Once upon a time, online (marketplace) lenders were the belles of the ball. Now, no one wants them, or if they do, it’s without the baggage.
American Express is acquiring fintech lender Kabbage for $850m. The acquisition includes employees, technology, and financial data, but “Kabbage’s pre-existing loan portfolio is not included in the purchase agreement.” Kabbage counts more than 225,000 U.S. small business clients, who have accessed over $9.5b of working capital financing through their platform.
SMBs have been hit hardest in 2020 - and there is no question that loan performance will likely suffer as a result. By segregating the loan book from the acquisition, Kabbage positioned itself well relative to some of its peers recently with the $90m OnDeck exit.
Despite the turbulence felt by the first wave of online lenders, there is an emerging cohort of companies that are ushering new-found optimism. Point-of-sale lending is booming in 2020 and if the rumors around Affirm’s $10b valuation target are true, this could give the entire fintech lending space a boost, or at the very least start to generate a new set of public lending comps...
Kabbage With No Baggage
Amex acquires SoftBank-backed Kabbage after tough 2020 for the SMB lender - Amex says it has “millions” of small business customers and the addition of Kabbage's loan and other financial services tools signifies that it plans to double down on that sector with a much wider range of offerings. The acquisition comes at a tricky time not just for SMBs but also the fintech companies that serve them, and specifically for Kabbage itself, with all of them weathering the storms of COVID-19. Read more
Online loans defy fears of mass delinquencies - According to a recent report from the data provider dv01, impaired marketplace loans — those that have fallen behind on payments or accepted payment forbearance — are 9.7 percent of the total, up from about 6 percent before the crisis began. That is down from a peak of 16 percent in April, and the impairment rate has continued to decline through the early weeks of August. Read more
Fintech lenders: marketplace of hope - The years after the last global financial crisis proved the perfect era to launch a US online fintech lender. The concept remains resilient. Whether a pure start-up can flourish is another matter as these lenders have struggled for years with high operating costs and scant profits. Read more
How 'buy now, pay later' became a coronavirus counter to credit cards - Traditional BNPL loans from main street banks have relatively been concentrated in installment lending at POS for large ticket, in-store purchases such as furniture, with little coverage of e-commerce merchants. In contrast, PayPal Credit (formerly BillMeLater) Affirm, Afterpay and others were largely born in the e-commerce channel and have begun to migrate to the in-store channel. Read more
Why OnDeck is being sold on the cheap - The 14-year-old company struggled to meet the expectations that accompanied its 2014 initial public offering, recording $94.5m in losses in its first two years as a public company. Cost-cutting eventually brought modest profitability, but investors were seeking margins more in line with those generated in the tech sector. Read more
BlockFi - Jersey City based financial services company developing products for cryptocurrencies raised $50m in Series C funding led by Morgan Creek Digital. Read more
EasyKnock - New York based residential sale-leaseback company raised $5m in additional Series B funding from Viola FinTech. Read more
Form3 - London based cloud-based payment processor raised $33m in Series C funding from Lloyds Banking Group Nationwide Building Society and VC 83North. Read more
Moov Financial - Iowa based open source embedded banking platform raised $5.5m in Seed funding led by Bain Capital Ventures. Read more
Offr - London based platform for real estate agents and buyers raised $3.5m in Seed funding led by Barclays. Read more
OneCard - India based mobile-first credit card raised $10m in Series A funding led by Matrix Partners India, Sequoia Capital India and Hummingbird Ventures. Read more
Robinhood - Palo Alto based stock trading platform raised $200m in Series G funding led by D1 Partners. Read more
Waterdrop - Beijing based online insurtech platform raised $230m in Series D funding led by Swiss Re and Tencent. Read more
Yalochat - Mexico City based conversational commerce platform raised $15m in Series B funding led by B Capital Group. Read more
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