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Kabbage, Amex, M&A, Lending


#350
Kabbage With No Baggage

Published:

Aug 22, 2020


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Posted In:

Kabbage, Amex, M&A, Lending

Published:

Aug 22, 2020


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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...

Portfolio News


FinTech Collective invests in IMMO - We're incredibly excited to announce that we have invested in the €14m Series-A financing round in IMMO. IMMO is building the real estate asset manager of the future leveraging data and technology to source, appraise, acquire, and rent-out single units at scale, starting with Europe. IMMO has assessed more than 10,000 property leads (totaling €3.5b in value) and has raised over €60m in real estate capital for deployment through its residential real estate platform. Read more

Fintech Equality Coalition forms to fight racial inequality in the industry - A new coalition composed of leading fintech companies have announced that they will work together to actively fight inequality within the industry and in society. Portfolio Company MoneyLion is a proud founding member of the coalition. There will be opportunities for other fintech companies to join in the future. Read more

Portfolio company Runa CEO and founder featured in interview for startup.info - Courtney McColgan shares her key learnings thus far and how COVID-19 has allowed Runa time to invest in improving its product, building out its team and optimizing its operations. Read more

How Rebel helps the Brazilian fintech market and the consequences of COVID-19 - Portfolio company Rebel has proved to address key pain points for Brazilians: High-interest rates, clumsy and bureaucratic loan application processing, unreliable and limited credit scoring, and lack of financial literacy and wellness within the general population. Read more

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

Industry News


Barclays reports 66% spike in scams - Barclays is reporting a 66% increase in scams for the first six month of this year, as criminals take advantage of lockdown pressures to line their pockets. Scams perpetrated include ‘genuine investment intercept’ where fraudsters intercept emails from legitimate investment companies without the victim realising, or ‘cloned companies’ where scammers create fake websites that attract customers actively searching for investment companies. Read more

Exclusive: Wirecard UK to be bought by Railsbank after downfall of parent company - Disgraced German payment group Wirecard has found a buyer for its UK division in competitor Railsbank. Wirecard Card Solutions once settled card payments for 70 fintech clients including Revolut, Pockit, Soldo and Curve. Read more

MarcusPay’s buy now pay later product takes off with JetBlue - Buy now, pay later (BNPL) point-of-sale credit is such a productive lending model that giant financial brands are getting into the act, adding debt consolidation, home improvement and unsecured loans to the core business of instant consumer credit that BNPL is built on. Read more

Mastercard strikes debit card deal with First Direct as it aims to recover from large fall in quarterly profits - Mastercard has agreed with HSBC's First Direct to provide debit cards to the retail bank's 1.5m current account customers from next year. In the UK, MasterCard issues debit cards for Santander, Metro Bank, and Starling Bank. Read more

Low rates and heavy buyer demand send US home sales surging - Spurred by ultra-low mortgage rates, home buyers rushed last month to snap up a limited supply of existing houses, causing the pace of purchases to jump by a record-high 24.7%, the fastest since 2006. Read more

Aave becomes second DeFi protocol to hit $1b in total value locked - Aave, a non-custodial lending and borrowing protocol, has become the second DeFi protocol to hit that milestone, which means Aave users have deposited $1b worth of assets for lending and borrowing purposes. According to Defi Pulse, nearly $6b assets are currently locked in DeFi protocols. Read more

Square’s Cash App tests new feature allowing users to borrow up to $200 - Cash App is giving select users a way to get short-term loans. The company said it’s only testing the feature with around 1,000 users for now. The loans range from $20 to $200. Users are expected to pay the loan back in four weeks, along with a flat fee of 5% (60% APR). Read more

The long-lasting impact of COVID-19 on digital payments - Conventional wisdom says it takes about two months to form a new habit, and since the pandemic is unlikely to subside until 2021, U.S. consumers will certainly have longer than two months to become accustomed to digital payments. Given the accelerated shift in payment behavior and fintech disruption, the path forward for the market incumbents is clear: adapt or wither. Read more

Select Financings


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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