- Today’s main news: blooom passes $1B in assets under management. SoFi rolls out new deal. DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-E LLC. The P2P Power 50. PeerStreet funds over $500M in loans with zero losses to investors.
- Today’s main analysis: LendingClub, Prosper after 10 years. FT Partners’ CEO monthly alternative lending market analysis (a must-read).
- Today’s thought-provoking articles: SoFi unlikely to damage digital lending sector. Funding Circle’s “other” expenses. TrueMoney finds niche in Myanmar’s mobile fintech niche.
- blooom hits $1B AUM faster than any other independent robo-advisor. AT: “Congratulations, and a significant achievement considering their narrow focus on employer-sponsored retirement plans.”
- SoFi rolls out new deal listing banks on security documents. AT: “There’s no reason to put the entire business on hold due to some recent bad news.”
- DBRS assigns provisional ratings to SoFi Professional Loan Program 2017-E LLC.
- SoFi unlikely to damage digital lending sector. AT: “Every blight is a blight against the industry, but if by ‘damage’ you mean permanent, then I agree. The marketplace has a short memory and is very forgiving, so I see the short-term repercussions moving away rather quickly and leading to greater long-term stability for everyone.”
- LendingClub, Prosper data after 10 years. AT: “Lend Academy. Always insightful.”
- FT Partners’ CEO monthly alternative lending market analysis. AT: “Don’t skip this.”
- PeerStreet funds over half a billion in loans with zero loss to investors. AT: “Congratulations. Great achievement.”
- College Ave Student Loans completes $161M in first securitization.
- Why are Amazon, Paypal meeting with bank regulators?
- Vestwell raises $8M in Series A round.
- YieldStreet adds Ron Suber, Mitch Jacobs, Alexandra Wilkis Wilson to advisory board. AT: “Is it me, or does it seem like Ron Suber is showing up everywhere?”
- The risk of playing alt lending’s rate limbo.
- Max Levchin interview.
- Finance industry coalition files lawsuit against Consumer Financial Protection Bureau to overturn arbitration rule.
- Curve partners with Xero.
- How blockchain will change financial services.
- First Data, Live Oak partner to take on big banks.
- Checking account fees surge.
- Tamarack launches 5 clients with lease/loan origination accelerator.
- Average registered investment advisor CEO pay close to $800K.
- Angelo State U. students graduate with very little debt.
- The fintech name generator.
- What’s 38M GBP of ‘other expenses’ between friends?
- The P2P Power 50. AT: “An interesting way to approach it.”
- ThinCats launches 200M GBP UK SME funding program.
- Why financial services should be terrified of dispensing wealth management robo-advice.
- Nebeus champions banks as public utilities, launches pre-ICO.
- Landbay make 5 new hires after record lending month.
- How to raise finance for your business.
- United States
- blooom Becomes Fastest Independent Robo-advisor to Pass $ 1 Billion in Assets Under Management (BusinessWire), Rated: AAA
- SoFi rolls out new deal amid exec reshuffle (GlobalCapital), Rated: AAA
- DBRS Assigns Provisional Ratings to SoFi Professional Loan Program 2017-E LLC (DBRS), Rated: AAA
- SoFi Unlikely To Damage Digital Lending Sector (Market Intelligence), Rated: AAA
- Lending Club and Prosper Data: 10 Years In (Lend Academy), Rated: AAA
- FT Partners’ CEO Monthly Alternative Lending Market Analysis (October ’17) (FT Partners), Rated: AAA
- PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA
- College Ave Student Loans Completes $ 161MM in Inaugural Securitization (BusinessWire), Rated: A
- Why are Amazon, PayPal meeting with bank regulators? (American Banker), Rated: A
- Vestwell Raises $ 8 Million in Series A Funding led by F-Prime Capital Partners (Business Insider), Rated: A
- YieldStreet Adds Three Tech Disruptors to Its Advisory Board (YieldStreet Email), Rated: A
- The Risk Of Playing Alt Lending’s Rate Limbo (PYMNTS), Rated: A
- The Source Code: Max Levchin (Marketplace), Rated: A
- Source available: Finance Industry Files Lawsuit to Overturn CFPB Arbitration Rule (Ballard Spahr Email), Rated: A
- Fintech startup Curve partners with accounting software Xero to make filing expenses ‘frictionless’ (TechCrunch), Rated: A
- Here’s How Blockchain Will Change the Financial Services Industry (Business.com), Rated: A
- First Data, Live Oak team up on fintech startup to take on big banks (Biz Journals), Rated: A
- Checking account fees surge. Here’s how to dodge them (Bankrate), Rated: A
- Tamarack Launches 5 Clients with Lease/Loan Origination Accelerator (Monitor Daily), Rated: A
- Average CEO Pay at Big RIAs Nears $ 800K (Financial Advisor IQ), Rated: B
- Angelo State University Students Graduate With Very Little Debt (San Angelo Live), Rated: B
- The fintech name generator (Vested Ventures), Rated: B
- United Kingdom
- What’s £38m of “other expenses” between friends? (Financial Times Alphaville), Rated: AAA
- The P2P Power 50 (P2P Finance News), Rated: AAA
- £200m UK SME funding programme launched by ThinCats (RealBusiness), Rated: A
- Why financial services should be terrified of dispensing wealth management robo-advice (Banking Technology), Rated: A
- London-Based Fin-Tech Platform Nebeus Championing Banks as Public Utilities (Business Insider), Rated: A
- Landbay makes five new hires following record lending month (Financial Reporter), Rated: A
- How To Raise Finance For Your Business (The Voice), Rated: B
- CBRC cautions on surging consumer loans (China.org), Rated: A
- Souqalmal.com raises $ 10m in Series B funding with investment from UK’s GoCompare (The National), Rated: A
- TrueMoney finds a niche in Myanmar’s mobile fintech space (Myanmar Times), Rated: AAA
- Middle East
- This UAE Startup Secured an Investment of US$ 5M, and is Planning on Expanding to Saudi Arabia (Startup Magazine), Rated: A
blooom Becomes Fastest Independent Robo-advisor to Pass $ 1 Billion in Assets Under Management (BusinessWire), Rated: AAA
According to monthly Securities and Exchange Commission (SEC) ADV filings, blooom, inc. reached $1 billion in assets under management (AUM) faster than any other independent robo-advisor. blooom achieved this milestone faster than Betterment and Wealthfront – and with less capital raised.
blooom, a first-of-its-kind robo-advisor, helps anyone with a 401(k) or comparable employer-sponsored retirement plan. blooom’s mission is to make “do-it-for-you” financial advice available, simple and affordable, regardless of the client’s account size.
The $1 billion AUM milestone is one of many key achievements for blooom over the past year.
- In mid-2016, Sheila Bair, FDIC Chair under two U.S. Presidents and “the second most powerful woman in the world in 2008 and 2009” by Forbes, joined the company as an Advisory Board Member.
- In February 2017, blooom raised $9.15 million in Series B funding and surpassed the $500 million mark in AUM.
- Since 2014, as part of its free product evaluation, blooom has analyzed the health of more than $2 billion of individual 401(k) plan balances.
SoFi rolls out new deal amid exec reshuffle (GlobalCapital), Rated: AAA
SoFi filed documents with the Securities and Exchange Commission on Friday for the upcoming deal, under its SOFI shelf. Deutsche Bank, Goldman Sachs, JP Morgan, Bank of America Merrill Lynch and Morgan Stanley have been named in the documents as banks on the deal.
DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes issued by SoFi Professional Loan Program 2017-E LLC (SoFi 2017-E):
— $72,850,000 Class A-1 Notes at AAA (sf)
— $303,000,000 Class A-2A Notes at AAA (sf)
— $161,000,000 Class A-2B Notes at AAA (sf)
— $55,000,000 Class B Notes at AA (sf)
— $34,500,000 Class C Notes at A (sf)
SoFi Unlikely To Damage Digital Lending Sector (Market Intelligence), Rated: AAA
The recent exit of Social Finance Inc. CEO Mike Cagney represents the third departure of a big-name digital lending CEO since the start of 2016. Social Finance, more commonly known as SoFi, was long considered a bright spot in the digital lending industry after making it through a rough 2016 unscathed.
Heading into 2016, investors started to notice higher-than-expected defaults on loans from large marketplace platforms, especially in lower-graded loans. In order to compensate for these higher losses, some lenders increased interest rates to keep investors on their platforms. For institutions that had been purchasing loans and packaging them into asset-backed securities, the underperformance of loans in previous securitizations became a concern. By April, Citigroup Inc. was having trouble marketing a new securitization of loans from personal-focused lender Prosper Marketplace Inc., leading the two firms to end their partnership. Without this important source of capital, Prosper saw originations fall 55.5% during the second quarter of 2016.
Past problems lead to a brighter future
Digital lenders entered 2017 with a renewed focus on operational efficiency and loan quality. For some, these measures are starting to pay off. LendingClub and On Deck both reached targeted profitability measures in the second quarter of the year. Prosper has reignited loan growth thanks to a $5 billion commitment to fund new loans, and the company reported positive adjusted EBITDA for the second quarter. Ex-LendingClub CEO Renaud Laplanche has launched a new personal-focused lender called Upgrade. Student-focused lender Earnest has taken a different approach and according to Bloomberg is seeking a buyer for its business. Originations have started to rebound as large lenders in the industry regain confidence in their models and continue to ramp up volumes.
Lending Club and Prosper Data: 10 Years In (Lend Academy), Rated: AAA
Lending Club and Prosper have both been around over 10 years now. A lot has changed since both companies were founded, including the performance of the loans. In this blog post we’ll share the performance of each platform over the last 10 years. The fact that we have access to this data set is one of the things that makes marketplace lending unique. The screenshots from this post are taken from NSR Invest, a marketplace lending robo advisor that is also a sister company to Lend Academy.
Lending Club Data
For Lending Club investors, most loan grade returns peaked in 2013. As you look at this chart it is worth noting that the 2017 numbers are somewhat meaningless because the loans there have not seasoned yet.
Prosper launched in 2006 as the first p2p lending platform in the U.S. Initially, they operated with a very different model allowing deep subprime borrowers on to their platform.
When they relaunched Prosper grew very slowly, they needed to prove out their platform to the many retail investors who had lost money in Prosper 1.0. Even in 2009 and 2010 originations were just $8 million and $27 million respectively. Prosper began to scale significantly in 2011 and onwards.
Prosper’s C grade loans are the closest to Lending Club’s D grade loans so this is the best side by side comparison.
FT Partners’ CEO Monthly Alternative Lending Market Analysis (October ’17) (FT Partners), Rated: AAA
September was another active month for the FT Partners team as we announced three significant FinTech transactions and the appointment of two additions to our senior team.
We are pleased to announce our role advising:
Source: FT Partners
Download the full report here.
PeerStreet funds over half a billion in loans, maintains zero losses to investors (PeerStreet Email), Rated: AAA
PeerStreet, the real estate investing platform for real estate debt, has just hit the milestone of having funded half a billion in loans and with zero losses to investors since the company launched in 2015.
Platforms in the P2P and crowdfunding space are seeing increasing competition and scrutiny, but PeerStreet has continued to offer investors access to quality loans and high yields, earning the public testimonial of some high-profile users, such as
College Ave Student Loans Completes $ 161MM in Inaugural Securitization (BusinessWire), Rated: A
College Ave Student Loans, the leading next-generation student loan marketplace lender, announced it has completed a $161 million securitization of private student loans, its first securitization. The CASL 2017-A transaction, completed over the summer, received an ‘A’ rating from DBRS and a ‘BBB’ rating from S&P for its highest-rated senior notes. The transaction was four-times oversubscribed. Barclays was the underwriter on the transaction.
The securitization also marks a year of growth for College Ave Student Loans. To date, the company has secured more than $2 billion of committed loan purchasing power from multiple sources.
Why are Amazon, PayPal meeting with bank regulators? (American Banker), Rated: A
Technology giants like Google, Amazon, Facebook and Apple are showing an increasing interest in engaging with federal banking regulators, a move that underscores Silicon Valley’s growing involvement in the financial services arena.
Amazon lobbyists met with the Office of the Comptroller of the Currency starting in the second quarter of 2016, and again this year to discuss “issues related to mobile payments and payment processing, financial innovation, and technology,” according to publicly available lobbying disclosures.
PayPal, meanwhile, met with OCC officials in the second, third and fourth quarters of last year to discuss “mobile payment innovation” issues related to underserved customers and remittances and money transfers, according to its disclosures.
Vestwell Raises $ 8 Million in Series A Funding led by F-Prime Capital Partners (Business Insider), Rated: A
Vestwell, the industry’s first and only fiduciary-backed retirement platform for the financial advisor community, today announced $8 million in Series A Funding led by F-Prime Capital Partners, the venture capital group associated with the parent company of Fidelity Investments, with participation from Primary Venture Partners, FinTech Collective, and Commerce Ventures. Launched in late 2016, Vestwell received $4.5 million in its initial Series Seed of financing in September 2016.
So far this year, the company has signed over 50 registered investment advisor (RIAs) firms, as well as independent broker-dealers, asset managers, and bank/trust custodians, with plans to onboard several thousand advisors this year. The funding will be used to grow the team while further enhancing the technology.
YieldStreet Adds Three Tech Disruptors to Its Advisory Board (YieldStreet Email), Rated: A
YieldStreet, the fintech company seeking to change the way we invest and accumulate wealth, announced the addition of three new members to its advisory board: Ron Suber of Prosper Marketplace, Alexandra Wilkis Wilson of Gilt, and Mitch Jacobs of OnDeck.
The three new members join an elite team of advisors whose deep expertise spans technology, investing, policy and financial services. The current members include economic policy expert Donald Marron Jr. of the Urban Institute, Rahul Gupta former Group President of Fiserv (NASDAQ: FISV), Mark Gerson founder of GLG, former House Majority Whip Tony Coelho, and Todd Deutsch formerly of Goldman Sachs.
The Risk Of Playing Alt Lending’s Rate Limbo (PYMNTS), Rated: A
And while there are myriad explanations, one clear issue – according to Quick.me CEO Ola Okeshola – is the simple fact that access to capital for small businesses has dried up significantly since the Great Recession, as banks have either gone out of business or lost interest in lending to that sub-segment of the market.
FinTech, Okeshola said, can offer SMBs streamlined access to funds in ways that are unprecedented. That’s the good news: There is a large, hungry and addressable market out there.
The more challenging news is that finding ways to address that market isn’t necessarily as easy as flipping a switch – it’s addressing the right problem in the right way.
For small business loans, he explained, giving an SMB a low interest rate or a very fast approval time nearly guarantees they will sign on, regardless of how much it cost the alt lender to acquire that customer.
In Quick.me’s case, that means working with POS providers as their referral source, to basically cut their customer acquisition costs as much as possible. Because they can’t make money back spending hundreds of millions to acquire customers, they instead decided to explore how to work with someone who’s already spent that money.
The Source Code: Max Levchin (Marketplace), Rated: A
Max Levchin knows a thing or two about money. He helped found PayPal almost 20 years ago, and his new startup, Affirm, is in the business of lending.