UK’s MarketFinance secures $383M to fuel its online loans platform for SMBs

Small and medium businesses regularly face cashflow problems. But if that’s an already-inconvenient predicament, it has been exacerbated to the breaking point for too many during the Covid-19 pandemic. Now, a UK startup called MarketFinance — which has built a loans platform to help SMBs stay afloat through those leaner times — is announcing a big funding infusion of £280 million ($383 million) as it gears up for a new wave of lending requests.

“It’s a good time to lend, at the start of the economic cycle,” CEO and founder Anil Stocker said in an interview.

The funding is coming mostly in the form of debt — money loaned to MarketFinance to in turn loan out to its customers as an approved partner of the UK government’s Recovery Loan Scheme; and £10 million ($14 million) of it is equity that MarketInvoice will be using to continue enhancing its platform.

Italian bank Intesa Sanpaolo S.p.A. and an unnamed “global investment firm” are providing the debt, while the equity portion is being led by Black River Ventures (which has also backed Marqeta, Upgrade, Coursera and Digital Ocean) with participation from existing backer, Barclays Bank PLC. Barclays is a strategic investor: MarketFinance powers the bank’s online SMB loans service. Other investors in the startup include Northzone.

We understand that the company’s valuation is somewhere in the region of under $500 million, but more than $250 million, although officially it is not disclosing any numbers.

Stocker said that MarketFinance has been profitable since 2018, one reason why it’s didn’t give up much equity in this current tranche of funding.

“We are building a sustainable business, and the equity we did raise was to unlock better debt at better prices,” he said. “It can help to post more equity on the balance sheet.” He said the money will be “going into our reserves” and used for new product development, marketing and to continue building out its API connectivity.

That last development is important: it taps into the big wave of “embedded finance” plays we are seeing today, where third parties offer, on their own platforms, loans to customers — with the loan product powered by MarketFinance, similar to what Barclays does currently. The range of companies tapping into this is potentially as vast as the internet itself. The promise of embedded finance is that any online brand that already does business with SMEs could potentially offer those SMEs loans to… do more business together.

MarketFinance began life several years ago as MarketInvoice, with its basic business model focused on providing short-term loans to a given SMB against the value of its unpaid invoices — a practice typically described as invoice finance. The idea at the time was to solve the most immediate cashflow issue faced by SMBs by leveraging the thing (unpaid invoices, which typically would eventually get paid, just not immediately) that caused the cashflow issue in the first place.

A lot of the financing that SMBs get against invoices, though, is mainly in the realm of working capital, helping companies make payroll and pay their own monthly bills. But Stocker said that over time, the startup could see a larger opportunity in providing financing that was of bigger sums and covered more ambitious business expansion goals. That was two years ago, and MarketInvoice rebranded accordingly to MarketFinance. (It still very much offers the invoice-based product.)

The timing turned out to be fortuitous, even if the reason definitely has not been lucky: Covid-19 came along and completely overturned how much of the world works. SMEs have been at the thin edge of that wedge not least because of those cashflow issues and the fact that they simply are less geared to diversification and pivoting due to shifting market forces because of their size.

This presented a big opportunity for MarketInvoice, it turned out.

Stocker said that the early part of the Covid-19 pandemic saw the bulk of loans being taken out to manage business interruptions due to Covid-19. Interruptions could mean business closures, or they could mean simply customers no longer coming as they did before, and so on. “The big theme was frictionless access to funding,” he said, using technology to better and more quickly assess applications digitally with “no meetings with bank managers” and reducing the response time to days from the typical 4-6 weeks that SMBs would have traditionally expected.

If last year was more about “panicking, shoring up or pivoting,” in Stocker’s words, “now what we’re seeing are a bunch of them struggling with supply chain issues, Brexit exacerbations and labor shortages. It’s really hard for them to manage all that.”

He said that the number of loan applications has been through the roof, so no shortage of demand. He estimates that monthly loan requests have been as high as $500 million, a huge sum for one small startup in the UK. It’s selective in what it lends: “We choose to support those we thought will return the money,” he said.

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Better.com acquires UK-based Property Partner ahead of SPAC close

Online mortgage company Better.com has acquired U.K.-based startup Property Partner as it seeks to expand into new markets and offer new product lines. The deal could give Better a way to augment its lending business with the potential to enable fractional ownership of properties in the U.S. and other markets.

Better plans to go public later this year through its planned merger with a special purpose acquisition company (SPAC) in a deal that values it at $7.7 billion. In the meantime the company has been active in the M&A market, acquiring two U.K.-based companies in the lead up to the deal’s close.

In July, Better announced its acquisition of Trussle, a digital mortgage brokerage in the U.K. that was widely seen as its first step to international expansion. But with the purchase of Property Partner, Better could gain technology capabilities to expand its feature set in the U.S. and other markets.

Launched in 2015, Property Partner enables fractional ownership of “buy to let” properties throughout the country. Through its platform, users could invest in individual properties or in a portfolio of properties and earn a portion of the rental income generated by those assets. It also created a resale market, enabling users to sell off their shares to other users.

The startup claims more than 9,000 investors on its property crowdfunding market and £140 million of assets under management. With the Better acquisition, the company expects to be able to expand both its investor base and properties to invest in.

Property Partner sent a message to users late last week to inform them of upcoming changes as a result of the deal. The startup announced it was temporarily pausing trading on the resale market while promoting some of Better’s plans as a result of the deal.

Under the new ownership, Property Partner said it would be able to reduce fees, grow its investor base, and dramatically expand investment opportunities by adding properties in the U.S. and other international locations to its platform.

For Better, the deal adds a new income stream in the short term while enabling the company to completely reimagine homeownership over a longer time horizon. Over the years Better has sought to augment its core mortgage lending business with additional products and services, including real estate agents, title and homeowners insurance, and the ability to make all-cash offers in certain markets in which it operates.

But in an interview with TechCrunch last month, Better CEO Vishal Garg previewed a vision for how fractional ownership could reduce friction and enable more freedom for the home-owning public:

You have a large population in this country that is composed of retirees and they don’t have a current income, so they cannot actually refinance their mortgage and they’re still paying interest at 6%. They’d like to move to a warmer climate. Well, they can’t, it’s gonna cost them 6% to sell their house, then it’s gonna cost them 6% to buy the other house.

Why can’t they set it up so they sell 1% of their house in Connecticut every year and establish an income stream that qualifies them to go get a cheap mortgage and sell that house in Connecticut over a period of time, to someone who wants to live there and buy a piece of property in Florida.

There are all these frictions and it’s honestly just a simple data-matching problem. There’s no reason you need to own 100% of your home. What if we could give you the ability to sell 10% a year or 3% of your home or 2% of your home to people who want to buy a home in your neighborhood and are not ready yet because they’re renting.

For a more detailed overview of Better’s upcoming SPAC and its product plans once it goes public, check out our feature on ExtraCrunch.

#better-com, #corporate-finance, #finance, #loans, #property-partner, #real-estate, #special-purpose-acquisition-company, #tc, #vishal-garg

Lessons from COVID: Flexible funding is a must for alternative lenders

Rachael runs a bakery in New York. She set up shop in 2010 with her personal savings and contributions from family and friends, and the business has grown. But Rachael now needs additional financing to open another store. So how does she finance her expansion plans?

Because of stringent requirements, extensive application processes and long turnaround times, small and medium-sized businesses (SMBs) like Rachael’s bakery seldom qualify for traditional bank loans. That’s when alternative lenders — who offer short and easy applications, flexible underwriting and quick turnaround times — come to the rescue.

Alternative lending is any lending that occurs outside of a conventional financial institution. These kinds of lenders offer different types of loans such as lines of credit, microloans and equipment financing, and they use technology to process and underwrite applications quickly. However, given their flexible requirements, they usually charge higher interest rates than traditional lenders.

Securitization is another cost-effective option for raising debt. Lenders can pool the loans they have extended and segregate them into tranches based on credit risk, principal amount and time period.

But how do these lenders raise funds to bridge the financing gap for SMBs?

As with all businesses, these firms have two major sources of capital: equity and debt. Alternative lenders typically raise equity funding from venture capital, private equity firms or IPOs, and their debt capital is typically raised from sources such as traditional asset-based bank lending, corporate debt and securitizations.

According to Naren Nayak, SVP and treasurer of Credibly, equity generally constitutes 5% to 25% of capital for alternative lenders, while debt can be between 75% and 95%. “A third source of capital or funding is also available to alternative lenders — whole loan sales — whereby the loans (or merchant cash advance receivables) are sold to institutions on a forward flow basis. This is a “balance-sheet light” funding solution and an efficient way to transfer credit risk for lenders,” he said.

Let’s take a look at each of these options in detail.

Funding sources for alternative lenders.

Image Credits: FischerJordan

Equity capital

Venture capital or private equity funding is one of the major sources of financing for alternative lenders. The alternative lending industry is said to be a “gold mine” for venture capital investments. While it is difficult for such companies to receive credit from traditional banks because of their stringent requirements in the initial stages, once the founders have shown a commitment by investing their own money, VC and PE firms usually step in.

However, VC and PE firms can be expensive sources of capital — their investment dilutes the ownership and control in the company. Plus, obtaining venture capital is a long, involved and competitive process.

Alternative lenders that have achieved good growth rates and scaled their operations have another option: An IPO lets them quickly raise large amounts of money while providing a lucrative exit for early investors.

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Octane raises $52M at a $900M+ valuation to help people finance large recreational purchases

Most of the time when people get loans, it’s for big life purchases such as a house or a car.

But not every big purchase is a necessity. Some are more for fun, and the financing options for those types of buys — such as motorcycles and ATVs — are more limited. Today, Octane Lending, a company that embarked seven years ago on remedying that, announced it has raised $52 million in a Series D round of funding that values the company at over $900 million.

The company, which offers “instant” financing for large recreational purchases, boasts impressive financials in a startup world whose inhabitants are mostly unprofitable. For one, Octane is both net income and operating cash flow positive, and expects to originate more than $1 billion in the next 12 months. It has been doubling revenue annually, and CEO and co-founder Jason Guss projects that the company will see “over $100 million in revenue” this year. Its valuation is now “more than double” what it was at the time of its July 2020 $25 million raise, according to Guss.

Progressive Investment Company Inc., a member of the Progressive Insurance group, led its latest financing, which included participation from existing backers Valar Ventures, Upper90, Contour Venture Partners, Citi Ventures, Third Prime and Parkwood, as well as new investors Gaingels and ALIVE. 

With the latest round, New York-based Octane has now raised more than $192 million in total equity funding since its 2014 inception.

Octane launched with the goal of “making lending better in overlooked markets,” according to Guss. Specifically, Octane initially set out to build a lender marketplace to streamline retail financing in the powersports category. Put more simply, it wanted to help people who want to buy things like motorcycles, snowmobiles, jet skis and ATVs get the financing they need to do so.

“We quickly learned that the buying journey in powersports markets was broken beyond just financing,” Guss told TechCrunch. “We elevated our goal to build an end-to-end buying solution including editorial content, consumer pre-qualification tools, instant full-spectrum financing and digital deal closing.”

Image Credits: Octane

Because lending is involved in about 80% of powersports purchases and about 80% of lending happens in the dealership, Octane focused first on building a lending platform for dealerships and consumers. Then in 2016, it launched Roadrunner Financial, a wholly owned-and-operated lender, so that it could offer full spectrum lending, “expand access to credit and speed up transactions through digitization and automation.” Today, the company is partnered with 3,800 dealers.

With an anchor in dealerships, Octane then expanded its scope. Last year, it acquired Cycle World and UTV Driver, along with five other brands from Bonnier with a goal “to inspire and inform powersports enthusiasts across the nation.” Also last year, it launched Octane Pre-qual, which enables consumers to instantly prequalify for financing on OEM and dealership websites with a soft credit pull. With that offering, Octane aims to help direct consumers to a dealership, close their loan and complete their purchase in one place.

“We are growing dramatically because we make transactions faster and simpler to close for consumers and dealerships,” Guss said. “We are the only platform to offer end-to-end purchasing benefits in the markets we play in.”

Looking ahead, Octane plans to use its new capital to expand to adjacent “other passion purchase” markets and continue to launch customer engagement tools as well as buying solutions for consumers shopping for powersports vehicles online. It also wants to continue to add dealership, OEM and brand partners, which today include BRP, Suzuki and Triumph Motorcycles.

“We define a passion purchase as a major discretionary purchase that brings people joy,” Guss said.Most innovation and investment is focused on large, marquee markets such as small business, auto and homes.” As people spent less toward travel and eating out once the COVID-19 pandemic hit, the powersports market got a boost, growing double digits last year, noted Guss.

“Our core customer base was not significantly impacted by COVID economically so consumer demand and loan performance remained strong,” he said.

Andrew Quigg, chief strategy officer at Progressive Insurance, believes that technology and consumers’ needs continue to evolve.

Octane’s point-of-sale loan origination platform provides benefits to consumers and dealerships in a specialty segment of the lending market,” he said. “We like to partner with innovative, forward-thinking companies and believe that our investment in Octane aligns very well with this strategy.” 

Octane describes itself as a remote-first workplace that has offices in New York and Dallas. It has grown its team by 50% in the last year, from 213 to 336 employees.

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Digital lending platform Blend valued at over $4B in its public debut

Mortgages may not be considered sexy, but they are a big business.

And if you’ve refinanced or purchased a home digitally lately, you may or may not have noticed the company powering the software behind it — but there’s a good chance that company is Blend.

Founded in 2012, the startup has steadily grown to be a leader in the mortgage tech industry. Blend’s white label technology powers mortgage applications on the site of banks including Wells Fargo and U.S. Bank, for example, with the goal of making the process faster, simpler and more transparent. 

The San Francisco-based startup’s SaaS (software-as-a-service) platform currently processes over $5 billion in mortgages and consumer loans per day, up from nearly $3 billion last July.

And today, Blend made its debut as a publicly-traded company on the New York Stock Exchange, trading under the symbol “BLND.” As of early afternoon, Eastern Time, the stock was trading up over 13% at $20.36.

On Thursday night, the company had said it would offer 20 million shares at a price of $18 per share, indicating the company was targeting a valuation of $3.6 billion.

That compares to a $3.3 billion valuation at the time of its last raise in January — a $300 million Series G funding round that included participation from Coatue and Tiger Global Management. Also, let’s not forget that Blend only became a unicorn last August when it raised a $75 million Series F. Over its lifetime, Blend had raised $665 million before Friday’s public market debut.

In filing its S-1 on June 21, Blend revealed that its revenue had climbed to $96 million in 2020 from $50.7 million in 2019. Meanwhile, its net loss narrowed from $81.5 million in 2019 to $74.6 million in 2020.

In 2020, the San Francisco-based startup significantly expanded its digital consumer lending platform. With that expansion, Blend began offering its lender customers new configuration capabilities so that they could launch any consumer banking product “in days rather than months.”

Looking ahead, the company had said it expects its revenue growth rate “to decline in future periods.” It also doesn’t envision achieving profitability anytime soon as it continues to focus on growth. Blend also revealed that in 2020, its top five customers accounted for 34% of its revenue.

Today, TechCrunch spoke with co-founder and CEO Nima Ghamsari about the company’s decision to go with a traditional IPO versus the ubiquitous SPAC or even a direct listing.

For one, Blend said he wanted to show its customers that it is an “around for a long time company” by making sure there’s enough on its balance sheet to continue to grow.

“We had to talk and convince some of the biggest investors in the world to invest in us, and that speaks to how long we’ll be around to serve these customers,” he said. “So it was a combination of our capital need and wanting to cement ourselves as a really credible software provider to one of the most regulated industries.”

Ghamsari emphasized that Blend is a software company that powers the mortgage process, and is not the one offering the mortgages. As such, it works with the flock of fintechs that are working to provide mortgages.

“A lot of them are using Blend under the hood, as the infrastructure layer,” he said.

Overall, Ghamsari believes this is just the beginning for Blend.

“One of the things about financial services is that it’s still mostly powered by paper. And so a lot of Blend’s growth is just going deeper into this process that we got started in years ago,” he said. As mentioned above, the company started out with its mortgage product but just keeps adding to it. Today, it also powers other loans such as auto, personal and home equity.

“A lot of our growth is actually powered by our other lines of business,” Ghamsari told TechCrunch. “There’s a lot to build because the larger digitization trends are just getting started in financial services. It’s relatively large industry that has lots of change.”

In May, digital mortgage lender Better.com announced it would combine with a SPAC, taking itself public in the second half of 2021.

 

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Tom Blomfield takes first board post at Generation Home, after leaving Monzo and Angel investing

Following on from mid-June when first-time buyer mortgage lending startup Generation Home raised a $30.4m Series A round and a £300m loan facility from NatWest, it’s now adding to its board.

Although known for becoming an Angel investor since leaving Monzo, the challenger bank startup he co-founded, Tom Blomfield hasn’t joined any startup boards.

That changes today with the news that he is joining Generation Home.

The startup launched last year with radically a different model for home buying – effectively allowing relatives to become co-equity holders in the properties their children bought, and go along for the ride.

Generation Home founder and CEO Will Rice says the platform, therefore, unlocks far larger amounts of capital from ‘the bank of mum and dad’ than normally happens when money is loaned or gifted to the next generation.

The UK property problem is acute. According to the English Housing Survey 2020, the average U.K. renter spends 35% of their income on rent compared with 18% for homeowners paying a mortgage. High rents inhibit their ability to save and house price inflation locks more people out of homeownership.

Using Generation Home, parents can contribute deposits as an equity loan. Generation Home then takes responsibility for the repayment of funds to the parents upon a sale of the property or remortgage. Repayment of the loan can also be triggered once the homeowner’s equity in the property reaches a pre-agreed level, and the value of the loan can reflect changes in the house price. Plus the loan can be converted into a gift at any time, through the Generation Home platform.

Speaking to TechCrunch about his move to join the board, Blomfield said: “I met Will last year and what really excites me was the product. I think it’s so relevant, and it hasn’t really been covered in the mainstream press much. The problem with first-time buyers, trying to get a mortgage, is that they almost invariably rely on help from their parents or sometimes their friends to help. I’ve had experience with this and a lot of people actually mean it as a loan and they intend to get that money back. But mortgage lenders make you sign a piece of paper saying this is an absolute gift. So hundreds of thousands of parents around the country are basically committing a – well-intentioned – fraud to help their kids get on the property ladder. So what I loved about the Generation Home product is that they’ve got this new legal structure where parents can effectively lend that money towards the deposit, but it’s structured as a loan if they want it to be. They have the right to get their money back eventually without having to lie. So that’s one thing that really really attracted me to the company. It’s just so so relevant to everyone, and people are just kind of blind to this problem.”

I asked him if he thinks there’s a “Monzofication” of FinTech business models in FinTech, as suggested by the success of Monzo’s model, where the user is put front and centre?

“There’s certainly a lot in common between what we do at Monzo and what Generation Home is trying to do. Big mortgage lenders focus on the mortgage product and the customer is like an inconvenience. As a customer you have to fit with whatever the mortgage provider will offer you and it’s totally inflexible. It’s very similar with Monzo – we tried to flip it around, and focus on what customers really want and care about every day. Simple stuff like notifications when you spend money or alerts before you go into overdraft – those are now commonplace and they weren’t, five, six years ago. I think Generation Home is doing the same thing which is focusing on the stuff that customers really, really care about, and then providing that flexibility and more features to meet their needs, rather than just raming everyone into the straitjacket of what a mortgage is doing,” he said.

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Accept.inc secures $90M in debt and equity to scale its digital mortgage lending platform

A lot of startups were built to help people make all-cash offers on homes with the purpose of gaining an edge against other buyers, especially in ultra-competitive markets. 

Accepti.inc is a Denver-based company that is attempting to create a new category in real estate technology. To help scale its digital mortgage lending platform, the company announced today that it has secured $90 million in debt and equity – with $78 million in debt and $12 million in equity. Signal Fire led the equity portion of its financing, which also included participation from existing seed investors Y Combinator and DN Capital.

Accept.inc describes itself as an iLender, or a “technology-enabled lender” that gives people a way to submit all-cash offers on a home upon qualifying for a mortgage.

Using its platform, a buyer gets qualified first and then can start looking for homes that fall at or under the amount he or she is approved for. They can purchase a more expensive home, but any amount above what they are approved for would have to come out of pocket. Historically, most buyers don’t know that they will have to pay out of pocket until they’ve made an offer on a specific home and an appraisal comes under the amount of the price they are paying for a home. In those cases, the buyer has to cough up the difference out of pocket. With Accept.inc., its execs tout, buyers know upfront how much they are approved for and can spend on a new home “so there are no surprises later.”

SignalFire Founding Partner and CTO Ilya Kirnos describes Accept.inc as “the first and only iLender.”

He points out that since it is a lender, Accept.inc doesn’t make its money by charging buyers fees like some others in the all-cash offer space.

“Unlike ‘iBuyers’ or ‘alternative iBuyers,’ Accept.inc fronts the cash to buy a house and then makes money off mortgage origination and title, meaning sellers, homebuyers and their agents pay no additional cost for the service,” he told TechCrunch.

IBuyers instead buy homes from sellers who signed up online, make a profit by often fixing up and selling those homes and then helping people purchase a different home with all cash. They also make money by charging transaction fees. A slew of companies operate in the space including established players such as Opendoor and Zillow and newer players such as Homelight.

Image credit: Accept.inc. Left to right: Co-founders Adam Pollack, Nick Friedman and Ian Perrex.

Since its 2016 inception, Accept.inc says it has helped thousands of buyers, agents and sellers close on “hundreds of millions of dollars” in homes. The company saw ”14x” growth in 2020 and from June 2020 to June 2021, it achieved “10x” growth in terms of the size of its team and number of transactions and revenue, according to CEO and co-founder Adam Pollack. Accept.inc wants to use its new capital to build on that momentum and meet demand.

Pollack and Nick Friedman met while in college and started building Accept.inc with the goal of “turning every offer into a cash offer.” The pair essentially “failed for two years,” half-jokes Pollack.

“We basically became an encyclopedia of 1,000 ways the idea of helping people make all-cash offers wouldn’t work,” he said.

The team went through Y Combinator in the winter of 2019 and that’s when they created the iLender concept. In the iLender model, the company uses its cash to buy a house for buyers. Once the loan with Accept.inc is ready to close, the company sells back the house to the buyer “at no additional cost or fees.”

“Basically what we learned through those two years is that you have to vertically integrate all of your core competencies, and you can’t rely on third parties to own or manage your special sauce for you,” Pollack told TechCrunch. “We also realized that if you’re going to build a cash offer for anyone who could afford a mortgage, you’ve got to make it a full bona fide cash offer that closes in three days as opposed to a better version of what existed. And you have to own that, and take the risk that comes with it and be comfortable with that.”

The benefits of their model, the pair say, is that buyers get to be cash buyers, sellers can close in as little as 32 hours, and agents “get a guaranteed commission check.” 

“Our mission is that everyone should have an equal chance at homeownership,” Friedman said. “We not only want to level the playing field, we want to create a new standard.”

Buyers using Accept.inc win 6-7 times more frequently, the company claims. With its new capital, It also plans to double its team of 90 and enter new markets outside of its home base of Denver.

SignalFire Partner Chris Scoggins believes that Accept.inc is different from other lenders in that its focus is on “winning the home, not just servicing the loan, with a business model that’s 10x more capital-efficient than other players in the market.

The team is driven…to level the playing field for homebuyers who today lose out against all-cash offers from home-flippers and wealthy individuals,” he added. “We see an enormous opportunity for Accept.inc to become the backbone of the future of mortgage lending.”

 

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Acorns’ new fintech target is debt management with acquisition of Pillar

Popular saving and investing app Acorns has acquired Pillar, an AI-powered startup built to help manage student loan debt, in its second acquisition of 2021.

New York-based Pillar helps consumers optimize their debt payments by focusing first on student loans. It launched in May 2019 with $5.5 million in seed funding led by Kleiner Perkins. The companies declined to reveal the financial terms of the deal, only noting that within six months of launching, Pillar managed over $500 million worth of student loan debt of more than 15,000 borrowers. 

Michael Bloch dropped out of Stanford Business School and co-founded Pillar after he and his wife had amassed more than $500,000 of student loan debt after she graduated from law school. Prior to that, he had led the Strategy & Operations division for DoorDash, growing it to $100 million in revenue. The problem Pillar has aimed to tackle is massive. Student loan debt is the second-largest type of consumer debt in the U.S., with 45 million borrowers collectively owing nearly $1.7 trillion in student loans.

Notably, Acorns was apparently one of several companies that had courted Pillar.

“We were in a pretty lucky position to have a lot of interest from many of the top fintech companies that are out there,” Bloch told TechCrunch. “We had multiple offers on the table and Acorns was really our top choice just given how the business has been doing and the team, the culture and the mission.”

The deal marks the second acquisition this year and third overall for Acorns, which says it notched its strongest quarter in its history the first three months of this year. In March, Acorns also acquired Harvest, a fintech that helped customers reduce more than $4 million in debt in 2020.

The Pillar and Harvest teams will help Acorns accelerate its product roadmap of helping customers pay down debt, “an essential part of the financial wellness system,” said CEO and founder Noah Kerner.

Over time, Pillar will become part of one of Acorns’ monthly subscription tiers. 

“The IP and technology that the Pillar team created in debt management is really interesting to us when we think about how we scale our Smart Deposit feature,” Kerner said.

With Smart Deposit, when a customer’s paycheck hits the Acorns bank account, the app automatically allocates a percentage of that paycheck into an individual’s different investment accounts. 

“From a behavioral perspective, the best way to get somebody to save and invest is to enable them to set aside a piece of their paycheck as soon as it hits the account so that they don’t spend it. That feature has been really well adopted by our direct deposit customers,” Kerner said. “And so Michael and his team are coming in to manage that feature, and also our bank accounts product. I think their past experience is going to be really useful for us to take what we have and help the team catalyze it further.”

With its latest acquisition, Irvine, California-based Acorns now has more than 350 employees. In 2017, the company acquired Vault, now called “Acorns Later.” As a result of that acquisition, the company has seen its number of retirement accounts grow to 1.2 million from 500.

As mentioned above, Acorns has had a good year so far. In the first six weeks of 2021, the company added nearly 600,000 new accounts, reaching a total of more than 9 million users having saved and invested a total of $7.5 billion.

“The first quarter was our biggest growth quarter on record,” Kerner told TechCrunch. “In particular we crossed the $4.3 billion in dollars in assets under management, which is a really exciting milestone when you think about the fact that these are customers that are saving small amounts of money in the relative scheme of money invested typically.”

#acorns, #artificial-intelligence, #bank, #debt, #exit, #finance, #financial-services, #financial-technology, #fundings-exits, #kleiner-perkins, #loans, #ma, #mergers-and-acquisitions, #new-york, #pillar, #startups, #student-debt, #student-loan

FinanZero, Brazil’s free online credit marketplace, raises $7M

FinanZero, a Brazilian online credit marketplace, announced today that it has closed a $7 million round of funding – its fourth since it launched in 2016 was founded in 2016. It has raised a total of $22.85 million to date.

The real-time online loan broker allows people to apply for a personal loan, a car equity loan, or a home equity loan for free and receive an answer in minutes. A key to FinanZero’s success is that it doesn’t offer the loans itself, but has instead partnered with about 51 banks and fintechs who back the loans.

FinanZero is based in Brazil’s financial capital, Sao Paulo, and has 52 employees.

“From day one we said, ‘We only work with a success fee,’ so we only get paid when the customer signs the loan contract,” said Olle Widen, the company’s co-founder, and CEO. 

Instead of charging the customer, FinanZero gets a commission from one of its partners, and with a growing volume of credit applications – an average of 750,000 applications per month – the company has seen 61% revenue growth from 2019-2020.

Olle Widen, cofounder and CEO of Finanzero

The Brazilian finance and banking market has been ripe for disruption, as it has traditionally favored the rich. 

Those with low incomes – the vast majority of Brazilian citizens – are then left with few options when it comes to financing, and which in turn forces them into compounding debt they’ll likely never escape from. Traditionally, young Brazilians have lived with their families until they got married, and while there is a cultural aspect to it, the bottom line is that mortgages were infinitely hard to get approved for. 

With products like FinanZero and Nubank – Latin America’s largest digital bank – Brazilians are starting to see more economic mobility and independence from the legacy institutions that dictated their lives for so long.

Widen, who is Swedish, moved to Brazil about 10 years ago for personal reasons, and while there, was pitched the idea of FinanZero by Webrok Ventures, an investment company focused on bringing Nordic innovation to Brazil. 

At the time, Swedish startup Lendo – a precursor to FinanZero – was making waves in Sweden, and the team felt that a similar model would succeed in Brazil, a country known for its bureaucracy and red tape, and thus primed for a streamlined and hassle-free approach to loans.

The original idea was to just copy Lendo, Widen said, but as others have discovered, along the way the team needed to “tropicalize” the product and the experience, meaning they had to build a custom solution for the Brazilian market and its people.

“The founder of Lendo was a childhood friend of mine,” said Widen, of his close ties to the Swedish fintech.

To apply for a loan on FinanZero you don’t need to provide your credit score. Instead, all you need is a utility bill (proof of address), proof of income, and your government ID. The process is so simple, Widen said, that 92% of loan applications are initiated from a smartphone.

“Our business model is very based on the bank’s risk appetite and we saw 60% growth from 2019-2020. We are close to 3 million visits per month, about 1.5 are unique and in March of 2021, we had 800K people fill out the entire loan form. We have about a 10% approval rating across all products,” Widen said.

The round was led by the Swedish investors VEF, Dunross & Co, and Atlant Fonder, which are all previous investors in the company. The funding will go toward marketing – most of which will be on T.V. – product development, and talent acquisition.

#banking, #brazil, #economy, #finance, #finanzero, #latin-america, #loans, #money, #online-lending, #personal-finance, #recent-funding, #sao-paulo, #startups

SeedFi closes on $65M to help financially struggling Americans get ahead

Millions of Americans live paycheck to paycheck, and struggle to get out of a debt cycle.

One startup is developing financial products targeted toward this segment of the population, with the goal of helping them build credit, save money, access funds and plan for the future.

That startup, SeedFi, announced Wednesday it has raised $50 million in debt and $15 million in an equity funding round led by Andreessen Horowitz, also known as a16z. The VC firm also led SeedFi’s $4 million seed funding when it was founded in March of 2019.

Flourish, Core Innovation Capital and Quiet Capital also participated in the latest financing.

SeedFi was founded on the premise that it is difficult for many Americans to get ahead financially. Its founding team has worked at both startups and big banks, such as JPMorgan Chase and Capital One, and operates under the premise that many legacy financial institutions are simply not designed to help Americans who are struggling financially to get ahead. 

“We’ve seen firsthand how the system has been designed for underprivileged Americans to fail,” said Jim McGinley, co-founder and CEO of SeedFi. “Our average customer earns $50,000 a year, yet they pay $460 a year in overdraft fees and payday loan companies charge them APRs of 400% or more. They barely make enough to cover their expenses and any misstep can set them back for years.”

In previous roles, McGinley was responsible for payday loans for underserved communities.

“There I got insights to the financial difficulties they had and the need for better products to help them get a step up,” he told TechCrunch.

Co-founder Eric Burton said he can relate because he grew up in Central Texas as part of “a super poor family.”

“I experienced all the struggles of being low income and the necessity of taking on high-priced credit to get through day to day,” he recalled. “I personally was trapped in a debt cycle for a long time.”

In fact, a job offer he got from Capital One was temporarily rescinded because the company said he had “bad credit,” which turned out to be a result of unpaid medical bills he’d incurred at the age of 18.

“I didn’t know about them, but was able to get the job after using my signing bonus to pay off that debt,” he said. “So I can understand how a certain starting point makes it very hard to progress.”

SeedFi’s goal is to tackle the root of the problem. It launched in private beta in 2019, and helped its initial customers build more than $500,000 in savings — even during the COVID-19 pandemic.

Now, it’s launching to the public with two offerings. One is a credit building product that is designed to “create important long-term savings habits.” Customers save as little as $10 from every paycheck, which is reported to the credit bureaus to build their credit history, and are then able to generate $500 in savings in six months’ time.

After six months of on-time payments, SeedFi customers with no credit history were able to establish a credit score of 600, while customers with existing credit scores and less than three credit accounts boosted their scores by 45 points, according to the company.

The concept of enabling consumers to build credit history beyond traditional methods is becoming increasingly more common. Just last week, we wrote about Tomo Credit, which provides customers with a debit card so they can build credit based on their cash flow.

SeedFi’s other offering, the Borrow & Grow Plan, is designed to be a more affordable alternative to installment or payday loans. It provides consumers with “immediate access” to funds while also helping them build savings and credit. 

Andreessen Horowitz general partner Angela Strange , who has joined SeedFi’s board with the financing, believes there’s “a massive business opportunity for new financial services entrants to reach historically underserved populations through better product experiences, underwriting and technology.”

In a blog post, she shares an example of how SeedFi works. The company evaluates risk and extends credit to a customer that might be traditionally hard to underwrite. It determines how much to lend, as well as the proportion of dollars to give as money now versus savings. 

“For instance, a typical SeedFi plan might be structured as $500 right now and $500 reserved in a savings account. The borrower pays off $1,000 over time, and at the end of the plan, he or she has $500 in a savings account. Not only has the borrower paid a lower interest rate, he or she is in a better financial position after making the decision to borrow money,” Strange writes.

Looking ahead, SeedFi plans to use its new capital to build out its product suite and grow its customer base. 

“We will be able to more efficiently fund our growing loan portfolio and serve more customers,” McGinley said.

#andreessen-horowitz, #angela-strange, #core-innovation-capital, #credit, #credit-history, #credit-score, #debt, #economy, #finance, #funding, #loans, #personal-finance, #quiet-capital, #recent-funding, #seedfi, #startups, #tc, #venture-capital

UpEquity raises $25 million in equity and debt for its cash-pay mortgage lending service

With a stated goal of aligning the mortgage industry with consumer interests, Austin-based UpEquity has raised $25 million in equity and debt funding to expand its business.

Chief executive Tim Herman started the mortgage lending company to take advantage of what he saw as inefficiencies in the $2 trillion U.S. housing market.

Existing financial services and property technology companies treat the symptom and not the cause of market inefficiencies, said Herman.

The company makes free cash offers but charges 2.5% on the loans it makes to homebuyers to give them the cash they need to make an offer before having to go through the traditional process of taking out a home loan through a bank. Then the homeowners can make payments directly to UpEquity to pay off the mortgage on the house.

“Our cash offer works like a guarantee that during the escrow period we will be able to get the mortgage in place,” Herman said.

A U.S. Naval Academy graduate and former fighter pilot, Herman saw real estate as the only avenue to true wealth creation open to him and his family given their years on the road and lack of available investment capital.

After the Navy, Herman went to Harvard Business School and met his co-founder Louis Wilson. It was in Boston while in B-School that the two men started UpEquity.

They since relocated to Austin because of its booming housing market and relatively more relaxed regulatory environment.

Ultimately, the pitch to customers is the ability to make an all-cash offer, which dramatically improves the likelihood of closing on a house. It’s a luxury that roughly 90 percent of Americans can’t afford, Herman said. There’s no downside for selling homeowners, if a purchaser doesn’t end up buying the home then UpEquity owns the house.

Of all of the 300 deals the company has done so far, only two have failed.

That’s why a company like UpEquity can raise $7.5 million in venture and $17.5 million in venture debt to start making loans.

The company’s A round was led by Next Coast Ventures and UpEquity said it would use the money to fund product development that can slash the time-to-close for the real estate agents that act as the company’s sales channel to ten days.

“Our goal is to finally align the mortgage industry with consumer interests,” said UpEquity Co-Founder and CEO Tim Herman. “This funding is validation that consumers, real estate agents and venture investors understand the power of removing friction from the homebuying process, not only for personal advancement, but to attain the American Dream.”

So far the company has expanded its operations from Texas into Colorado, Florida and California, where it has originated $100 million in mortgages in 2020.

“As real estate continues to evolve in the face of limited supply and tight competition, UpEquity is at the helm of PropTech’s growing capabilities,” said Thomas Ball, managing director at Next Coast Ventures. “Most innovation has focused on the front end, but until now, nobody has expedited what happens after the borrower submits an application. UpEquity has the team, talent and technology to not only succeed, but to disrupt and emerge as the leader in the mortgage lending marketplace.”

 

#austin, #bank, #boston, #california, #co-founder, #colorado, #economy, #finance, #financial-services, #florida, #harvard-business-school, #leader, #loans, #money, #mortgage, #navy, #next-coast-ventures, #pilot, #real-estate, #real-estate-agents, #tc, #texas, #united-states

LA-based SoLo Funds raises $10 million to offer an alternative to predatory payday lenders

SoLo Funds wants to replace payday lenders with a community-based, market-driven model for individual lending and now has $10 million to expand its business in the U.S.

Payday lenders offer high interest, short-term loans to borrowers who are at their most vulnerable and the terms of their loans often trap borrowers in a cycle of debt from which there’s no escape.

Around 80% of Americans don’t have adequate savings to cover unforeseen expenses, and it’s that statistic that has made payday lending a lucrative business in the U.S.

Over the past decade websites like GoFundMe and others have cropped up to offer a space where people can donate money to individuals or causes that in some cases serve to supplement the incomes of people most in need. SoLo Funds operates as an alternative.

It’s a marketplace where borrowers can set the terms of their loan repayment and lenders can earn extra income while supporting folks who need the help.

The company is financing tens of thousands of loans per month, according to chief executive officer and co-founder, Travis Holoway and loan volumes are growing at about 40% monthly, he said.

While Holoway would not disclose the book value of the loans transacted on the platform, he did say that the company’s default and delinquency rates were lower than that of its competitors. “Our default rate is about three times better than the industry average — which is the payday lending industry that we’re looking to disrupt,” Holoway said.

The company also offers a sort of default insurance product that lenders can purchase to backstop any losses they experience, Holoway said. That service, rolled out in April of last year, helped account for some of the explosive 2,000% growth that the company saw over the course of 2020.

SoLo has seen the most activity in Texas, Illinois, California, and New York, states with large populations and cities with the highest cost of living.

“Our borrowers are school teachers… are social workers. When you live in those larger cities with higher costs of living they can’t afford the financial shocks that they could if they lived in Dayton, Ohio,” said Holoway.

While the company’s borrowers represent one cross section of America, the lenders tend to also not be hailing from the demographic that a casual observer might expect, Holoway said.

About half of loans on the platform are made by folks that Holoway called power lenders, while the rest are coming from less frequent users.

“A majority of [power lenders] are college educated and the majority of them tend to be white men. It’s individuals who you might not think are going to be power lenders… They may make $100,000 to $125,000 per year,” said Holoway. “They’re looking to diversify their capital and deploy it to make returns. And they’re able to help individuals out who otherwise would not be able to pay for groceries, paying rent or taking care of their transportation expenses.”

Given the company’s growth, it’s no wonder investors like ACME Capital, with support from Impact America Fund, Techstars, Endeavor Catalyst, CEAS Investments and more joined the new round. previous investors like West Ventures, Taavet Hinrikus of Transferwise, Jewel Burks Solomon of Google Startups, Zachary Bookman of OpenGov, Richelieu Dennis of Essence Ventures, and tech innovation accelerators also participated in financing the company.

“For too long, there have been limited options for individuals in need of immediate funds due to unforeseen circumstances, like a shift in hourly schedules, unplanned car troubles or other cases,” said SoLo, co-founder and CEO Travis Holoway. “SoLo was created to offer safe, affordable options for borrowers that need cash quickly, while also creating a marketplace for lenders to grow capital and help community members in need. We believe that at the end of the day, people are innately honest and tend towards generosity, and our platform’s growth is further proof that people want to do good in the world and make an impact.”

#america, #california, #credit, #economy, #finance, #google, #illinois, #impact-america-fund, #jewel-burks-solomon, #loans, #money, #new-york, #ohio, #richelieu-dennis, #solo, #taavet-hinrikus, #tc, #techstars, #texas, #united-states

OptioLend launches new marketplace to become ‘the LendingTree of commercial real estate’

The commercial real estate industry is facing its share of challenges, considering the fact that so many people are working from home (and not in offices) and retail is riding a slippery slope as more people shop online.

But from downturns, opportunity emerges.

Enter OptioLend, a new startup that wants to help individual investors take advantage of opportunities in commercial real estate by connecting them with “the best possible” lenders. The Columbus, Ohio-based company launched its marketplace Tuesday after months of operating in private beta.

The new platform uses an AI-powered algorithm and a database of more than 9,500 capital sources to help prospective real estate borrowers in search of debt financing find lenders “with the best terms.” In other words, the company’s self-proclaimed mission is to become the “LendingTree for commercial real estate.” (For the unacquainted, Charlotte, North Carolina-based LendingTree is an online marketplace that provides consumers multiple offers from several lenders for things like mortgage, student and personal loans.)

In fact, Joel Lowery, a former LendingTree executive who built the back end of that company’s platform, helped build out the OptioLend portal serving in a technical advisor capacity along with former data scientists at IBM.

Once an investor applies for a loan, OptioLend identifies up to 20 lenders best suited for that application based on recent lending history and other criteria. Borrowers and brokers can negotiate and close deals from within the company’s platform via the mostly automated process, the company claims. But it’s also launching “with a concierge service of experienced capital advisors” to help guide users who need help during the loan procurement process.

To get off the ground, OptioLend last year raised about $1 million in seed funding led by the Schottenstein Family Office with participation from Loud Capital and MLG Ventures. For context, the Schottenstein family is one of the largest private real estate owners in the country.

CEO Richard Geisenfeld said there’s a plethora of lenders that can lend at that price point, whereas there is “a relatively small pool of capital sources” that focus on deals above $10 million.

“Capital markets are experiencing a 50% surge in refis and new loans as the markets start to rebound from COVID,” he said. “And as existing loans start coming due, we think we’re in a perfect timing to roll out. Properties are going to be repurposed, and are already starting to be.”

And while OptioLend can work with institutions and individual investors, it’s more focused on the latter.

Institutions have a lot of choices,” Geisenfeld said. “Individual investors do not.

Geisenfeld said he comes from a family of developers and himself has closed about $1.7 billion worth of transactions in 44 states as founder of Capital Commercial Partners. He’d been representing the Schottenstein family for nearly 20 years before the concept behind OptioLend emerged.

As an experiment prior to the formation of OptioLend, the family office had reached out to more than 50 lenders in an effort to finance the purchase of a small single tenant, triple net portfolio. They were surprised to discover that the interest rates varied as much as a full percentage point.

“Every time we did a deal with them, we’d hear anecdotally there were better [loan] rates out there and they agreed that we needed to create some kind of efficiency and automation,” Geisenfeld told TechCrunch. “So I went to one of my colleagues and asked ‘how do we change the paradigm from the traditional methodology?’ And that’s the problem we’re out to solve — by increasing an investor’s access to capital by 10 times in 10 minutes.”

The startup says it not only helps investors with new loan applications, but it can also help them refinance existing assets. Its sweet spot is on transactions in the middle market — in the $1 million to $10 million range.

OptioLend will work with commercial real estate and mortgage brokers alike either by allowing them to use the platform directly or to refer property owners to it. Their incentive for referrals is earning up to 50% of the original fees.

David Schottenstein, principal of Schottenstein Family Office, noted in a written statement that in today’s market, borrowers with limited access to capital sources sometimes sign onto loan terms with interest rates “as much as 100 basis points higher than they have to.” 

“OptioLend’s ability to get deals in front of multiple lenders quickly helps ensure that borrowers are getting the best terms possible,” he added.

#economy, #finance, #financial-technology, #lendingtree, #loans, #ohio, #online-lending, #online-marketplace, #optiolend, #real-estate, #schottenstein-family-office, #startups

Embedded finance startup Banxware raises €4M seed

Embedded finance — the idea of offering financial products where customers are already congregating via white label solutions and APIs – isn’t an entirely new concept. In fact, in one form or another, such as point of sale credit, the concept has existed for years and long before Silicon Valley venture capital firm and media company (ha!) Andreessen Horowitz made it a thing. However, fuelled by cloud technology and a plethora of new fintech and Banking-as-a-Service startups, there is no doubt the embedded finance trend is accelerating.

The latest company to declare its hand is Berlin-based Banxware, which offers embedded finance in the form of loans for SMEs, in partnership with marketplaces, payments providers, and others. It launched in December and today is disclosing that it has raised €4 million in seed funding.

Leading the round is Force over Mass, and VR Ventures. They are joined by HTGF, and private investors in banking, payment and e-commerce.

Banxware says it will use the investment to develop and grow its embedded white label financial services offering, and expand its team. In addition to lending, the startup will also soon offer card-based products and other financial services.

Banxware’s tech and infrastructure enables any company to offer loans and other banking services to SME customers. The idea is to act as the link between banks (lenders), digital platforms, and merchants. Banks get access to hard to reach SME customers. Platforms, such as online marketplaces, can up-sell financial products beyond their core offering. And merchants benefit from speedy access to working capital.

“SMEs have a hard time to access capital when needed, especially when they are less than three years old or do not have the most pristine credit history,” explains co-founder and CEO Jens Röhrborn. “On top of this, loan applications, i.e. loan decisions and loan payout, still take several weeks in most cases.

“More and more sellers and merchants are using digital platforms through which they sell their products or process their digital payments. By using the recent historic data on these merchants provided by the platforms, we can lend against their future revenues”.

This has seen Banxware build an instant lending tool that includes AML and KYC compliance, and a scoring engine that analyzes historic platform data and data from third party providers, such as account information providers and external scoring services. The promise is an instant loan decision and loan payout, “all in less than 15 minutes”.

“On the lending side, we work with both balance sheet lenders and lending vehicles with whom we pre-agree on lending terms and loan decision criteria and on whose behalf we execute the loan decision,” says Röhrborn. “Merchants repay their loan in such a way that platforms subtract a certain percentage of the future merchant payouts”.

Röhrborn says the company’s instant lending tool is “only the beginning” and that Banxware will develop additional embedded financial services and expand internationally.

Meanwhile, the German fintech currently generates revenue by charging a one time fee for each loan that is processed through its platform and via a one off customization fee.

#banking, #banxware, #berlin, #cloud-technology, #credit, #e-commerce, #embedded-finance, #europe, #financial-services, #fundings-exits, #loans, #media, #online-marketplaces, #startups, #tc, #venture-capital

Valon closes on $50M a16z-led Series A to grow mobile-first mortgage servicing platform

If you’ve ever applied for a mortgage, you know it’s one of the most painful processes out there. 

So it’s no surprise that big bucks are being poured into the space with the goal of making the process easier, more digital and more transparent.

To that end, Valon, a tech-enabled mortgage servicer, announced this morning it has raised $50 million in a Series A round of funding — which is large for its stage even by today’s standards.

Andreessen Horowitz (a16z) led the round for the New York-based company formerly known as Peach Street. Returning backers Jefferies Financial Group, New Residential Investment Corporation – an affiliate of Fortress Investment Group LLC – and 166 2nd LLC also participated in the financing.

Valon previously raised $3.2 million from seed investors such as serial entrepreneur Kevin Ryan’s Alley Corp, Soros, Kairos, and Zigg Capital. 

Andrew Wang, Eric Chiang and Jon Hsu founded Valon in June 2019 with the mission of breaking up what it sees as “a monopoly in the market,” with “the largest mortgage servicing software company” (software giant Black Knight) controlling more than half of all U.S. residential loans.

“We’re on the cusp of a mortgage foreclosure crisis comparable to 2008, and the majority of homeowners struggling to make their loan payments are unaware of their options,” Valon CEO Wang said. “This stranglehold has driven servicing costs up nearly 250% in the past decade, and the fees are passed on directly to the borrower.”

Concurrent with the raise, Valon recently got the green light from Fannie Mae to service its government sponsored home loans. (For the unacquainted, servicing loans means doing things like collecting payments on behalf of a lender). The approval will only continue to fuel Valon’s rapid growth, according to Wang.

“We went from no contracts committed to $10 billion in mortgages committed to be serviced in one year,” he told TechCrunch. 

Valon operates in 49 states, and expects to add New York this year. 

As a former investor in mortgage servicing space, Wang was frustrated by “the lack of service” provided by other servicers. So he teamed up with Chiang and Hsu, who had prior product and engineering experience at Google and Twilio, to launch Valon.

The company’s cloud-native platform aims to deliver what it describes as a borrower-oriented experience. Lenders also can request access to real-time API data feeds to view performance of their borrowers and reconcile transaction data. 

Unlike mortgage originators, which lend money to the borrower, a mortgage servicer interfaces with the borrower for the duration of their loan – and that can be anywhere from 15 to 30 years. 

“This includes things like collecting payments on behalf of the lender and providing assistance and guidance to the borrower in moments of stress,” Wang said. “Traditional mortgage servicers use antiquated technology and provide poor service to borrowers. Valon looks to change that dynamic by providing transparency and full self-service capabilities to homeowners.

The company also claims that its technology has the potential to reduce mortgage servicing costs by up to 50% by vertically integrating the entire process. Its platform is built on Google Cloud with security as a “first-principle” with features such as default encryption and intrusion detection, the company said.

Millions of Americans stopped paying their mortgages in 2020 due to the economic strain of the coronavirus pandemic. This led to requests for forbearance (postponement of payments) and foreclosure moratoriums.

“The pandemic highlighted the stress in the market and greatly accelerated the need for a new age mortgage servicer,” Wang said. “Homeowners faced a great deal of financial stress and had difficulty getting the right option and assistance from existing servicers due to their antiquated technology and inability to process requests… In 2021 we will see forbearance and foreclosure leniency come to an end and this need will be even more acute.”

Angela Strange, a general partner at Andreessen Horowitz who joined Valon’s board in mid-2020, says Valon has built a mobile first mortgage servicer from the ground up.

“Homeowners are faced with clumsy websites, call centers, and often misinformation,” she said in a written statement. “In Valon, they have a trusted software driven advisor who can provide clear, transparent, regulatory compliant information in good times and bad – without needing to pick up the phone.”

The Fannie Mae approval only serves as further validation of the platform the team has created, she added.

Valon plans to use its new capital to triple headcount to about 100 by year’s end as well as to acquire more mortgage servicing rights (MSR) contracts to service.

#andreessen-horowitz, #angela-strange, #finance, #funding, #loans, #mortgage, #real-estate

Google Cloud launches Lending DocAI, its first dedicated mortgage industry tool

Google Cloud today announced the launch of Lending DocAI, its first dedicated service for the mortgage industry. The tool, which is now in preview, is meant to help mortgage companies speed up the process of evaluating a borrower’s income and asset documents, using specialized machine learning models to automate routine document reviews.

Some of this may sound familiar, because, with Document AI, Google Cloud already offers a more general tool for performing OCR over complex documents and then extracting data from those. Lending DocAI is essentially the first vertically specialized Google Cloud service to use this technology.

“Our goal is to give you the right tools to help borrowers and lenders have a better experience and to close mortgage loans in shorter time frames, benefiting all parties involved,” writes Google product manager Sudheera Vanguri. “With Lending DocAI, you will reduce mortgage processing time and costs, streamline data capture, and support regulatory and compliance requirements.”

Google argues that its tool will have speed up the mortgage workflow process and improve the experience for borrowers, too. If you’ve ever gone through the mortgage process, you know how much time it takes to compile all of the necessary documents and how much lag there is before your bank or mortgage broker tells you that everything is in order (or not).

In addition, Google Cloud also argues that this technology can help “reduce risk and enhance compliance posture by leveraging a technology stack (e.g. data access controls and transparency, data residency, customer managed encryption keys) that reduces the risk of implementing an AI strategy.”

In many ways, this new product is a good example for Google Cloud’s current strategy under the leadership of its CEO Thomas Kurian. While it continues to develop a plethora of general services for developers at every level, it now also bundles these together to sell as complete solutions to enterprises in various verticals. That’s where Google Cloud believes it can generate the most benefit for these companies — and hence generate the most revenue. With industry solutions for retailers, telcos, gaming companies and more — and industry partners to help them get up to speed — Kurian and his team believe that they can offer solutions while its competitors focus on offering tools. So far, that strategy seems to be working out alright, with Google Cloud’s revenue growing over 43 percent in the last quarter.

#artificial-intelligence, #cloud, #developer, #economy, #finance, #google, #loans, #machine-learning, #mortgage, #ocr

Finance and the digital divide: a conversation with Tunde Kehinde of Lidya

Small and medium businesses have been some of the hardest hit in the Covid-19 pandemic. And all that has been as true in emerging markets as it has been for SMBs in the developed world.

Tunde Kehinde has had a front-row seat witnessing and responding to that crisis. He’s the CEO and co-founder of Lidya, a startup out of Nigeria that has built a platform for SMBs to apply for and get loans and other financial services, aimed at markets on the African continent and increasingly also in emerging economies in Europe. We sat down with him as part of our new virtual Disrupt series, where we have been connecting with some of the biggest movers and shakers in the tech world beyond the US.

Kehinde has been called the “Jeff Bezos of Africa”, a funny title you might think sounds like tenuous or cheesy marketing until you know more about his history in business, the impact it’s had so far (he’s not that old) in the region, and until you hear him speak.

Kehinde — born in Nigeria and exposed to a lot of the US way of doing things through university years at Howard and then Harvard — was previously the co-founder of one of the biggest tech startups to have come out of the continent — Jumia — an Amazon-style marketplace that is slowly branching out into a wider web of services like payments, food delivery and more.

Initially incubated by Rocket Internet, Jumia raised hundreds of millions of dollars from VCs, scaled to multiple countries on the continent, and is now traded publicly on Nasdaq with a current market cap of $660 million — modest by Amazon standards maybe, but a real milestone for African tech.

That alone would probably merit some to wonder if he’s the “next Bezos”, but it’s been his follow-up act at Lidya that paints a broader picture. In short, there is a lot more potential for payment and online commerce services in emerging markets, and focusing on helping small businesses cross the digital chasm is not just a good business opportunity, but a developmental one, too. Capital, specifically the lack thereof, has always been a huge hindrance to growth, and these days it’s an even more critical axiom to address.

You can see the full Disrupt conversation below, where Kehinde covers a lot of ground, not just about his company but about how tech is evolving in the region.

The breakout success of a handful of startups — which include the likes of new digital payments unicorn Interswitch as well as Jumia — venturing into multiple jurisdictions, he noted, is seeing more VCs also increase their interest and investment activity. He thinks the next very important step is to have more exits, which will confer a different kind of credibility and liquidity to the market.

And there should be, he added: There are few places like the African continent that is a blank slate, where you can come in quickly and build a really dominant player, if you have the right capital and team, he said.

“It’s night and day between seven years ago and now,” he added, but also admitted that while financial services and the related world of e-commerce are obvious places to start — it was also the classic category to tackle first in the US and Europe many years earlier — he still sees more interest from VCs in the U.S., Europe and Latin America.

His advice for VCs?

“If I were a VC I would look at what have been the biggest successes from folks like me,” he said. “Seeing Jumia and others going public, as more of these things happen the more you can develop a great policy and that will make it easier. I launched, I got to scale, I got return on investment, the right infrastructure can be built.”

Tune in here to hear him also talk about China and how to handle investment from outside Africa; what other big deals in loans for SMBs, such as Kabbage getting acquired by Amex, mean for startups like Lidya, the impact of the global coronavirus pandemic on business; identifying opportunities beyond your immediate region; and more.

#africa, #african-tech, #disrupt, #ecommerce, #emerging-markets, #finance, #fintech, #jumia, #lidya, #loans, #nigeria, #smbs, #smes, #startups, #tc, #tcuk, #techcrunch-disrupt, #tunde-kehinde

Republican Congress members upset banks dropping support for fossil fuels

Image of fossil fuel wells and the flames powered by vented gasses.

Enlarge (credit: NOAA)

Last week, Republican House members sent a letter to President Donald Trump in which they decried banks’ recent re-evaluations of the risks of fossil fuel investments. While the letter doesn’t call for any particular action, it repeatedly mentions the assistance offered to banks via the Coronavirus Aid, Relief, and Economic Security Act 9 (CARES Act), and it implies that the banks aren’t living up to their end of the deal. And, throughout the letter, its signatories seem to ignore the fact that the fossil fuel sector is not the only component of the US energy economy.

The letter was sent to Trump by a collection of 14 senators and 22 representatives, all Republican. In addition to Trump, the letter cc’ed a few senior administration officials, including the secretaries of the Department of Energy and the Department of the Treasury and the CEOs of six banks. The CEOs of three fossil fuel industry groups were also included.

Financial headwinds

The letter comes as the recent events have accelerated banks’ decisions to re-evaluate fossil fuel investments. In the long term, fossil fuel development faced two significant challenges. The first is that wind and solar generation have become cost-competitive with fossil fuels in most markets. The second is that the pledges made to limit future fossil fuel emissions will likely mean that some fossil fuel deposits will be left undeveloped. That means that some of the resources now held as assets by fossil fuel companies will end up “stranded”—meaning the assets will turn out to have no value.

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#banking, #congress, #energy, #fossil-fuels, #loans, #science

My experience with the CARES Act was frustrating, confusing and unfair

As a small business owner, I was excited to learn about the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act that offers low-interest loans to firms impacted by the COVID-19 pandemic. However, as I read through the details and began to apply, it became clear that this legislation — while well-intentioned — may not be enough to help many SMBs and startups.

Here’s a quick recap of my experience.

Emergency Economic Injury Grants and Economic Injury Disaster Loans

First and foremost: You need to act swiftly. Emergency Economic Injury Grant and Economic Injury Disaster Loan programs included in the CARES Act function on a first-come, first-served basis, and are funded from a limited pool of resources.

I began my company’s application process by submitting our EIDL and EEIG applications through the SBA website. This was easy, if tedious. It took about two hours to complete the necessary online forms and about two seconds to click the EEIG checkbox. Submission was seamless, but I haven’t received any further communication from the SBA since completing my application, which is a bit confusing — EEIG funds are supposed to be dispersed within 3-5 days of the submission date.

However, I know there’s been a huge volume of submissions recently and this must be exceptionally difficult to handle. I look forward to any email correspondence or updates from the SBA that might give me — and other applicants — an updated estimate of the expected dispersal timeline.

#cares-act, #column, #congress, #coronavirus, #covid-19, #extra-crunch, #funding, #government, #loans, #policy, #ppp, #shake-shack, #startups