and interest rates arises from the fact they are lending to businesses that generally encounter high borrowing costs, no matter who they are borrowing from.

Venture Capital Funding Report Q1 2017 (CB Insights), Rated: AAA

US VC-backed companies saw $13.9B in total financing across 1,104 deals in Q1’17, up 15% and 2% from Q4’16, respectively.

While Asia saw an increase in unicorn births from Q4’16, North America remained flat with a total of 3 new unicorns. Notably, Europe has not seen a new VC-backed unicorn since the first quarter of 2016.

Source: Gallup

Elevate Credit: Not Trading At An Elevated Price (Seeking Alpha), Rated: A

The fintech has funded more than $4 billion in loans for 1.6 million customers by using machine learning to lower fraud scores while providing quick lending decisions based on data inputs for a high-risk borrowing group.

Revenues grew 34% to $580 million last year while operating income expanded to $48 million, up from $9 million in 2015. The fintech is still losing money; that typically is a large negative in the recent IPO market, though other offerings have rallied despite large losses.

In total, Elevate sold 14.26 million shares at $6.50 including the over allotment amount. The company raised about $81 million after fees.

The company has a fully diluted market cap of only $350 million using a share count of 41 million and nearly 4 million of outstanding stock options.

The reality is that Square had a very subdued IPO similar to Elevate Credit. The initial price range target was $11 to $13 while the actual offer price dipped to only $9, though Square jumped back to that original price range trading around $12 for most of the first month as a public company.

Should fintech startups buy banks? (Tearsheet), Rated: A

Banks buying startups isn’t anything new. But for financial tech startups, looking for scale at any cost, perhaps the solution would actually be to buy a bank, according to a growing number of observers and experts in the industry.

There are almost 6,000 FDIC-insured banking institutions in the U.S. as of the end of 2016 and 1,541 of them have less than $100 million in assets, including a sliver of failing banks that need saving. With average common equity around $12.5 million for a healthy bank of that size, a well-established startup could pay $25 million and get fully licensed to be deposit taking.

Part of the reason startups haven’t been able to scale, at least in the retail banking world, is that so-called innovations are usually just different ways for people to interface with their banks, while core banking transactions – deposits, loans, mortgages and payments – generally remain the same on the backend. In other words, there hasn’t truly been an Uber for banking, said Pascal Bouvier, a venture partner at Santander Innoventures. Most fintech startups operate at the thin outer layer of banking.

The valuation gap between fintech startups and banks makes it difficult to structure a deal, he said. Banks tend to be valued more through historical earnings and the price of tangible book value, whereas fintech startups, because of their perceived high growth potential, often tend to have higher earnings multiples.

Diversification 101 in Marketplace Lending (LendingClub), Rated: A

While loans are issued in amounts between $1,000 and $40,000, Notes can be purchased for as little as $25.

If you invested $2,500 in only one borrower and that borrower becomes late and the loan eventually charges off, you could potentially lose 100% of your total investment amount. If you invested $25 in 100 different borrowers your potential loss on any single Note would be limited to 1% of your total investment amount.

 

Episode 6 – Economic Analysis of Real Estate, Part 2 (RealCrowd), Rated: A

In this episode listeners will learn about:
– How rising household income impacts multifamily investments
– How property tax factors into decision making
– Where to access data on real estate markets
– What asset class RealSource is pursuing in this current economic climate 

Redfin Veterans Raise Pre-Seed Round and Launch Digital Mortgage Platform “Approved” (Yahoo! Finance), Rated: A

Approved launched its digital mortgage platform today, aimed at radically simplifying the home loan experience for lenders and borrowers nationwide. The company raised $1 Million in pre-seed funding led by Social Capital and Precursor Ventures to support the launch.

Lenders in the pilot saw an average 50% reduction in the time it took to get those documents.

Approved technology includes:

  • DocCast™: Automatically collect original bank statements, W2s, 1099s, 1040s and paystubs.
  • DocVision™ Camera Scanning: Allows borrowers to securely “scan” documents using their mobile devices.
  • White-labeled Dashboards: A delightful and frictionless platform for borrower and lender collaboration.
  • Digital Document Library: Support for all popular loan programs.

Opus releases new version of OpusNotes (Hedgeweek), Rated: B

Opus Fund Services, a provider of hedge fund administration services, has launched new release of the OpusNotes loan accounting platform for marketplace lending vehicles.

United Kingdom

Latest OFF3R Index Data Reveals Significant Increase in Equity Crowdfunding Investments in March 2017 (PR Web), Rated: AAA

This record breaking figure smashed the previous monthly high, set back in July 2015, by over £13 Million. This made March 2017 the most successful month for the total amount raised via equity crowdfunding platforms in the young life of the asset class in the UK.

According to the data from OFF3R, equity crowdfunding had a very strong finish to 2016 but had so far had a slow start to the year.

The data revealed that March 2017 was a strong month for the sector. Just over £300 Million was lent in March via the platforms that form the P2P element of the OFF3R Index, including Zopa, Ratesetter and Funding Circle. This was marginally higher than February’s data but slightly down from January’s year to date high.

Lending Works Announcement: £8.8 Million Has Been Invested In ISA Account Since February 2017 Launch (Crowdfund Insider), Rated: AAA

UK-based peer-to-peer lending platform Lending Works announced on Wednesday £8.8 million has been invested into the company’s Individual Savings Account (ISA) since its launch on February 8th.

Lending Works reported given that there are no limits on transfers of ISA funds accumulated in previous financial years, the largest individual investment to date within a Lending Works ISA stands at £154,190, while the average amount invested among the 815 ISA investors currently stands at £10,769.

Fintech founder: I would not set up in London today (Financial News), Rated: A

The founder of one of London’s best-known fintech startups has said that he would not choose London as a location to set up his business today, as he has “no idea what Brexit will mean”.

Taavet Hinrikus, the chief executive and co-founder of online FX service TransferWise, urged the UK government to quickly secure access to talent and trade with Europe in a post-Brexit world.

Funding Circle’s Desai: use P2P for monetary stimulus (P2P Finance News), Rated: A

UK POLICYMAKERS should start using peer-to-peer platforms to stimulate the economy, Funding Circle’s chief executive and co-founder Samir Desai said on Wednesday.

The head of the country’s third-largest business lender called on the government and the Bank of England to bypass the banking system and inject monetary stimulus via P2P platforms, capitalising on the direct access they provide to the real economy.

Boost Capital Secures New £15m Credit Line (Boost Capital Email), Rated: A

No end to Boost Capital’s growth spurt as the business funding specialist secures new £15m credit line to meet small business loan demand.

An extra £15m will now be available to UK small businesses, after alternative business lender Boost Capital secured a new credit line from American Investment Firm Atalaya Capital Management.

Ex-Aldermore director joins SME lending platform (Bridging and Commercial), Rated: B

SME lending platform Growth Street has announced the appointment of a new commercial director and general counsel.

Chris Weller will serve as commercial director, having formerly held the role at Aldermore Bank from 2013-14 before becoming sales director for invoice finance until 2015.

Meanwhile, general counsel April Nardulli joins from P2P platform RateSetter, having served as senior regulatory counsel, regulatory lawyer and interim compliance manager since her appointment in 2015.

European Union

Finbee Experiences – My Portfolio Review (P2P-Banking), Rated: AAA

A year has passed since I last wrote about the portfolio I built on Finbee. Currently I have invested 1,027 Euro in 35 loans. 32 are current (965 Euro), 2 are late (23 Euro) and one is in default (38 Euro), but rates for this loan are paid to me by Finbee’s compensation fund. The average interest rate of my loan parts is 31%.

My self calculated yield (XIRR) is 31.5%. This is the highest I achieved on any p2p lending marketplace over a longer duration of time. Calculating the result again, this time with assuming a full write-off of the defaulted loan gives a yield of 29.4%.

Why banks are reluctant to enter the roller coaster of FinTech (JAXenter), Rated: AAA

Blockchain, NFC, Peer to peer lending are just a few of the options traditional banking could have fully adopted. This would have had a tremendous impact on the way we exchange transactions, do business and live our lives. However, I cannot name a big bank that has jumped on the bandwagon and delivered a fully-fledged product in this area. Just the opposite — the stories I hear are, for example, about two of the top executives of BNP Paribas in Bulgaria leaving the company to start their own Peer to peer lending platform called Klear. Why didn’t they initiate this project inside the organization?

I think there are two factors causing this:

  • Internal factor: Company culture in the traditional banking
  • External factor: The public image of banks is all about security, while innovation relates to risk.

Usually, new banking products need a lot of IT involvement — for each new type of deposit/loan you need someone to implement tens of forms and wizards.

How to enable innovation in banking

We have a good example of consortium of banks coming up with a radical move to start a joint blockchain project. This way none of the big players risks their own reputation.

Another way to announce innovative projects is by strongly focusing on the physical design and digital UX of the innovation because, believe it or not, the mass client judges how reliable something is by the external look of it.

Former HSBC banker Lake joins fintech revolution (Financial News), Rated: B

Spencer Lake, a former HSBC banker who led the group’s global capital financing business, has joined a fintech firm that boasts the UK bank as one of its main clients.

Lake has been named vice-chairman of Fenergo, a Dublin-based firm that makes what it calls client lifecycle management software, according to a statement from the company on April 12.

International

How fintech startups are helping SMEs choose who they do business with (Daily Fintech), Rated: A

According to Xero, 38 percent of small business owners indicate late payments cause them to delay payments to their suppliers, while 15 percent claim this often sees them delaying wage payments to staff, along with other benefits.

62 percent of businesses would not survive more than three months if all invoices went unpaid, while nearly 25 percent wouldn’t last a month.

Xero’s Live Contacts, a partnership with the local arm of credit bureau Equifax (formerly Veda) is one such data driven solution. As part of a paid-up Xero subscription, businesses can now see a credit risk indicator against a contact in their database, helping them to better assess whether to do business or not, or even risk adjust payment terms.

At the other end of the data spectrum, CreditMonk in India allows businesses to add a review of a creditor’s payment behaviour via its platform.

Asia

SINGAPORE-based Marvelstone Capital, which is a data-driven asset management company, is planning to launch its robo advisor platform for family offices in Asia in the third quarter of this year.

According to Cho, the robo advisor platform is being developed with Singaporean fintech startup Smartfolios, which is focused on building next-generation advisory and thematic investment technologies. The robo advisor will be available on desktop and mobile for Marvelstone Capital’s clients.

To give an idea of the market size of family offices in Asia, Cho cites a report that says that overall, the billionaires in the Asian market have about US$400 billion of assets at their disposal, which equates to an average of about US$3.6 billion per individual, which in turn makes all of them potential clients of family office solutions or even owners of single family offices. (Source:

Cho explains that family offices with below US$1 billion assets under management are the underserved family offices.

He adds that second priority countries will be Korea, China, Taiwan and Japan and that the third priority will be emerging markets such as Myanmar and Vietnam.

30 Under 30 Asia 2017: The Top Young Venture Capitalists And Fintech Entrepreneurs (Forbes), Rated: AAA

Val Yap founded PolicyPal — a Singapore-based smartphone app that helps users never miss a premium by tracking all their insurance on one dashboard.

MoolahSense Adds Invoice Financing to List of Services (Crowdfund Insider), Rated: A

Singapore-based MoolahSense, a marketplace lending platform, has added invoice financing as a new product line. The new service will allow SMEs to access financing to address short-term capital needs of up to $15,000. For investors, a nominal interest rate of up to 12% may be earned. An invoice backed loan would mature in 15 to 90 days’ time and investors would be able to receive returns in a relatively shorter period of time.

Authors:

George Popescu
Allen Taylor