Independent films are financed in one of two ways. Either some billionaire takes a big risk or the film is funded with deficit financing, which involves pre-selling licensing rights to a piece of content where money is lent against those rights. But the pre-seller doesn’t pay until the project is done, which creates the need for […]
Independent films are financed in one of two ways. Either some billionaire takes a big risk or the film is funded with deficit financing, which involves pre-selling licensing rights to a piece of content where money is lent against those rights. But the pre-seller doesn’t pay until the project is done, which creates the need for the loan to complete the project.
In 2010, Matthew Helderman was a college student with film making aspirations. He wanted to produce his first feature film, The Alumni Chapter. That’s when he and a partner started Buffalo 8, a production and post-production company focused on feature films and content creation.
At that time, banks tightened their lending policies for such projects, especially smaller projects.
Advances in technology, however, was reducing the cost of movie production. That coupled with the increased ease in content distribution caused the number of films produced to grow. Now, there are about 5,500 feature films produced worldwide every year. Helderman and Luke Taylor found themselves living in the right moment and hit upon the idea to finance film projects rather than simply producing them.
The Birth of BondIt
Expanding the scope of Buffalo 8 meant buying up smaller companies and adding subsidiaries to their film production brand. By the end of 2013, they had their own fund.
“Writing equity checks for media is flushing money down the toilet,” Helderman said. “We realized we should be lending and be seen as partners, not just bankers.”
They raised a small seed round and was “off to the races.” The company completed 60 short term deals in 2014, all profitable with zero defaults and completed 60 more in 2015. But a need for a more sophisticated back office led to a partnership with Pat Peters, who joined Buffalo 8 from JPMorgan. Peters was developing an entrepreneur mindset at the time, so timing was good for him to join Helderman and Taylor. Helderman said, “Peters raised the sophistication level of our business that allowed us to raise money for a hedge fund.” As a result, BondIt originated more volume than it had capital to furnish, which created a need for third-party financiers.
One early investor was the founder of a payroll company that processed the payroll for 400 feature films each year. This gave Buffalo 8 the opportunity to acquire another company, re-brand it, and train the staff. Thus, BondIt was born. The company was restructured to place Buffalo 8 under BondIt to create an ecosystem that provides value from different areas of the movie-making supply chain.
The Life of BondIt Today
The company is incredibly busy with deal flow. Helderman reports that Accord Financial, an alternative lender, bought a big piece of the company last year. Additionally, there is a possibility that BondIt may sign a term sheet with a major hedge fund to “bolster internal capacity.”
In the global media world, the top three or four players have done 254 senior financing of feature films and TV projects. Netflix pays out over three years, but producers want access to funds faster than that. That leaves them with the option of either going to BondIt or to a bank. Because streaming services affect business in every way, it gets harder to compete against Netflix when they enter the small film projects territory. “We used to be able to sell in Europe, but Netflix buys all the rights for Europe consolidating the way content is being paid for,” Helderman said. That creates a competitive challenge for small rights financiers like BondIt.
Nevertheless, there is plenty more opportunity in the market. “It was overcrowded when we got in,” Helderman said. “Leveling the playing field with Netflix, Hulu, and other streaming services democratizes the playing field.”
BondIt’s Early Funding and Platform
Helderman raised under a half a million dollars through a seed round in 2013 and another few hundred thousand in 2014. In 2015, the company received three separate $10M fundings. There were two Series A rounds, the first of which included Glory Ventures and the second of which was led by SixThirty. The earlier Seed B round came from Startupbootcamp. The company has raised $15 million to date.
The company was originally built on aggressive grass roots marketing, with a year’s worth of cold calls and social media.. Helderman and Taylor gave lectures at colleges and on speaker panels, building the brand as media experts.
“Today, customers find us organically. We look at 300-400 submissions a year,” Helderman said. While BondIt uses analytics, Helderman said you can’t remove the human element completely. They still have to perform due diligence on borrowers.
BondIt originates, structures, and funds its own deals. They have a heavily managed portfolio that technology helps enable. Buffalo 8 selects, produces, and creates the content. On the financing side, BondIt does the due diligence through its existing network, which Helderman said “speaks volumes” compared to a FICO score. He calls it a “cash out now for cash flow later” business, paying at six, nine, and twelve months, for example, some in pre-production and some in the deliverables phase. Financing a project helps the company have more control and allows them to fund projects in pieces.
The market space is wide open with BondIt’s typical customer being anyone who is creating, distributing, or buying any type or length of film content.
Helderman paints a picture in which companies coexist, feeding off of and supporting each other at times. One company only does tax credits. BondIt has built a partnership with that company, each feeding the other deals that don’t fit their own profile. But the biggest competition comes from the UK, from a company whose financing is more flexible because they’ve been at it longer. “We partner with them on deals, but we’re all aware that it’s head to head. We may lose out on certain deals, but we find ways to work together where possible.”
Performance and The Future
BondIt signs one new financing deal every week. In total, the company has logged $60 million in transactions since founding and Helderman believes they can do that much business every year as long as they have the right funding partners in place. The company prides itself on the amount of repeat business it has. Helderman wants half of BondIt’s deals to be from new clients, but that will require introducing new products or financing structures at least once a month. Helderman loves to experiment and test market boundaries, which Helderman says BondIt is “crushing.”
“Smaller buyers are going to continue to struggle,” Helderman said, “as companies like Netflix and Hulu continue to control the vast majority of the marketplace. We need to get a facility in place to service blue chip deals. We need to set up a new funding partner and be competitive at a 5%-8% yield. Netflix spends $5B a year on content, all of which needs to be financed.” For that reason, Helderman believes BondIt needs a long-term balance sheet. “We need to be laser focused on structuring deals.” With a cheaper line of credit, he believes his company can get their business hats on and think about growth.
He sees BondIt expanding into sports lending and working with a blue chip facility (Netflix, Amazon, etc.) to help business develop on the production side. At the end of the day, he says that, like so many other companies, “We always need cash.” The golden goose, he said, would be a family office that says “Go make me 8% or 10%,” which could help BondIt create a facility with no unused fees, no servicing fees, and no expansion fees.
When looking at the things that make a strong businesses, adaptability comes to mind. It seems especially promising the way these BondIt have identified a unique market need. They saw what the market had in store, and they pivoted to fill the void. This ability to conform to the opportunities the market presents speaks well of their potential going forward.
News Comments Today’s main news: California SC finds arbitration agreement waiver unenforceable. BondMason first P2P provider to launch SIPP. China’s internet finance thrives as fraud fades. Marvelstone plans robo-advisor for family offices. Today’s main analysis: Real estate tech deals tick up. Today’s thought-provoking articles: 5 areas of fintech attracting investment. UK still fintech unicorn capital of Europe. Millennials favor search […]
Real estate tech deals tick up. AT: “I suspect most of this is being driven by RECF. Mortgage tech is starting to rise. PropTech is huge, and that includes tools for real estate brokers and investors including rental unit management.”
Why I don’t believe in the hybrid advice model. AT: “This is a position I’d expect of LendingRobot’s Emmanuel Marot. Although brilliant, LR and Marot cannot fight market forces. Nonetheless, I agree with his bottom line: Humans can spout meaningless justifications better than any robot, which is why the hybrid model is catching on. While investors think technology is cool, there is still that spark of meaningless human voice-in-the-head begging them to fear it.”
On April 6, the California Supreme Court issued a unanimous opinion in McGill v. Citibank, finding that a pre-dispute arbitration agreement was unenforceable to the extent it required the plaintiff to waive her right to seek public injunctive relief. According to the court, the right to pursue a public injunction constitutes an “unwaivable public right” under California law. Therefore, “a provision in any contract ― even a contract that has no arbitration provision ― that purports to waive, in all fora, the statutory right to seek public injunctive relief . . . is invalid and unenforceable under California law.”
The California court further explained that its partial unenforceability finding is consistent with the U.S. Supreme Court’s decision in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). In that case, the Court stated that “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitrable, rather than a judicial forum.”
The court also acknowledged, but found no reason to address, the plaintiff’s related claim based on what is known under California law as the “Broughton-Cruz” rule, asserting that a request for a public injunction cannot be decided in arbitration. Finally, the decision remanded the case to the California Court of Appeals to consider ― if either party should raise the issue ― the question of whether the rest of the arbitration agreement remains enforceable in light of language contained in the most recent version of the underlying account agreement stating that, “if any portion of the arbitration provision is deemed invalid or unenforceable, the entire arbitration provision shall not remain in force.”
The decision of the California Supreme Court in McGill v. Citibank will likely be appealed.
In light of this decision, providers of consumer products and services should review their existing arbitration agreements to determine whether the consumer’s ability to pursue a public injunction or other “public rights” is completely foreclosed.
McGill v. Citibank also highlights the risks of including language in an arbitration agreement (or in any contract) stating that the agreement will be invalid if any portion of the agreement is deemed invalid or unenforceable. Given the impossibility of predicting how courts may interpret even well-settled questions of law, standard severability language is always preferable unless different language is specifically mandated.
At the same time, some of the steam has come out of the sector. Overall investment and merger and acquisition activity in fintech almost halved from a record high of $46.7bn in 2015 to only $24.7bn last year, according to KPMG.
Another negative factor was the governance scandal last year at Lending Club, the biggest online lender in the US, combined with disappointing performances by some of its rivals, which turned investors off peer-to-peer lending.
Total fintech investment in Asia inched up to a new record of $8.6bn last year, although the number of deals fell by more than 8 per cent. More than half the region’s total fintech investment came from one deal: Ant Financial’s $4.5bn funding round.
The launch of voice-activated assistants such as Amazon Alexa and Google Voice has opened up possibilities for making online banking easier for customers. Banks such as Capital One have already latched on to this trend.
Cyber security shot to the top of the boardroom agenda for banks after one of the biggest bank robberies in history was carried out by cyber thieves on the Bangladesh central bank via the Swift payments system in February 2016. The crooks made off with $81m that was on deposit at the US Federal Reserve.
Most big financial groups remain convinced of the potential for blockchain to revolutionise parts of their industry and several central banks are examining the potential for using the technology to create digital currencies. Venture capital investment in blockchain companies rose by a fifth to $544m last year, according to KPMG.
The insurance industry has been slower than other areas of finance to wake up to the digital disruption at its door. But recently start-ups such as So-sure, Friendsurance, Lemonade, Guevara and Brolly have emerged with plans to transform the sector. Venture capital investment in insurance technology companies doubled last year to almost $1.2bn, according to KPMG.
2016 was a banner year for real estate tech with over $2.6B in funding to the category across 277 deals. At the current run rate, 2017 could very well reach another consecutive funding high, even as deals are on track to come in slightly below last year’s total.
So far this year, real estate tech companies have received $733M across 61 deals. At the current run-rate investment activity is on track to reach $2.9B invested across 247 deals.
On a quarterly basis, deals have materially declined since Q3’16.
Funding, on the other hand, has increased in each of the last three quarters and Q1’17 received the second-largest quarterly funding total ever, behind Q2’16.
On paper, it looks pretty good: let the robot do the simpler stuff, like a modern-portfolio-theory allocation between a few ETFs, and have a human being intervene to provide more sophisticated and personalized advice.
In practice, I think it’s nonsense. If you believe the market is truly efficient, then there’s no point in using an advisor, robot or human. Just invest in a broad market ETF and be done with it (except for tax harvesting).
If you think the market is efficient-ish, then low cost optimization is the solution. Go robot. If you think you need an active manager, you should read the trove of statistical analysis that demonstrate you’re simply paying for someone’s yacht. Indexes beat stockpickers [92% of time]…
It does make sense for robo-advisors to move to the hybrid model, since it allows them to differentiate and de-commoditize their service, but for their clients, not so much.
Machine learning algorithms have become so good in the last 10 years, that any number-crunching and quantitative decisions a smart but junior employee can do, the machine will do better, faster, and cheaper.
Investors with at least $100,000 with Wealthfront can now borrow up to 30% of their balance for loans for anything except purchasing more investments on the firm’s platform, the company announced Wednesday.
Reuters reports loans will cost between 3.25% and 4.5%, and any money a client deposits into their account after taking out a loan will pay off the balance rather than investments.
Financial services firm Edward Jones today announced a multi-year partnership with SixThirty, a St. Louis-based venture fund that invests in financial technology (FinTech) startup companies. Backed by the St. Louis Regional Chamber, SixThirty was founded in 2013 and to date has funded more than 25 startups across the globe.
As part of the partnership with SixThirty, Frank LaQuinta, a general partner with Edward Jones, has joined the organization’s Investment Committee which evaluates the investment pipeline and selects FinTech startups that SixThirty invests in.
Pi Capital International LLC (“Pi Capital”) is pleased to announce that it was the exclusive financial advisor and placement agent to Money360, Inc. for a structured debt facility of up to $250 million. The financing vehicle is designed to allow Money360 to employ funding as it provides commercial real estate loans to its U.S. client base. The fund provides Korean investors with a short-duration, high-yield fixed-income instrument.
“The fund raise by Pi Capital will allow us to substantially increase our assets under management,” said Evan Gentry, M360 Advisors’ CEO. “We believe this gives us a competitive advantage with an anticipated $250 million investment from one of South Korea’s most reputable financial institutions.”
ApplePie Capital, the first online lender solely dedicated to the franchise industry, today announced the appointment of franchise industry veteran Ronald Feldman as chief development officer, as well as the acquisition of Funding Solutions, LLC, a well-established national franchise lending consultancy that specializes in SBA, conventional and equipment finance loans. Feldman and Funding Solutions’ managing partner Randy Jones will join ApplePie’s leadership team.
These additions position ApplePie’s financial platform to exponentially expand upon its hallmarks of speed, flexibility and efficiency with new product options, an expanded network of lending sources and an extraordinary wealth of franchise finance expertise for its growing list of franchisor partners. Currently, ApplePie serves more than 40 franchisors including Orangetheory Fitness, Jimmy John’s, Jersey Mike’s and Marco’s Pizza.
Responsible for growing ApplePie’s brand portfolio and contributing to product strategy, Ronald Feldman comes to the company with more than 20 years of experience in franchise leadership and franchise financing. He previously served as chief development officer at FranData, the industry leader in market research, and as a principal and co-founder of Franchise America Finance (FAF) and The Siegel Financial Group. Feldman was also an early franchisee of The Goddard School system. As an active advocate of the franchising business model, Feldman currently serves the International Franchise Association (IFA) as chair of the Supplier Forum Advisory Board and sits on both the Board of Directors and the Executive Committee of the association. Feldman was awarded the Sid Feltenstein MVP Award for service to the IFA’s Political Action Committee (FRANPAC) in 2013.
Unfortunately, some Millennial stereotypes are rooted in fact. A 2015 PWC survey showed that only 24% of us have basic financial knowledge, and even so, only 27% of us seek financial advice on saving and investing.
When it comes to jobs, we’re not the deadbeats that people assume. In fact, a 2015 Deloitte report found that 54% of Millennials had started or had planned to start their own businesses by year-end. Although we may work differently than generations past, many of us are passionate, entrepreneurial and looking to make a difference.
“Advisors need to understand how truly connected this new generation is to each other and to information.” When it comes to trusting a financial advisor, Kamine highlights this outsider oversight as a road block.
Millennials currently represent a meaningful fraction of U.S. wealth that will grow as baby boomers continue to pass down an astounding $30 trillion over the next 30 years. When this transfer of wealth happens, an estimated 66% of Millennials will fire their parents’ financial advisor, according to InvestmentNews Data.
This year, 86% of Millennials said they are interested in socially responsible investing, according to Morgan Stanley.
The Millennial Disruption Index reports 71% of us would rather go to the dentist than listen to what banks tell us. In our financial planning, we have shorter-term goals that we’re trying to align with the things we care about.
With an average age of 51, many advisors still build financial plans based on their view of a traditional life cycle with set ages for when we start a family, buy a house, climb the corporate ladder and retire. But their view is not our reality. Kamine adds, “Financial advice has been like a structured box without much creativity or understanding of the individual. Advisors need to become more dynamic because we’re revolting against structure. I’ve told my advisors I don’t envision buying a house for at least the next five years. And I’m definitely not focused on planning for retirement 40 to 50 years from now.”
The report, the first in a series on regulation in the fintech industry, focuses specifically on marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger (also known as blockchain) technology.
While the GAO did not issue any recommendations in the report, it noted that regulation of these four subsectors was varied depending on the types of products or services offered and the way in which they are delivered to consumers.
College Ave Student Loans, the leading next-generation student loan fintech lender, has teamed up with America’s #1 College Life Expert Harlan Cohen to help families get comfortable with the uncomfortable when it comes to college and money. Hosted by Harlan Cohen, author of The Naked Roommate, the Naked Financial Truth Digital Tour will feature a series of free webinars and videos focused on financial advice, strategies and tips to help parents and students plan for post-secondary education.
The first webinar, “The 7 Biggest Financial Mistakes College Students Make (And How Parents Can Help)” will be held on Tuesday, April 25 at 7 p.m. ET. Registration for the webinar is free and available online at
These eight companies — which are required to have a presence in the region to receive an investment — will begin the 12-week accelerator on April 24, meeting with mentors and advisors selected to help guide them toward growth and fundings. They run the gamut of the financial industry, from creating data visualizations of personal assets to a student loan repayment benefit program. Four focus on putting financial technology to use solving social issues.
In the next several weeks Raymond James is setting its sights on rolling out a revamped suite of “longevity” planning tools. The updated software comes with the kinds of bells and whistles that advisors might expect from a nearly five-year-old package – a “new look and feel” as well as a “more conversational design,” as company execs put it.
Other notable enhancements, they say, include more flexibility for analyzing portfolio return patterns and capabilities allowing real-time updates as clients’ household budgets and retirement goals change over time.
Tamarack, a leader in providing independent software solutions in the equipment finance and commercial lending industry, has added Channel Partners Capital as its newest client to utilize Tamarack’s Lease/Loan Origination Accelerator on Salesforce.
Channel Partners, a leading provider of small business working capital loans, will benefit from added flexibility, streamlined operations and enhanced audit controls, as a result of using Tamarack’s Lease/Loan Origination Accelerator on Salesforce.
Tamarack’s Lease/Loan Origination Accelerator on Salesforce is a scalable solution offering users the ability to automate work queues,increase throughput of loans without additional head count and customize notifications from lead generation through to funding.
BondMason has become the first peer-to-peer service provider to launch a self-invested personal pension (SIPP) product. The service aims to offer investors a flexible and tax-efficient way to save for retirement.
The new retirement product, which selects loans across P2P lending platforms, will grant UK savers exposure to higher-return assets than traditional pension savings products. Starting from a minimum investment of £5,000.
MILLENNIALS are favouring search engines over professional financial advice when it comes to managing their own money, research claims.
A poll of more than 2,000 adults by Zurich UK claims 15 per cent of millennials, referring to those aged 18-34, are turning to search engines such as Google instead of seeking professional financial advice, more than any other age group.
Only three per cent of 35-44 year olds and nine per cent of those aged 45-54 and over 55 respectively, opt for web-based information.
Asked why they eschew professional help, one in five millennials cited confidence in their ability to sort their own financial futures as a reason for not initially seeking professional help, while 37 per cent felt they do not earn enough to need to speak to a financial adviser, and almost a quarter said they were too young.
High Street bank TSB said some loan providers make a “hard mark” on credit files when someone asks for a loan price or quote.
TSB chief executive Paul Pester said: “We estimate that consumers are losing out by as much as £400m each year, which is going straight into the pockets of aggressive loans providers. It is time the industry comes clean on these costly underhand tactics.”
P2P lending offers an innovative funding option for businesses – including developers – and is fast becoming the go-to option.
It’s essential that the development finance sector stays competitive and vibrant, and alternative lending allows that to happen. Far from just being a back-up for situations that the traditional lending sector can’t cater to, crowdfunding and P2P platforms can actually be a more efficient source of funding.
Achieving compliance will not happen overnight. Indeed, MiFID II is widely considered to be one of the most sprawling pieces of financial legislation ever devised, and thus it presents numerous challenges. One of which being that recording calls will become mandatory for all areas of financial advice.
Then, if you add GDPR (the EU’s General Data Protection Regulation), coming into effect in May 2018, into the equation, 2018 is shaping up to be a regulatory nightmare for financial services firms. Under GDPR, we all have a‘ right to be forgotten’ or a right to erasure of all personal information held on us by a particular company. This places a duty on companies to be able to quickly access and delete the information they hold on specific individuals, on request.
However, comparing the responses of IT professionals and those responsible for managing Risk & Compliance within a business shows IT teams have a better overall understanding of the consequences of non-compliance. 62% of risk and compliance managers admitted to not knowing a company can be fined up to five million euros or 10 per cent of annual turnover, compared to only 42% of IT managers and decision makers.
A stranger’s photograph appears on your smartphone screen, and you decide whether to give him or her a loan or not. The money is not yours, but instead is provided by microfinance organizations. That’s the main difference from traditional American P2P (peer-to-peer) lending, and with Suretly you can earn or lose depending on whether the recipient of your largesse proves to be a reliable borrower or not.
Suretly is geared exclusively to short-term loans of up to one month; in other words, those with the highest interest.
The money itself is loaned by the microfinance organization that the borrower applies to, but only if they attract enough sureties to cover the whole amount, plus interest. Users share the risks, and depending on whether the individual returns the money or not, they can lose or earn from $1 to $10.
On the app, borrowers are divided into seven categories from A to G depending on their trustworthiness. The higher the risk that the loan won’t be repaid, the higher the price of its surety. The maximum commission is $1.5.
Listed Australian deposit taking institution Goldfields Money (ASX:GMY) looks to be making good on its intention to become a leading player in the digital banking product distribution and BaaS market in Australia, announcing last week that it had signed an MoU with Singapore headquartered remittance fintech Instarem.
What is interesting about the MoU is the intent to move beyond remittance towards a broader banking play for cross-border SMEs and products orientated towards visa holders visiting or living in Australia.
The two companies should have a healthy market ready to capitalise on. According to the Australian Bureau of Statistics, over the last 10 years the proportion of the Australian population born in China alone has increased from 1.2% to 2.2%, coming in just behind New Zealanders and British immigrants. Those born in India currently make up 1.9% of the population, while citizens from the Philippines, Vietnam and Malaysia collectively add up to further 2.7%.
Migration isn’t going away. And the degree to which an individual’s assets are spread across countries is also on the increase thanks to globalization.
China has four large state-owned banks, and state-owned enterprises generally have easier access to financing. Many small companies are troubled by the financing bottleneck, creating pent-up demand.
Meanwhile, working-class families struggle to figure out where to invest their savings to seek higher returns, and many of them move money online. The country, home to the world’s biggest online population, also has a number of groups, such as college students, who are underserved by banks.
By March 2017, 3,607 Chinese P2P lending platforms had run into trouble or been forced to close, with only 2,281 platforms in normal operation.
On top of P2P lending, Internet finance also covers business such as third-party online payment, crowd funding, and other financial services.
Risk caused by the Internet finance industry has wide repercussions. Some P2P lending platforms resembled hybrid financial institutions providing clients with various financial services online, analysts said.
Businesses such as P2P lending, Internet-based insurance, third-party online payment, and online asset management were among key areas for strengthened supervision, industry observers said.
Internet finance last week appeared on the top banking regulator’s list of ten most important areas for enhanced risk control, with targeted measures to be taken to stem emergence of a financial crisis.
Wang said 2017 will be a watershed year for Chinese Internet finance as the rules are tightened, bringing the industry out of the wilderness.
Singapore-based Marvelstone Capital plans a robo advisor platform for the under-served family office market in Asia.
The platform is being developed with Singaporean fintech startup Smartfolios, and will be launched in the third quarter of 2017. It will be available on desktop and mobile for Marvelstone Capital’s clients.
Marvelstone will target family offices based in Singapore, Malaysia, Indonesia, Myanmar, as well as India. The company points out that Malaysia is an important market and Cho added: “It is a huge market and the culture is quite unique as well, there’s a huge Shariah-compliant market, so it is definitely one of the most important markets for us.”